Strange Bedfellows: Amazon Reportedly Inks $1B Microsoft 365 Contract

Microsoft's most notable new cloud customer might be Amazon, according to a report.

In an unlikely development, Amazon has allegedly agreed to pay its closest cloud rival $1 billion over five years to license over 1 million seats of the cloud-based Microsoft 365 productivity suite.

The news comes from a Tuesday Insider article, which cited an unnamed person "familiar with the situation," as well as an unpublished internal memo. As of this writing, neither Microsoft nor Amazon has confirmed the report. If it bears out, however, it would defy the companies' history of fierce, and sometimes bitter, rivalry. 

The public cloud is a two-horse race between Amazon and Microsoft, and the two have directly competed on services, price, size and, lately, growth (Amazon is the perpetual cloud market share leader, but its growth has been slowing in recent quarters while Microsoft's has been booming.

From 2019 through 2021, the two companies were involved in a protracted, high-profile bidding war for a multibillion-dollar cloud contract with the U.S. Department of Defense. That conflict reached a rather unclimactic conclusion in 2022 when, after multiple fits and starts, the DoD ended up splitting the contract between Microsoft, Amazon, Google and Oracle.

According to Insider, Amazon's migration to the cloud-based Microsoft 365 is expected to begin in November -- perhaps to coincide with the Nov. 1 release of the AI-powered Microsoft 365 Copilot product -- and continue through 2024. The move would affect both frontline Amazon workers, as well as corporate employees.

For Microsoft's part, the company is bracing its "Office and security organizations" for the massive resource impact of having Amazon as a customer, per Insider

While Amazon, through its Amazon Web Services arm, makes its own productivity and collaboration products (namely AWS WorkDocs and WorkMail), it apparently has been using on-premises Microsoft Office products internally.

About the Author

Gladys Rama (@GladysRama3) is the editorial director of Converge360.


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