Amazon (AMZN) is trading lower Thursday following multiple reports that it has lost some of Apple’s (AAPL) business for its AWS cloud service. Though the iPhone giant is not said to have fully abandoned Amazon’s platform, it has reportedly switched a sizable portion of its spending to Google (GOOG, GOOGL). Research firm Pacific Crest argues that the win is a major perception boost for Google Cloud, traditionally a laggard to Amazon and Microsoft (MSFT).
LOSS FOR AMAZON CLOUD: On March 16, CRN reported that Apple shifted some of its cloud spending to Google Cloud Platform in late 2015, according to multiple sources. The company was previously using Amazon Web Services to run parts of iCloud and other services, and while Apple has not entirely abandoned AWS, it has “significantly” cut its reliance on the platform, CRN said. The sources specified that Apple is spending $400M-$600M on Google Cloud, though it was not clear whether that number refers to annual spending, total capacity, or some other metric.
APPLE WIN ONLY TEMPORARY: The CRN report was confirmed by Re/code’s own sources later in the day. Re/code argued that the shift away from Amazon may simply be a temporary cost-cutting move, with Apple taking advantage of potentially aggressive price concessions from Google before shifting to its own infrastructure at a later date. In a statement to Re/code, an Amazon spokesperson remarked, “It’s kind of a puzzler to us because vendors who understand doing business with enterprises respect [non-disclosure agreements] with their customers and don’t imply competitive defection where it doesn’t exist.” Building on a Morgan Stanley note last month that Apple may indeed be looking to bring its $1B annual spend on AWS in house, Re/code’s source revealed that the company already has a team working on the matter. The project is known internally as “McQueen,” a codename which refers to Apple’s intent to escape its reliance on Amazon, Google, and Microsoft “sometime in the next few years.”
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