Amazon’s pioneering cloud business gave the company an early lead in an emerging and lucrative industry but competition is heating up between Amazon Web Services and newer entrants, like Microsoft and Google, particularly when it comes to talent.
The latest example of that conflict: Amazon is suing a former AWS executive in King County Superior Court in Seattle for taking a job with Google Cloud in alleged violation of a non-compete agreement.
Seattle has become the battleground in the cloud wars as Amazon’s longtime home, with Microsoft just across Lake Washington in Redmond. Google Cloud is moving into a massive campus down the street from Amazon and the two rivals are not off to a very neighborly start. That’s because competition for cloud workers is fierce and the two companies are now wading in the same shallow talent pool.
The executive in Amazon’s crosshairs is Philip Moyer, a Pennsylvania-based former AWS sales executive whose past experience includes several CEO roles and a long stint as a manager for Microsoft. Moyer was the chief executive for software-as-a-service companies Edgar Online and Cassiopae, according to his LinkedIn. In 2017, Amazon hired Moyer as a sales executive for AWS focusing on the financial services industry. By the time he resigned in 2019, he had 13 direct reports and managed 100 employees, according to the complaint.
When Moyer accepted the job with Amazon, he signed a non-competition agreement, a contract in which an employee agrees not to work for a competitor for a period of time to avoid sharing confidential trade secrets.
“Moyer’s role in Google cloud will necessarily involve strategy regarding sales of and improvements for Google’s current or future cloud offerings, and will therefore threaten the disclosure of Amazon’s highly confidential information and breach the Noncompetition Agreement,” the complaint says.
Non-competes are a lightning rod in the tech industry, with critics claiming they stifle innovation and give an unfair advantage to big corporations. Non-compete skeptics raised that concern earlier this year when Washington state enacted a law that sets minimum salary thresholds to enforce non-compete agreements. Though the law has not yet taken effect, non-competes can still be difficult to enforce.
But in Moyer’s case, Amazon is going to try.
Amazon is seeking an injunction to prevent Moyer from taking the job with Google Cloud for 18 months from his last day at AWS, May 22. Amazon is also asking the court to prohibit Moyer from selling to current or prospective AWS cloud customers during that period.
“Moyer cannot be successful in selling Google cloud without developing methods to compete with Amazon cloud,” Amazon said in the complaint.
According to the complaint, the position Moyer accepted with Google involves selling cloud services to the healthcare industry. Amazon claims that because both healthcare and financial services — Moyer’s focus at AWS — are highly-regulated industries, selling to them will require the same tactics.
“Because of the high level of regulation, companies in the financial services and healthcare industries share many inhibitors to cloud adoption and the same needs for privacy, security, and the ability to react quickly to a customer’s needs to ensure resiliency and stability such that the customer meets all regulatory requirements for handling customer confidential information,” the complaint says.
Amazon says that it will suffer “economic damages in an amount to be proven at trial” if the court doesn’t prohibit Moyer from taking the gig.
Google declined to comment on the lawsuit and Amazon has yet to respond to GeekWire’s request at the time of publication.
This isn’t the first time Amazon has gone after a former employee for allegedly violating a non-compete agreement. Amazon sued former AWS VP Gene Farrell in 2017 for taking a job with Smartsheet, the maker of work collaboration software. The case rankled the startup community. Critics claimed Amazon was bullying a smaller company that it did not directly compete with. Amazon and Farrell eventually settled the suit after a judge temporarily enjoined Farrell from taking the job with Smartsheet.
In Moyer’s case, Amazon is concerned about trade secrets ending up in the hands of a direct competitor. AWS still dominates cloud services, capturing 33 percent of the market according to a 2018 CB Insights report using data from Synergy Research Group. Microsoft Azure has 13 percent market share, trailed by Google Cloud Platform, which has 6 percent. But AWS competitors are “increasing market share by playing to their strengths,” CB Insights researchers say. They expect the cloud computing industry to reach $513 billion by 2022.
Earlier this year, Washington state enacted legislation that makes it more difficult to enforce non-compete agreements. The law requires employees to earn more than $100,000 per year for a non-compete to apply and the agreement can’t extend longer than 18 months. Amazon lobbied to have the salary threshold lowered.
The law does not take effect until after 2020 but even if it were in place now, the Moyer case would probably not be affected. Moyer almost certainly meets the salary threshold and Amazon is not seeking an injunction longer than 18 months.
Non-compete agreements have long been considered unenforceable in California, where some of the world’s biggest tech companies were born. Some California companies have found a work-around in the form of non-poaching agreements, however.
Former employees and recruiters told GeekWire that Amazon’s enforcement strategy for non-compete agreements can appear arbitrary. AWS CEO Andy Jassy allegedly told Farrell in a meeting that he makes decisions about non-compete agreements on a “case-by-case basis,” according to court filings in that case. But Amazon’s history shows the company is particularly sensitive to competitive concerns when it comes to cloud talent.
In 2014, the company sued a former AWS strategic partnerships manager, Zoltan Szabadi, after he took a job at Google Cloud Platform. In 2012, it also sued former Amazon Web Services vice president, Daniel Powers, who joined Google as the search giant’s director of cloud platform sales. That case was transferred to federal court in Seattle, where a judge declined to enforce the most sweeping provisions of Amazon’s non-compete agreement.
In Moyer’s case, Amazon says that he has intimate knowledge of AWS’s competitive strategies through the end of 2020.
“In short, Moyer knows — and participated in formulating much of — the roadmap and competitive strategies for AWS cloud through the end of 2020, and he was instrumental in selling that vision to some of Amazon’s most important prospects and customers,” the complaint says. “Amazon’s confidential information and trade secrets are the results of significant and long-term investments of money and resources, and Amazon takes extensive steps to keep them confidential.”
Thanks to Venkat Balasubramani for alerting us to the case.