Amazon's Cloud Business Looks Vulnerable in Wake of ChatGPT

For years, Amazon Web Services' annual Las Vegas trade show functioned as an infomercial for its cloud computing platform, rarely mentioning the competition. The pitch was so successful that AWS pulls in $90 billion per year. Then generative AI emerged, with Microsoft and Google baking it into products their cloud units sell. Suddenly, AWS faced startups building businesses on rivals' AI-powered platforms. So at AWS's 2023 event, AI was ubiquitous -- in presentations, launches, partnerships. AWS announced more models powering AI services and its largest-ever tech investment, $4 billion in generative AI startup Anthropic. AWS aims to show that, despite stiffening competition, it remains the leader in cloud computing. From a report: If Amazon had been caught off guard by the dawn of the generative AI age, here was evidence of a massive, companywide effort to catch up. "This is what last place looks like," analysts with Sanford C. Bernstein quipped in a research note. In the short term, AWS is going to be fine. Slowing sales growth aside, Amazon's servers remain the default starting point for companies looking to modernize old infrastructure or do much of anything online. And though generative AI makes for an impressive demo, the technology is error-prone and expensive. For most companies, it's an experiment, not a necessity. Still, "to remain relevant," AWS needs to have a handle on generative AI, according to JB McGinnis, a principal at Deloitte who helps companies use AWS. "If they're not competing, they might lose the cloud game, too." Late in the week of the conference, Amazon invited thousands of attendees with ties to startups to the Las Vegas Raiders' stadium, which it had rented out for the occasion, plying them with drinks and AWS swag and giant versions of bar games. Before a panel discussion on artificial intelligence, Swami Sivasubramanian, the Amazon executive in charge of the company's AI services, declared 2023 the year of generative AI. Nearby, an AWS product leader walked up to the founder of a tiny startup, introduced himself, and asked what Amazon could do better. This was a humbled AWS, one that has to fight for business.

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