Technology 3 min read

Amazon Web Service: The World’s Largest Landlord in Cyberspace

Image via Amazon

Image via Amazon

Amazon Web Service may be a smaller business that the retail part of the company, but it is far more profitable.

When you think of Amazon, the first thing that comes to mind is online shopping, which is understandable.

Amazon is the largest e-commerce marketplace on the planet, surpassing Walmart as the most valuable retailer in the United States by market capitalization. The company is currently in the same league as the most prominent tech companies such as Apple, Google, and Facebook.

However, this has very little to do with the retail part of the business and more to do with Amazon’s dominance in cloud computing.

Unlike the eCommerce part of the business, Amazon Web Services (AWS) is smaller. However, it is a far more profitable unit.

In 2018, Amazon Web Services not only contributed 11 percent to the company’s total revenue but AWS was also responsible for 68 percent of Amazon’s total gross profit.

Based on recent reports, the company’s cloud computing sector is so impressive that one of its biggest rivals, Apple, pays hundreds of millions of dollars yearly to use it.

How Tech Companies Depend on Amazon Web Service

 Image Credit: The Information

Apple has admitted in the past that it depends on AWS to deliver iCloud storage.

However, details of the agreement have only just surfaced this week in a CNBC article. According to the post, Apple currently pays over $30 million a month to use AWS’ cloud service.

Last year, the tech company paid approximately $350 million to Amazon. And, based on its current usage, Apple’s AWS bill could exceed $360 million at the end of 2019.

Aside from iCloud, details of the other Apple services that rely on AWS are still hazy. But since Apple is expanding its online services (to compensate for slowing hardware sales), you can bet that its dependence on Amazon cloud services will only increase.

Apple isn’t the only tech giant that pays Amazon a hefty monthly cyber rent. According to The Information, companies such as Lyft, Adobe, Snap, Capital One, Pinterest and Intuit all depend on AWS to build their services.

For example, Snap’s multi-year agreement with AWS is worth over $1.1 billion, while Pinterest has a six-year contract of $750 million.

Apple’s Data Centres

In January 2018, Apple announced its plans to invest $10 billion into building its data centers.

The reason for the project is pretty obvious; Apple wants to depend less on Amazon to deploy its cloud services. The incredible lucrativeness of the sector only made it easy to dedicate half of the budget – $5 billion – to the project in 2o19.

Apple’s data center should be up and running within the next five years. Until then, the tech giant has to live by Amazon’s rules.

Read More: Amazon Plans to Launch its Own Constellation of Internet Satellites

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Sumbo Bello

Sumbo Bello is a creative writer who enjoys creating data-driven content for news sites. In his spare time, he plays basketball and listens to Coldplay.

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