What happened
Amazon (NASDAQ: AMZN) stock was an outperformer on Thursday, rising almost 2% higher against the S&P 500 index’s 0.6% gain. This was due in no small part to a dispute between a pair of big rivals concerning a business the company is deeply committed to.
So what
Although Amazon is known chiefly as a direct-to-your-door retailer, the real powerhouse of its business is its cloud computing service. With that in mind, investors were cheered that the company isn’t mixing it up in a fight that seems to be brewing between Alphabet and Microsoft. The two tech giants are also powerful and assertive cloud service providers in their own right.
In an exclusive report published very early Thursday morning, Reuters quoted Alphabet’s Google Cloud unit vice president Amit Zavery accusing Microsoft of unfair practices in the business.
“Microsoft definitely has a very anti-competitive posture in cloud. They are leveraging a lot of their dominance in the on-premise business as well as Office 365 and Windows to tie Azure and the rest of cloud services and make it hard for customers to have a choice,” he told the news agency. Office 365 and Windows are two of Microsoft’s most durably popular software products.
Zavery added that his company has notified antitrust agencies of Microsoft’s efforts.
Now what
With the increasing popularity of cloud services, regulators in various jurisdictions are subjecting them to more scrutiny. Microsoft has faced complaints, particularly in the European Union (EU), about its conduct in the cloud business.
Microsoft hasn’t yet formally responded to the Reuters article; previously it indicated it was willing to make concessions to turn down the regulatory heat. This past May in an official blog post, the company’s president of E.U. policy Brad Smith detailed two initiatives he said Microsoft was undertaking to make the cloud segment more competitive in the region.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon.com, and Microsoft. The Motley Fool has a disclosure policy.
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