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a-cloud-prfaq

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A PR/FAQ document to support Amazon's decision on whether to spin out AWS as a separate company

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# AWS Becomes "A-Cloud", an Independent Entity

### A-Cloud is positioned to address the whole multi-trillion dollar IT marketplace

### Goldman Sachs to lead A-Cloud IPO - launch customers include Walmart and Apple

**[Important: This document is not an Amazon production. It describes a hypothetical
process that could take place, but the author is not an Amazon employee and has no information to suggest that any such process is
in fact taking place.]**

SEATTLE--(Business Wire)--December 1, 2020-- Today, at AWS re:Invent, 
Jeff Bezos and Andy Jassy jointly announced A-Cloud, a new Delaware 
corporation which will assume ownership of Amazon Web Services'
assets and become the employer of existing AWS employees.  This 
will make A-Cloud's services more attractive to customers who
compete with Amazon in one or more market segments, and free
Amazon.com to build custom IT infrastructure where A-Cloud
services don't fully meet its needs. To get started with A-Cloud,
visit [A.Cloud](https://a.cloud).

AWS has become the leading public-cloud provider, offering the widest 
range of services backed by the strongest security, availability,
and data-protection infrastructure.  Now, organizations who compete
with Amazon want to take advantage of AWS's industry-leading 
offerings without having to worry that they are strengthening 
a competitor.

From the AWS-customer point of view, the experience will be seamless.
All existing AWS services will continue to operate exactly as before wth no 
changes of any kind required in any customer application.

"AWS is one of the Amazon.com creations of which I'm most
proud", said Jeff Bezos. "Its success at improving IT cost,
security, and performance of large and small organizations across
the business, government, education, and nonprofit sectors 
constitutes a major contribution to the way everyone uses technology.
Now it's time for it to spread its wings and address the whole
IT market, end to end and top to bottom."

Andy Jassy, CEO of A-Cloud, said "We owe everything to Jeff's
leadership team, and everyone at A-Cloud joins me in a hearty 
thank-you. Now it's time for our team to work even 
harder at understanding and meeting customer needs across 
the IT horizon."

Following on A-Cloud's IPO, to be managed by Goldman Sachs, A-Cloud 
will acquire all current AWS assets from Amazon.com
for a one-time payment of $100 billion. Also, Amazon.com will receive a 
20% equity stake in A-Cloud. Jeff Bezos has agreed to join the 
A-Cloud Board of Directors, but will not seek nor accept the Chairmanship.

A-Cloud will continue the rapid pace of innovation for which AWS
has been acclaimed, without ever losing focus on delivering
the best security and uptime available from any vendor. A-Cloud
looks forward to serving Amazon.com as a customer, but understands
that Amazon may choose to operate some of its own data 
infrastructure to meet specific needs or location requirements
that would not be well-served by A-Cloud.

"Walmart.com is the world's largest retailer
and has developed an outstanding online-shopping experience" said Doug McMillon, Walmart CEO. "We don't
see online infrastructure as a core competence, and have 
agreed in principle to transfer our applications to run on 
A-Cloud infrastructure. We expect the cost savings to be massive,
without any loss of responsiveness or security."

"Apple iCloud has become an essential part of the customer experience
on iPhone, iPad, and Mac" said Tim Cook, Apple CEO. "We look forward
to relying on A-Cloud services to strengthen iCloud without
any concerns about it competing with Apple in any of our
business segments."

"AWS has served Amazon.com retail superbly for fifteen 
years now" said Jeff Wilke, CEO:Worldwide Consumer at 
Amazon.com. "We're confident that A-Cloud will continue 
to support our retail operations with the reliability,
security, and attention to detail that we've come to 
rely on.  There are a few select areas and geographies
where we plan to build some very Amazon-retail-specific
infrastructure, but for general-pupose public-cloud 
services, we're all-in on A-Cloud".

## External Frequently Asked Questions

**1. What are you launching?**

We are launching A-Cloud, a new corporate entity of which
Amazon.com will be a shareholder but over which it will not exercise 
equity or management control. A-Cloud will assume all the 
assets, operations, and employees of Amazon Web Services.

**2. Why is this good for AWS customers?**

AWS has been scrupulous in declaring and ensuring that
customers own their own data and that it is not accessed
by anyone unauthorized, including any AWS employees.  However, 
some organizations are strategically reluctant to
commit business-critical software and data to infrastructure
owned and operated by an organization whose parent
corporation may be one of their competitors.

