Amazon commits over $1 billion to Microsoft - its largest cloud rival
By MYBRANDBOOK
Amazon has reportedly committed more than $1 billion over five years to secure more than 1 million Microsoft 365 license users. The 1 million seats will be used by Amazon corporate employees as well as workers in frontline roles. Amazon’s cloud business, AWS, owns 32 percent share of the global cloud market, followed by Microsoft at 22 percent share.
“It’s so interesting because Amazon has its own productivity toolset and offerings, yet they’re deciding not to use it or invest in it, and instead give $1 billion to a direct competitor,” said an SP that is a large Amazon Web Services partner but also partners with Microsoft.
“Amazon is the biggest cloud company in the world and they’re giving a ton of money to the No. 2 cloud company—to buy their competitor’s cloud products,” said the executive. “I just think the generative AI phenomenon that’s happening this year is giving [Amazon and AWS] a new outlook on everything.”
Amazon does have its own collaboration products including its videoconferencing offering Chime and its content collaboration and storage service WorkDocs. Apparently, Amazon’s own offerings lack the same capabilities as Microsoft 365 such as with Teams, which directly competes with Chime.
AWS has over 200 cloud services, although its cloud-based productivity offerings are not as popular compared with Microsoft 365 and Google Workspace. It currently leverages on-premises versions of Microsoft Office products, and had previously chosen to stay off Microsoft’s cloud products because it didn’t want to store anything on its competitor’s cloud infrastructure.
The sheer scale of the $1 billion deal is unprecedented for Amazon in terms of giving a rival such a large contract. According to reports, groups within Microsoft’s Office and security organizations are reportedly starting to scale up in order to meet the demand.
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