Amazon Inc. AMZN is transforming its competitive relationship with Microsoft Corporation MSFT into a business partnership as it reportedly plans to become a significant user of Microsoft’s 365 cloud productivity tools.
What Happened: Amazon, known for its e-commerce dominance and extensive cloud computing services through Amazon Web Services or AWS, has committed over $1 billion for more than one million Microsoft 365 licenses over five years, reported Business Insider, citing internal documents and a person familiar with the matter.
These licenses are anticipated to be used by both Amazon’s corporate employees and frontline workers.
The e-commerce behemoth currently uses a local, on-premise version of Microsoft Office products. However, the tech giant intends to shift to Microsoft’s cloud-based productivity suite, Microsoft 365.
The transition could commence in early November, coinciding with Microsoft’s release of an updated version of its 365 applications featuring new AI capabilities. Amazon employees are expected to be fully migrated to Microsoft 365 by early 2024, the report noted, citing the person.
The surprising move marks a significant departure from the traditional rivalry between the two Seattle-based tech giants. Historically, Amazon and Microsoft have not frequently collaborated on this scale.
Why It’s Important: This collaboration signifies a significant transformation for Amazon and a noteworthy triumph for Microsoft.
Despite being rivals, this alliance shows Amazon overcoming its reluctance to leverage the cloud version of Microsoft’s 365 products due to its hesitation to store data on a competitor’s cloud.
This comes after Panos Panay, Microsoft’s chief product officer, left the tech giant to join Amazon. It was reported that the former head of Microsoft’s Windows and Devices division and a key player in creating the Surface line of laptops and tablets was not happy with the recent changes within the division, including budget cuts and product cancellations.
Additionally, earlier this month, it was reported that the U.K.’s anti-competition regulators have reportedly begun a thorough investigation into the overwhelming dominance of Microsoft and Amazon in the cloud computing sector.
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