A report claims that Amazon is penning a $1 billion deal with Microsoft, which will grant it a million Microsoft 365 licenses for its employees.
Key Takeaways
- Amazon and Microsoft are expected to announce a major $1 billion cloud deal, with Amazon committing to pay Microsoft over five years for Microsoft 365 licenses.
- This deal will see Amazon transition from on-premises Office 365 installations to cloud-based productivity tools.
- The transition is expected to start in November and continue into early 2024, with Microsoft scaling its resources to meet the increased demand.
Amazon and Microsoft have collaborated on various initiatives in the past. Amazon has an Alexa app published in the Microsoft Store, and conversely, Microsoft has also released some of its apps on the other’s ecosystem. Most notably, the two also partnered to officially support Android apps in Windows 11 back in 2021. Now, a report claims that the two firms are striking a major $1 billion cloud deal.
Citing internal sources and documents, Bloomberg says that Amazon has committed to pay Microsoft $1 billion over a period of five years for one million Microsoft 365 licenses. These licenses will purportedly be used by Amazon’s corporate employees and frontline workers. Currently, Amazon leverages on-premises Office 365 installations, but the deal will see it migrate its productivity tools to the cloud.
The transition to Microsoft 365 is expected to kick off this November, which is also when the Redmond tech firm will integrate its AI Copilot capabilities in its Office applications. However, the process will continue into early 2024. According to the report, Microsoft is also scaling its resource allocation in the cloud and security departments in order to meet the demand generated by this deal.
In the past, Amazon had shied away from investing in the cloud versions of Office applications because it didn’t want to store its own data on a competitor’s cloud. It’s unclear what has changed to encourage Amazon to now move to Microsoft 365.
The deal serves as a major win for Microsoft and one that could pave the way for future partnerships across other domains too. The positive sentiment generated by the transaction was reflected in the stock market where Microsoft’s share price increased by 1% in after-hours trading. That said, it is important to note that this is still a rumor for now, until Microsoft officially confirms such a deal.
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