Behind AWS CEO Andy Jassy's strategy for expanding the cloud platform by building new features and services that sometimes compete with partners on the platform
The giant's cloud-computing business offers a look inside its model for expanding. Some partners praise the unit's chief … Tweets: @chupchap , @mdudas , @wsjtech , @hkanji , and @spicergerard Tweets: @chupchap : I'm sure this is true for all platforms including salesforce. For example, last Dreamforce, I met a vendor that was confused how to pitch after introduction of MyTrailhead http://twitter.com/... Mike Dudas / @mdudas : “Amazon is market leader, reporting $17.5 billion in web-services sales last year. No. 2 Microsoft Corp. had $5.3 billion in revenue last year from its cloud-infrastructure business, estimates investment firm Stifel Nicolaus & Co.” http://www.wsj.com/... Wsj Tech / @wsjtech : “You're stupid if you don't get scared by that.” When Amazon is your ally and then it is your competition, too http://www.wsj.com/... Hussein Kanji / @hkanji : AWS has become Amazon's cash cow, providing 73% of its operating income or $1.4b a quarter https://www.wsj.com/... Gerard Spicer / @spicergerard : It is with a certain dread every autumn that some companies described by http://Amazon.com Inc. as its technology partners gather at a Las Vegas convention and find out if Andy Jassy has new plans to encroach on their turf. https://www.wsj.com/...
Context & Ripple Effects
This WSJ piece lands mid-arc in Andy Jassy's run atop AWS: an earlier Fortune profile of Jassy traced how he built AWS into the cloud's dominant force, and this report adds the uncomfortable mechanism behind that growth — AWS ships features and services that sometimes compete directly with the partners selling on its own platform. The economics explain why it can afford the friction: AWS generated $17.5 billion in web-services sales last year against Microsoft's $5.3 billion, and supplies roughly 73% of Amazon's operating income.
The tension the article documents is not incidental — it is the playbook. As one commenter notes, Salesforce vendors faced the same disorientation when the platform launched MyTrailhead, and AWS's scale advantage means every partner category it enters starts from a position where the landlord is also the largest competitor.
First-order effects
- Partners building on AWS now face a landlord-competitor: any successful software category on the platform is a candidate for AWS to absorb as a first-party service, forcing ISVs to re-pitch their value proposition overnight.
Second-order effects
- Microsoft, trailing badly on revenue, gains a positioning wedge as the cloud that treats partners less predatorily — giving enterprise buyers and ISVs a concrete reason to multi-home rather than standardize on AWS.
Third-order effects
- If the pattern holds, platform providers systematically absorb their most successful third-party categories — the dynamic captured by Jassy's own later framing of cloud competition — pushing independent vendors toward niches too small for hyperscalers or toward multi-cloud strategies as insurance.
The trend: Hyperscale cloud platforms are converging on a grow-by-absorption model in which the infrastructure provider becomes the default competitor to its own ecosystem — a pattern that only intensified as AWS later pushed into AI services and its own chips.