Amazon is allegedly close to signing a contract worth over $1 billion with Microsoft to subscribe to one million Microsoft 365 licenses for its corporate and frontline workers.
As reported by Business Insider this week, who cited internal documents and a source close to the deal, Microsoft is preparing to bring on Amazon as a customer for its Microsoft 365 cloud productivity software.
Amazon reportedly utilises Microsoft’s local, on-premises Microsoft Office software currently, but this new partnership with Microsoft signals a transition towards incorporating the latter’s 365 cloud productivity tools. The source close to Amazon cited by Business Insider claimed that it hesitated to adopt Microsoft 365 software because it didn’t want to store its data on Microsoft servers.
Business Insider’s source added that Microsoft expects to begin establishing the cloud systems for Amazon in early November, while the software transition for employees is scheduled for early next year.
The source stated that the scale of the partnership demands complex processes to manage a seamless transition. These measures encompass precise allocation of cloud resources and more staff on deck across Microsoft Office and security organisations so that the demand for the services is adequately addressed.
Microsoft’s shares grew by almost one percent following the report.
Neither Microsoft nor Amazon has responded to requests for comment on the deal.
When Competitors Become Partners
Such a move would be seismic given that Amazon and Microsoft are traditional rivals, especially in the cloud space, with AWS and Azure being in direct competition.
From Amazon’s perspective, the move is possibly motivated to ensure that employees are equipped with advanced versions of software for a reasonable cost. While Amazon is Microsoft’s rival for cloud software and infrastructure, the former doesn’t have its own office software.
From Microsoft’s perspective, it’s a significant commercial (and PR) boon in the tech giant cold wars. Albeit, one of its primary competitors feeling compelled to partner with Microsoft for office software will hardly quieten the accusations of uncompetitive market dominance in several spaces, most prominently illustrated by it being investigated by the European Commission for breaching antitrust laws by bundling its UC and collaboration platform Teams with 365.
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