According to an Insider report on Tuesday, Amazon has agreed to a deal with Microsoft, purchasing a million seats of Microsoft 365 for a staggering $1 billion. The deal, set to stretch over a five-year period, will see the tech behemoth transition from reliant on-premises Microsoft Office products to cloud-based Microsoft 365 solutions as early as next month.
A Shift to Cloud-Based Productivity
It appears that despite having its own collaboration and productivity tools like AWS WorkDocs and WorkMail under Amazon Web Services, Amazon will transition its personnel to Microsoft's cloud-based suite. The company has been reported to kick off the switch to Microsoft 365 in November, a date possibly aimed to sync with the November 1 release of Microsoft's AI-powered Microsoft 365 Copilot product. The migration will extend up to 2024 and will impact both core corporate employees and the frontline workers of Amazon.
Rival Companies Brace for Impact, Amazon's Switch Reflects Shift in Strategy
On the Microsoft front, the company is reportedly preparing its Office and security organizations to adeptly manage the imminent resource challenges of having Amazon as a major customer. The final confirmation of this unexpected collaboration, however, remains unverified as neither company has officially announced the deal at the time of writing this report.
Historically, Amazon and Microsoft have maintained a rivalry, particularly within the public cloud domain where both companies are significant contenders. Amazon holds the leading position in terms of market share, although recent quarters have shown slowing growth whereas Microsoft's growth has been on an upward trajectory. The competition escalated during 2019-2021 when both companies entered a bidding for a significant Department of Defense cloud contract. This wrangle concluded in 2022 with the DoD dividing the contract among Microsoft, Amazon, Google, and Oracle.