Amazon's AWS Shows Signs of Weakness as Competitors Charge Ahead

Amazon Web Services basically invented the cloud computing business and once held nearly half the market. That dominance is slipping. AWS captured 38% of corporate spending on cloud infrastructure services last year, down from almost 50% in 2018, according to Gartner. Microsoft now grows its backlog of corporate sales faster than Amazon. The company that brushed aside incumbents and transformed an internal startup into Amazon's profit engine now faces internal bureaucracy that has slowed it down.

Bloomberg interviewed 23 current and former AWS employees who described management layers that proliferated after a pandemic hiring binge. One sales engineer who was six managers from Jeff Bezos before the pandemic found himself fifteen rungs from CEO Andy Jassy earlier this year. AWS hesitated to invest in Anthropic when the AI startup was spending most of its cash on Amazon servers.

Executives doubted the Anthropic AI could be monetized and were culturally reluctant to pay for external technology they believed could be built in-house. Google invested in early 2023. Amazon followed that September with $4 billion in commitments. On Thursday, Google said it will supply up to 1 million AI chips to Anthropic.

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