Microsoft is preparing to bring on Amazon as a major customer of its 365 cloud productivity tools, a megadeal that would transform bitter rivals into business partners, according to an internal document and a person familiar with the situation.
The e-commerce giant has committed more than $1 billion over five years to secure more than one million Microsoft 365 license seats, according to the document, which was reviewed by Insider. Those spots are expected to be used by both Amazon corporate employees and workers in frontline roles, the person said.
Microsoft shares rose 1% in after-hours trading, following Insider’s report.
Amazon uses a local, on-premise version of Microsoft’s Office products but plans to move to Microsoft’s 365 suite of cloud based productivity tools, the person explained. They asked not to be identified discussing internal matters.
Amazon is expected to start setting the new systems up in early November. That’s around the time when Microsoft releases a new version of its 365 suite of applications with new AI capabilities. The full move for Amazon employees is expected to happen in early 2024, the person said.
Such a huge deal requires major planning and the allocation of cloud resources. Groups within Microsoft’s Office and security organizations are starting to scale up to meet the demand, according to the person familiar.
The move would be a radical one for Amazon, and a major win for Microsoft. The two companies are bitter cross-town rivals and rarely work together or give each other business on a scale like this.
A person familiar with Amazon’s operations said the company stayed off of the cloud version of Microsoft’s 365 products because they didn’t previously want to save anything on a competitor’s cloud. Microsoft and Amazon declined to comment immediately when contacted by Insider on Tuesday.
One potential draw for Amazon is that employees would have alternatives to in-house products such as WorkDocs and Chime, which are not that popular. Amazon has tried to offer cloud-based productivity tools to other business customers, but those services have not had huge uptake generally.
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