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Even Amazon employees are curious about the true nature of Amazon’s relationship with Snowflake — the cloud software company that’s both a customer and competitor to the Amazon Web Services cloud business.
During an internal all-hands meeting held late last month, a recording of which was reviewed by Business Insider, an employee asked AWS CEO Andy Jassy whether AWS is “actively competing against” Snowflake, or if it’s “partnering up with them” because the company relies on Amazon’s cloud infrastructure.
Snowflake is a major AWS customer, having committed to spend $1.2 billion on public cloud services — mostly AWS — over the next five years. At the same time, it competes with AWS’s own cloud warehousing service called Redshift.
Jassy said Snowflake is an “important partner” because it runs the “vast majority” of its service on AWS. But he said it’s inevitable for AWS to compete with Snowflake in some capacity, given AWS’s strong presence in the cloud infrastructure space and a wide array of product offerings. And even so, he said, the market is big enough for multiple players.
“When you’re in the type of business that AWS is, where we provide a set of infrastructure services for other companies to build their technology applications on top of, you end up in the situation sometimes like we are with Snowflake — where they’re an important partner and we also have some overlapping products,” Jassy said. “But because these market segments are so large and there’s room for so many winners, that’s okay. I expect Snowflake to continue to grow very nicely, as I do Redshift.”
The question reflects a growing concern among cloud software providers that use AWS’s infrastructure service to run their business, as AWS expands into other parts of the cloud. AWS is the leader in the cloud infrastructure space, accounting for 45% of the market as of last year, according to Gartner, but has a smaller share in other areas.
Companies like Snowflake could start having second thoughts about paying for Amazon’s cloud service — which, in theory, helps AWS grow and invest in its own competing products, like Redshift. Additionally, there’s always the chance of Amazon using its pricing power to eventually put pressure on competitors.
The way AWS deals with its own customers that are also competitors could potentially come under more scrutiny as the US government looks into its business practices. The House antitrust committee made a series of allegations about AWS’s abusive behavior in its report last month, while the FTC is reported to have broadened its antitrust investigation to cover Amazon’s cloud unit, according to Bloomberg.
The investigation has parallels to that of Amazon’s retail business, which is accused of using confidential customer data to build its own competing products. On Tuesday, the European Commission filed antitrust charges against Amazon over the way the company uses data from third-party sellers, which could cost Amazon more than $28 billion in fines.
Amazon’s spokesperson didn’t respond to a request for comment. Snowflake’s representative declined to comment.
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Source:: Businessinsider – Tech