With antitrust scrutiny growing around Amazon as it continues to impact nearly every sector of the economy, one financial analyst believes it is time for Amazon Web Services to become its own company.
Mark May of Citi Research sent a note to clients Monday arguing that given the Trump administration’s criticism of Amazon and the hamfisted regulations that could emerge from that ire, the two operations should go their own ways. He estimated that a post-AWS Amazon would be worth around $400 billion while the cloud computing unit’s value would outpace its parent at $600 billion.
AWS generates the lion’s share of the operating profit for the larger corporation, which is one reason Amazon has always appeared wary of spinning off the cloud computing leader. The technical operations of both companies are also integrated to a degree that would make separating the two pretty complicated, although longtime cloud watchers believe that’s less true these days than a few years back. And AWS benefits from the immense amount of capital that Amazon is able to invest in its business, which could be harder to obtain as a standalone company competing against Microsoft and Google.
But those cloud rivals have been using Amazon’s ability to strike fear into the heart of retailers as a selling point against AWS when courting those customers. Wal-Mart has gone so far as to require its suppliers use alternative cloud providers, and has formed a partnership with Microsoft for cloud services.
Last year at AWS re:Invent AWS CEO Andy Jassy downplayed talk of a split, saying he would be “very surprised” if that ever happened. But there’s no question that antitrust experts and federal regulators are taking a closer look at the impact of Amazon’s power over the economy, and separating the two divisions would likely quiet those critics.