Microsoft in talks to sign on Amazon as customer in $1 bln cloud tools deal - Insider

$Microsoft (MSFT.US)$ is preparing to bring $Amazon (AMZN.US)$ as a customer for its 365 cloud productivity tools in a deal worth over $1 billion, news site Insider reported on Tuesday, citing an internal document and a person familiar with the matter.

The e-commerce giant has committed the amount for over five years and to secure more than one million Microsoft 365 license seats, according to the report.

$Amazon (AMZN.US)$ currently uses an on-prem version of M365 and will start deploying the new licenses in November. This likely makes Amazon Microsoft’s largest M365 customer.

Even with a deal this large, it doesn’t materially grow the productivity business.

Microsoft did ~$69B for their Productivity business last year. This adds .28% to that number annually. It goes to show how hard it is to scale a business the size of Microsoft’s productivity business.

The bigger benefit would be an improving relationship between the two cloud giants as more companies shift to a multi-cloud model.

It’s a win-win for both companies as Amazon presumably made the decision to cut costs and efforts of managing servers of supporting 1m+ M365 users.