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Report: FTC expands scope of Amazon antitrust probe to include AWS

Amazon has been offered an early Christmas present from the Federal Trade Commission (FTC) by extending an existing antitrust probe to include its burgeoning cloud business.

According to Bloomberg, FTC investigators have begun questioning customers about AWS, allegedly focusing on whether the dominance of AWS is impacting competition in the cloud segments. While this probe does not necessarily mean any action against the company, Amazon executives will not be thrilled at the attention.

As it stands, AWS is the clear market leader in the cloud computing market, largely thanks to being first to market with services but also due to the significant infrastructure footprint it has developed over recent decades. Although estimates vary, AWS has been deemed the market leader, with just below 50% market share, with Google and Microsoft the other players with significant market share.

It is believed the probe is looking at how potential competitors interact with AWS customers and the company itself. One area the probe will address is whether AWS is effectively punishing software companies who work with its cloud rivals and incentivising others to work with AWS exclusively.

This investigation is part of a larger, sweeping trend with greater scrutiny being placed on Big Tech. Amazon’s retail business is at the heart of an existing FTC antitrust probe, while Google, Apple and Facebook are also facing their own competition investigations from a variety of authorities. Some might presume these enquiries are being made as the first steps towards diluting the influence of Big Tech, and in some cases, breaking-up the internet giants.

Although significantly younger than the retail business units of Amazon, AWS has been collecting the lion’s share of profits for the firm in recent years. Amazon was famously known as the technology giant which never generated profits, though that changed in recent years, partly thanks to the rise of AWS.

Looking at the most recent quarterly earnings report, total revenues for Amazon increased to $70 billion for the three months ending September 30, with operating income at $3.1 billion. AWS accounted for $2.2 billion of this operating income on net sales of $8.9 billion for the quarter. Across the year to date, AWS accounts for 61% of the total operating income of Amazon.

Antitrust probes are of course nothing new to Amazon, though a few executives and investors might get a bit twitchy that it is the profit machine which is facing enquiries now.

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