What Leaked Court Documents Revealed About Amazon and Microsoft's Cloud Battle
Is the strength of $Microsoft(MSFT.US$ 's Azure cloud business overrated? If so, that could be $Amazon(AMZN.US$ 's gain.![]()
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U.S. antitrust regulators may have just tattled on technology giant Microsoft. A recent filing briefly exposed Microsoft's revenue for its cloud platform Azure, a figure the company doesn't publicly disclose to investors.
The documents have since been removed, but the numbers are out, which gives investors a chance to accurately compare Azure to rival Amazon's AWS.
This new revelation could support Amazon's prospects as a long-term investment. The global cloud computing industry is growing, and things could look better for Amazon than most previously thought. Here is what you need to know.
U.S. antitrust regulators may have just tattled on technology giant Microsoft. A recent filing briefly exposed Microsoft's revenue for its cloud platform Azure, a figure the company doesn't publicly disclose to investors.
The documents have since been removed, but the numbers are out, which gives investors a chance to accurately compare Azure to rival Amazon's AWS.
This new revelation could support Amazon's prospects as a long-term investment. The global cloud computing industry is growing, and things could look better for Amazon than most previously thought. Here is what you need to know.
Amazon is the undisputed cloud leader
Microsoft doesn't typically disclose its Azure revenue or profits, instead lumping it in with its Intelligent Cloud segment. This differs from its major cloud competitors Amazon and Alphabet, which both itemize it on their financials. Whatever the reason, I've always believed that people only hide the things they're not proud of.
The leaked court documents revealed that Azure generated $34 billion in revenue for the 12 months ended June 2022. This is less than half of Amazon's $72 billion in AWS revenues over the same period. Analysts have believed Azure was a fierce competitor to AWS for a while. Estimates on Statista put Azure behind AWS in market share (32% to 23%).
Microsoft doesn't typically disclose its Azure revenue or profits, instead lumping it in with its Intelligent Cloud segment. This differs from its major cloud competitors Amazon and Alphabet, which both itemize it on their financials. Whatever the reason, I've always believed that people only hide the things they're not proud of.
The leaked court documents revealed that Azure generated $34 billion in revenue for the 12 months ended June 2022. This is less than half of Amazon's $72 billion in AWS revenues over the same period. Analysts have believed Azure was a fierce competitor to AWS for a while. Estimates on Statista put Azure behind AWS in market share (32% to 23%).
What's important is that analysts may have overestimated Azure's competitiveness with AWS. The revenue gap would indicate that Azure's true market share isn't 9 percentage points behind Amazon -- it could be more.
This is more about Amazon than Microsoft
While Microsoft might be upset that this got leaked, from an investing standpoint, this is more about Amazon than Microsoft. Amazon's AWS growth has slowed in recent quarters as companies work to cut costs in preparation for a possible recession. It can be good to read between corporate speak, and some may have feared that AWS was being out-competed by rivals.
However, Microsoft's real Azure revenue paints the picture that it's the other businesses in Microsoft's Intelligent Cloud business driving the segment's growth. For Amazon, its high cloud market share is important for two reasons. First, it gives some weight to management's comments about end customers reducing their spending.
Second, cloud computing is a growing industry. According to Grand View Research, the global cloud computing market could grow by more than 14% annually to become a $1.5 trillion industry by 2030. As a dominant cloud platform, Amazon is more likely to capture much of that growth directly. In other words, Amazon's golden goose, its profit-driving AWS business, should grow quite well over the coming years.
While Microsoft might be upset that this got leaked, from an investing standpoint, this is more about Amazon than Microsoft. Amazon's AWS growth has slowed in recent quarters as companies work to cut costs in preparation for a possible recession. It can be good to read between corporate speak, and some may have feared that AWS was being out-competed by rivals.
However, Microsoft's real Azure revenue paints the picture that it's the other businesses in Microsoft's Intelligent Cloud business driving the segment's growth. For Amazon, its high cloud market share is important for two reasons. First, it gives some weight to management's comments about end customers reducing their spending.
Second, cloud computing is a growing industry. According to Grand View Research, the global cloud computing market could grow by more than 14% annually to become a $1.5 trillion industry by 2030. As a dominant cloud platform, Amazon is more likely to capture much of that growth directly. In other words, Amazon's golden goose, its profit-driving AWS business, should grow quite well over the coming years.
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