With the arrival of A-Cloud, this strategic concern 
vanishes.  Customers can choose between A-Cloud and one
of its public-cloud competitors strictly on the basis 
of the range, quality, and pricing of the services on
offer.

**3. Why is this good for Amazon.com?**

As a matter of policy, Amazon.com services are strongly
encouraged to use AWS services, as opposed to 
purpose-built Amazon retail technologies. The cost 
attributed to Amazon.com groups for use of AWS is an 
internal transfer price, and there is room for debate as 
to its fairness both to Amazon.com and to AWS.

Obviously, since Amazon.com will be a large customer
of A-Cloud, it will not be paying list prices. But
the prices will be denominated in real money and
there will be no suspicion that either party is 
accepting an unreasonable deal.

Additionally, there may be certain Amazon.com services
that, for locational or technical reasons, are 
difficult to port to AWS. With the launch of A-Cloud,
Amazon.com gains the option of building and running
its own infrastructure where appropriate, or even 
choosing in some cases to use a competitive public 
cloud provider.

**4. Will AWS pricing change?**

AWS has a track record of regular price cuts. There is
no reason to expect that this will change.

**5. How do I switch from AWS to A-Cloud technology?**

You don't have to do anything.  All the existing 
APIs and endpoints and services will work exactly
as before.
All AWS accounts and billing will work as before.

**6. Why the corporate transaction structure, with the large payment and 20% equity stake?**

Amazon.com has invested hugely in the creation and
growth of AWS.  It is now enjoying a substantial profit
stream which it has fairly earned, and the subtraction
of which might cause financial stress as Amazon.com
continues its focus on customer-obsessed growth.

This transaction gives Amazon.com a large financial
reward, equivalent to several years of AWS profit,
plus a potential long-term reward from
its equity stake in A-Cloud.

Simultaneously, the IPO gives the investing community
a chance to partipate in A-Cloud's demonstrated ability
to grow quickly while operating at a substantial 
positive margin.

## Internal Frequently Asked Questions

**7. Why are we doing this?**

The connection with Amazon is an increasingly important factor limiting the 
growth of AWS. As a matter of strategy, Amazon continues expanding into multiple markets 
and, whether or not customers *should* worry about their cloud provider being associated
with a competitor, they *do*.  We estimate (see Appendix C) that spinning 
out A-Cloud will increase its projected 2025 revenue from $75B to $110B.

Second, the requirement to use AWS for every purpose in every geography may not always
serve Amazon retail optimally.

Third, all of the large US technology companies are coming under increasing antitrust
scrutiny, and Amazon is no exception.  The use of AWS profits to subsidize Amazon's
drive for growth in many loosely-related sectors of the economy can only aggravate
those concerns.  The independence of A-Cloud will remove one of the key irritants 
in this space.

**8. What will most please customers about the launch of A-Cloud?**

The vast majority of IT people have come to understand the advantages of moving their
app deployments from their own infrastructure to the public cloud, including 
increased agility, world-class security, and reduced costs. Now, when they approach
leadership with the idea of moving to the cloud, they will no longer have to deal with 
fear that they might be empowering a competitor.

**9. What do we want customers to say about A-Cloud?**

"I may not love everything about my AWS bill, but now I'm not worrying about some of
it going to help Amazon compete against me in my own market."

**10. What will customers most dislike about the launch of A-Cloud?**

IT leaders who have serious concern about losing control of their own infrastructure 
will no longer be able to resist moving to the cloud by arguing that this will 
lead to them depending on a competitor.

**11. How do we know that this is what customers want?**

Customers, in executive-to-executive conversations, have been clear that they have
strong concerns about making strategic commitments to a service provided by a competitor.
Walmart has been particularly vocal and has pressured its business partners to avoid
using AWS.

**12. Might Amazon.com use services on Azure or Google Cloud?**

After the launch of A-Cloud, Amazon.com will be perfectly free to make whatever technology
arrangements suits it best. This would be a little bit surprising since Amazon has 
developed a large amount of expertise in using AWS effectively, and retains an 
equity stake in A-Cloud.

However, one can imagine applications which don't need much more than a virtual 
Linux instance, in cases where Azure or Google Cloud has a region in closer geographic proximity 
to a large retail site than any A-Cloud region; in this case, using an alternative service might be a great
choice.

a-cloud-prfaq

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