Amazon's cloud unit has, over the last 15 years, built itself up into the dominant cloud computing player in the market. Amazon Web Services is now a $54 billion-a-year business, and far ahead of rivals like Microsoft and Google in market share — a dynamic most recently underscored by this earnings season.
But no cloud is an island, and AWS didn't get there alone. It counts over 100,000 independent partners in its ecosystem, most of which sell either software or consulting services that help their mutual customers make best use of their cloud infrastructure. That might include security partners like Crowdstrike or major telcos like Verizon. The scale of AWS is such that it's even dragged rivals like Microsoft, SAP, and Oracle into its orbit, which all provide their flagship database services and other products for use on Amazon's cloud.
AWS said in a statement to Insider that over 50 new companies join its partner network every day, and listed "strong partnerships" with companies including Datadog, Databricks, Infor, Informatica, Red Hat, Salesforce, Snowflake, Splunk, VMware, and Workday. "These companies choose to work with AWS because of AWS's leading functionality, partner ecosystem, operational performance, and market segment position," the statement said.
In theory, this dynamic is beneficial for everybody: Those partners get access to all of Amazon's very many cloud customers, plus access to resources including opportunities for joint marketing. And AWS customers are happy because every new partner makes their cloud infrastructure that much more versatile or secure.
In practice, however, Amazon's relationships with its partners can be a lot more complicated. In much the same way that sellers on Amazon's core retail marketplace worry about house brands like AmazonBasics, partners building on Amazon Web Services often wind up competing with the tech titan, one way or another. For as much as partnering with Amazon brings increased reach and scale, it also means cozying up to a tech superpower that's shown no hesitation to compete with anyone and everyone.
For some partners, at least, this dynamic puts a strain on the relationship. "I wouldn't call [Amazon] a true partner," Sudeesh Nair, CEO of $1.95 billion analytics startup ThoughtSpot, told Insider, contrasting the company's relationship with AWS to the ones it has with Google and Microsoft.
"We built our cloud as a [software] product on AWS, and sell with them, in the sense that every time ThoughtSpot cloud is sold, we pay AWS and AWS gets paid for it," Nair said. "But other than that in general, I don't consider AWS to be the best partner-friendly sort of a company."
Calling it a "well-known" dynamic, Nair says "[AWS] will always have a product that competes with the partners that they are hosting. I am very clear-eyed when it comes to what we can get from Amazon, what we cannot."
The ThoughtSpot CEO's comments highlight a complicated power dynamic in the cloud industry: AWS needs partners, and partners need AWS — forcing them into an uneasy alliance even as each tries to chip away at the others' business. It's an issue that's common among major tech companies, but Amazon's dominant position and the famously aggressive pace with which it releases products complicate its relationships with the partners it needs to thrive.
"The fact they don't compete with you right now doesn't mean they won't become interested in this market. It's just further down on their list of priorities," Lydia Leong, a Gartner vice president focused on cloud, told Insider.
For Amazon's part, a spokesperson said, "Though there are times that AWS services and partners have some overlap on product features, these market segments are so large that there is room for multiple successful entrants — and partners who have strong customer experiences and keep iterating on these experiences have continued to prosper."
As AWS prepares for the imminent arrival of Adam Selipsky as its new CEO on Monday, replacing Andy Jassy, Insider looked at the Amazon cloud unit's relationship with its partners to get a clearer picture of how the company collaborates with and competes against its closest partners, and how those partners say they've been able to survive — and, often, thrive — by working with a sometimes-benevolent behemoth:
How Amazon's reach helps many partners thrive
Amazon has boasted that 90% of the Fortune 100 and the "majority" of the Fortune 500 use services through its AWS Partner Network, or APN, which encompass consulting firms, software firms, managed service providers, and other third parties. Though AWS doesn't reveal exactly how much of its profit comes from partners, the company says its partner network has grown "more than 400 percent in the past five years."
Outgoing AWS CEO Jassy is praised for building and growing that partner ecosystem, helping software companies like Splunk and consultants like Accenture flourish in it. Eran Gil, CEO of AWS consulting partner AllCloud, recently told Channel Futures, "Andy established a lot of opportunities for a broader ecosystem of AWS, which has enabled an entire set of partners to flourish around the AWS business."
