Amazon Signs Up To Be a Billion-Dollar Microsoft 365 Customer: Report

In an unlikely pairing, Amazon has allegedly inked an agreement with Microsoft to buy over 1 million seats of the cloud-based productivity suite.

Amazon has agreed to a $1 billion deal with Microsoft to use the latter's Microsoft 365 productivity suite as early as next month, according to an Insider report Tuesday.

The report, which cites an unnamed source "familiar with the situation" and an unpublished internal memo reviewed by Insider, said the deal is for over 1 million seats of Microsoft 365, for which Amazon has agreed to pay its closest cloud rival $1 billion over five years. 

While Amazon, through its Amazon Web Services arm, makes its own productivity and collaboration products (namely AWS WorkDocs and WorkMail), it apparently has been using on-premises Microsoft Office products internally. 

According to the report, Amazon's migration to the cloud-based Microsoft 365 would begin in November -- perhaps to coincide with the Nov. 1 release of the AI-powered Microsoft 365 Copilot product -- and continue through 2024. The move would affect both frontline Amazon workers, as well as corporate employees.     

For Microsoft's part, the company is bracing its "Office and security organizations" for the massive resource impact of having Amazon as a customer, per Insider

As of this writing, neither Microsoft nor Amazon has confirmed the report. If it does bear out, it would defy the companies' history of fierce, and sometimes bitter, rivalry. 

The public cloud is a two-horse race between Amazon and Microsoft, and the two have directly competed on services, price, size and, lately, growth (Amazon is the perpetual cloud market share leader, but its growth has been slowing in recent quarters while Microsoft's has been booming.

From 2019 through 2021, the two companies were involved in a protracted, high-profile bidding war for a multibillion-dollar cloud contract with the U.S. Department of Defense. That conflict reached a rather unclimactic conclusion in 2022 when, after multiple fits and starts, the DoD ended up splitting the contract between Microsoft, Amazon, Google and Oracle.   

About the Author

Gladys Rama (@GladysRama3) is the editorial director of Converge360.


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