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Is Amazon.com, Inc. (NASDAQ:AMZN) Losing to Google in Cloud?

Amazon.com AWS (AMZN)

Amazon.com, Inc.  has a big reason to worry: Alphabet Inc.’s Google has been successfully raiding its Amazon Web Services (AWS) vault and escaping with its clients. And if left unchecked, this trend is set to continue. Google has reached an agreement with Apple Inc. to host part of the latter’s iCloud infrastructure on its Google Cloud platform.

Amazon.com AWS (AMZN)

While the terms of the deal aren’t yet clear, Apple is rumored to have agreed between $400 million to $600 million in fees, though it isn’t clear whether the fee will be paid annually or is for the whole duration of the contract.

The deal was agreed to in the last months of 2015, meaning Apple has already started cutting down its dependence on AWS.

Google Also Recently Poached Spotify from Amazon

Only recently, Google managed to poach away Spotify AB, a music streaming service, away from Amazon. Analysts have attributed Google’s innovative data-analytics technology, dubbed BigQuery, as the key factor that shifted the odds in Google’s favor. The system has the capacity help Spotify finetune its user listening recommendations.

It is also interesting to analyze why Apple shunned Amazon in favor of Google, a company it spars in courtrooms with, though indirectly.

While neither of the two firms has sued the other directly, Apple has kept itself busy with fighting lawsuits against Android handset manufacturers in the recent past, with Korean smartphone manufacturer Samsung Corporation being the most prolific one.

Moreover, Apple’s decision to part ways with Amazon Web Services is a puzzle. The reason could be Google Cloud’s superior data analytics capabilities, but it could also be something else.

Morgan Stanley recently hinted last month that Apple is planning to build its own three data centers to cut reliance on its tech rivals. This move makes sense if Apple doesn’t want to share its trade secrets with its rivals, or be arm-twisted into negotiating bad deals in future.

The investment bank also revealed that Apple had spent about $1 billion on Amazon’s cloud platform. Maybe Apple had negotiated hard with Google to obtain a discount and thus benefit from cost savings, given it is also reliant on  Microsoft Corporation’s  Azure cloud platform.

Victory for Diane Greene

Apple’s decision to deal with Google Cloud is a major victory for Diane Greene, the co-founder and former CEO of VMware, Inc. .Google hired Ms. Greene in November to spearhead its cloud business, which was lagging behind market leaders Amazon and Microsoft.

Apple joins a group of several high-profile Google clients that have been attracted by its advanced cloud-hosted data-analytics offerings. Such customers include Snapchat, The Coca-Cola Co , Sony Corporation and Northrop Grumman Corporation .

Northrop Grumman, in conjunction with Google, are currently researching a prototype software which will be deployed in medical research to map out genomics data. Verizon Communications and Google are also exploring the possibility of partnering in hybrid cloud.

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