Eric Dynowski, CTO of AWS consulting partner ServerCentral Turing Group (SCTG), told Insider that since his company started working with AWS in 2013, "the partner program has matured significantly over the last decade, from enablement materials to training, to credit, partner portals."
Indeed, companies like $22 billion Splunk or $63 billion Snowflake have built their respective cloud businesses on and with AWS, helping customers secure, organize, and analyze their data stored in the cloud. Both of those companies eventually grew to work with Microsoft and Google Cloud — but they started with Amazon.
Splunk CEO Doug Merritt recently told Insider that AWS is "beyond important as far as the cloud footprint that they drive for us." For AWS too, Splunk is also important: Merritt said Splunk is one of AWS's top 10 or 20 customers by total volume, and the data Splunk drives to AWS tends to be workload and storage intensive, meaning customers end up renting a lot of AWS cloud infrastructure to handle it.
For a startup just finding its market, the reach of AWS makes it an attractive partner, too — not least because of the mentorship programs Amazon offers smaller companies. WireWheel, a data privacy startup, went through an AWS incubator program called the SaaS Factory (which also counts hot startup Sumo Logic as an alumni.)
"AWS has supported a lot early in our life cycle, provided architectural support, security reviews. They provided a fair amount of support to us as we were growing, and so it became more than just a service provider," WireWheel co-founder and CEO Justin Antonipillai told Insider.
Amazon's relentless pace puts the burden on partners to figure out ways to compete
While plenty of companies have ridden Amazon's cloud to great heights, there's still tension their relationships with the tech giant. AWS is famous for the rapid clip at which it releases products, introducing something new to its platform every three to six months, Lopez Research analyst Maribel Lopez told Insider.
Its platform now consists of over 200 different services, ranging from basic cloud storage to virtual Windows PCs, databases, and artificial intelligence tools — and many compete with those of its partners.
"At some point, Amazon's just going to come and say, here's my toolkit for that," Lopez said.
And much of the conventional wisdom in the industry is that partners still have a place, even when Amazon encroaches on their territory. Companies like Snowflake, Splunk, or Sumo Logic, the thinking goes, are more focused on their particular technologies, whereas Amazon's homegrown versions don't dive as deep.
Larry Carvalho, a cloud research director at IDC, uses the example of Salesforce's Tableau, which remains the data visualization tool of choice for many customers, even though Amazon has its own QuickSight product. "There are overlaps, but they're not directly in competition with each other. In my opinion, that's the way I see companies play a role in that sense," Carvalho told Insider.
And where those overlaps do exist, some like Splunk have invested in making sure their products integrate with the AWS equivalent to make both more appealing. This tactic has "wound up enhancing the solutions rather than be a direct head-on hit," says Splunk's Merritt.
Sometimes, Amazon partners go on the defensive
Sometimes, though, that competitive dynamic puts companies in its partner network on the defensive.
"As companies like AWS grow, they don't need to be quite as accommodating in every instance," Newman said. "If your partner is a hundred percent dependent on that company, you are taking a high, disproportionate amount of risk to build a business that's entirely dependent on someone else's business."
Several prominent open source-based software companies, including MongoDB, Elastic, and Confluent, have changed the terms of their licensing to prevent Amazon and other large-scale cloud providers from taking their code and using it as the basis of a commercial product. Those companies said it was a necessary step to protect their businesses from the influence of AWS.
"We think this is a positive change and one that can help ensure small open source communities aren't acting as free and unsustainable R&D for tech giants," Confluent CEO Jay Kreps wrote in a 2018 blog post describing the change.
The Congressional antitrust investigation into Amazon also identified numerous examples of Amazon building what it called "knock-off" versions of open source products, including Redis Labs.
Amazon, though, says it is both contributor to and supporter of open source communities. Its ISV Accelerate Program, a co-selling model where AWS sells partner software, was launched out of customer demand for more cloud software, regardless of vendor. MongoDB and Confluent are both part of the program, the company said, as well as others whose products directly compete with AWS.
