Amazon Commits Over $1 Billion to Microsoft in Unprecedented Deal
In a surprising move, Amazon has decided to partner with its biggest cloud rival, Microsoft, by committing over $1 billion to purchase Microsoft 365 licenses for 1 million Amazon employees. This deal marks a significant shift in Amazon’s strategy as it chooses to invest in its competitor’s cloud products rather than utilizing its own productivity toolset.
“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 executive from a solution provider that partners with both Amazon Web Services (AWS) and Microsoft.
This collaboration between Amazon and Microsoft highlights the growing importance of generative AI in the cloud computing market. The executive believes that the AI phenomenon happening this year has given both companies a new outlook on everything.
According to reports, Amazon has committed to securing more than 1 million Microsoft 365 license users over the next five years. These licenses will be used by Amazon corporate employees as well as frontline workers. This move comes as Amazon’s cloud business, AWS, continues to dominate the global cloud market with a 32 percent share.
While Amazon does have its own collaboration products, such as Chime and WorkDocs, it appears that Microsoft 365 offers more comprehensive capabilities, especially with its Teams feature. AWS currently offers over 200 cloud services, but its productivity offerings are not as popular compared to Microsoft 365 and Google Workspace.
Previously, Amazon had chosen to stay off Microsoft’s cloud products due to concerns about storing data on its competitor’s infrastructure. However, the scale of this $1 billion deal is unprecedented for Amazon, and it seems that Microsoft’s Office and security organizations are already preparing to meet the demand.
“We do millions in AWS sales. I have complete faith that AWS will continue pushing innovation,” said the executive. “They just have a different outlook right now. AI is everything to AWS. And Microsoft is about to push AI features in 365. … We need to wrap our heads around the fact that AWS will create business partnerships with anyone and not let it distract us.”
Both Amazon and Microsoft have not provided any comments on the matter at this time. The implementation of the new Microsoft systems at Amazon is expected to begin next month, coinciding with the introduction of new generative AI capabilities into Microsoft 365 through its Copilot AI tool.
Overall, this unexpected partnership between Amazon and Microsoft signifies a shift in the cloud computing landscape and highlights the increasing importance of AI in driving innovation and collaboration.