“We rely upon Amazon for AWS web hosting and we do not currently have an alternative provider. If Amazon decided to compete with us and did not allow us to renew our commercial agreement, this may have a significant impact.”

-Samsara, Inc., the latest public company to disclose the competitive threat from reliance on AWS¹

Introduction

Amazon Web Services (AWS) faces a gathering storm: U.S. companies increasingly are disclosing in securities filings that their use of AWS presents a material risk to their shareholders.  Baron’s research reveals that a steadily rising number of AWS customers have volunteered in 10-K filings with the Securities and Exchange Commission (SEC) that reliance on AWS might be used against them by Amazon.  Although those corporations have not specified that Amazon either will utilize their data or leverage systems engineering know-how gained from their accounts, their statements evoke Amazon’s alleged abuse of seller data on its e-commerce Marketplace to develop and promote its own first-party offerings.  If the current disclosure trend continues, then competitors to Amazon ultimately will be compelled to select other cloud providers to avoid legal liability.  As a result, the plaintiffs’ bar, securities regulators, and directors and officers (D&O) insurers disproportionately could determine the future of the cloud market.

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