Yet in at least one extreme case, an unidentified cloud startup that participated in the AWS Activate accelerator program told House antitrust investigators that it shared information with Amazon about how its product was built — only for AWS to launch a "replica" product within a few years.
"We basically helped them build their offering that they copied from us," the startup said, per the report.
Amazon has said in response to the antitrust report that its size does not equal dominance: "The presumption that success can only be the result of anti-competitive behavior is simply wrong."
Amazon needs to partner with startups and big firms — and rivals aren't sitting still
At the same time, the rise of the major cloud providers' partner programs means AWS isn't the only game in town. Partners and customers are using their relationships with the Big Three to hedge their businesses — in some cases, negotiating better deals with AWS when others come in.
A Splunk employee who was granted anonymity because they are not authorized to discuss internal company matters, said that in their view it was a mistake for the company to go all-in on AWS when it first moved to the cloud in 2013: "Splunk put all their eggs in one basket, and it was AWS." But expanding Splunk's partnerships to include Google Cloud helped it gain concessions from Amazon, the employee said.
"We have a longstanding partnership with AWS that has never been stronger and to suggest otherwise would be false," a Splunk spokesperson told Insider in a statement. "We highly value our partnerships with AWS and Google Cloud. Both companies have been instrumental in Splunk helping organizations overcome the complexity that comes with moving to the cloud."
Experts say they expect to see more companies take a similar tack. Among other benefits, the so-called multi-cloud trend means that companies can pick and choose services from multiple cloud providers, making them less reliant on any single vendor, while also catering to customers that might want to use their service on other platforms.
"I think that multi-cloud continues to proliferate more and more as organizations start to really not put all their eggs in the proverbial one basket, trying to hedge their bets," Gartner vice president Sid Nag told Insider.
Bill Richter, CEO of data storage company Qumulo, told Insider that though it first partnered with AWS, it began hearing from "a large number" of customers that they needed multiple cloud providers to "eliminate that cloud lock." Customer demand drove the company to begin working with Google Cloud, he said.
For data analytics company Datadog, which works with Amazon, Microsoft, and Google, CEO Olivier Pomel told Insider that his company functions as an independent layer that can combine data from all three. Similar to Qumulo in that "a large number" of its customers are on AWS, Datadog thinks it has plenty of room even when Amazon releases completing products because of the "myopic" outlook of AWS, according to Pomel.
Some partners even say they can work with all three, while preserving their relationships with each. Data warehousing company Informatica partners with all three clouds, but has a "unique and special" partnership with Microsoft, says CEO Amit Walia. "A lot of customers are in a multi-cloud environment, and our goal is to make sure that customers get what they want," he recently told Insider. "That does not take anything away from having a deeper partnership in different areas."
Meanwhile, Amazon's chief cloud rival Microsoft often boasts of its $9.5 billion in annual contracted partner revenue, crediting its decades-long lead on the competition in building up its ecosystem. "One of the things that I feel the most-proud of as a company is when you go drop yourself anywhere on the planet, there will be a Microsoft partner ecosystem," CEO Satya Nadella told CRN.
SCTG's Dynowski said AWS and Azure are similarly priced, and even among the services they offer, the overlap is as much as 80%. So for some customers, working with partners can be a differentiator: "Microsoft knows how that space works, and knows what value partners can bring in," Dynowski said, thus creating an opportunity to negotiate with the Redmond giant, but "Amazon just doesn't really play that game."
And with Microsoft aggressively forging cloud partnerships with larger software companies like Databricks and Snowflake — as well as with startups via its Microsoft for Startups program — the burden falls on Amazon to make sure it keeps as many partners in its ecosystem as possible, giving third-party firms leverage in their dealings with Amazon.
"For AWS and Jassy, it's both an offensive and defensive because Microsoft clearly, in our opinion, is gaining share on the core enterprise market," Wedbush Securities managing director Dan Ives told Insider. "And I believe they're going to have to further build out their ecosystem and entrench partners."
Ultimately, Futurum's Newman said that partner ecosystems tend to be "choice-driven," meaning customers decide which AWS partners they want to work with and sway demand for certain products.
So while winners and losers within the AWS ecosystem will keep changing, the one constant is that "AWS is always winning," Newman said.