• by Laurie Sullivan , October 17, 2023

Microsoft is preparing to add Amazon as a major client, in addition to it being a customer of Microsoft Office products.

The deal would shift Amazon from local services to cloud-based tools for corporate employees and frontline workers, starting next month when Microsoft is expected to release its newest version of 365 with artificial intelligence (AI) capabilities.

The internal document seen by Insider shows Microsoft is in the midst of increasing internal services to support the large 365 cloud deal with Amazon, which has purchased more than 1 million licenses. The document shows that Amazon has committed $1 billion to the deal over five years.

Amazon today uses a local, on-premise version of Microsoft's Office products, but the plan is for the company to move to Microsoft's 365 suite of cloud-based productivity tools. 

Microsoft 365 Copilot is scheduled for release in general available for enterprise customers on November 1, along with Microsoft 365 Chat, a new AI assistant.

The deal revealed two weeks after the launch of a new investigation by the European Union into public cloud providers in the UK. Amazon and Microsoft are both involved. The investigation was spurred by UK telecoms regulator Ofcom, which “identified a number of features in the supply of cloud services that make it more difficult for customers to switch and use multiple cloud suppliers.”

Ofcom found issues with charges that cloud customers have to pay to move their data out of the cloud, discounts to only use one cloud provider, and technical barriers to switching between cloud providers.

The Competition and Markets Authority (CMA) has appointed an independent panel to an inquiry group, who will act as the decision makers on this investigation. The CMA will conclude its investigation by April 2025.