Amazon Spins Up New Cloud Division for Europe

Amazon said Wednesday that its Amazon Web Services cloud division is launching a “European Sovereign Cloud.”

(Photo by Web Summit under CC BY 2.0)

Sign up for smart news, insights, and analysis on the biggest financial stories of the day.

They say the clouds in Europe are different anyway.

Amazon said Wednesday that its AWS cloud division is launching a “European Sovereign Cloud.” That means that AWS’ Europe business is breaking away from the core business, though not enough to be a bona fide spinout. It’s a move aimed at soothing increasingly irate European regulators, and possibly scooping up government contracts along the way.

Get Off of My Cloud

Amazon said that its European cloud will be well-suited for “customers in highly regulated industries and the public sector.” It added that all metadata generated by those customers would stay within Europe’s borders, and the only employees allowed to access customer data would also be based in the continent. These promises ever-so-slightly echo TikTok’s assurances to the US that its data is kept far enough away from its Chinese parent company ByteDance to be inaccessible from China, but they’re designed to soothe pesky EU lawmakers looking to enforce data “sovereignty” within the region.

AWS is a vital part of Amazon’s corporate makeup — not to mention its bottom line. While the company is famous for same-day delivery, AWS is its most profitable division. Amazon is also the dominant market player in cloud services, commanding about a third of global market share. The runners-up are fellow pipsqueaks Microsoft’s Azure and Google, although it’s possible the market could soon consolidate yet further:

  • Google’s disappointing earnings performance late Tuesday in its cloud division — which only just became profitable in Q1 of this year — led to an 8% dip in shares. Wedbush analyst Dan Ives said the reaction from investors was a tad overblown, as cloud services only account for roughly 11% of Google’s revenue.
  • Microsoft, however, beat expectations on growth for Azure, posting 29% growth as opposed to the forecast 26%. The jump was attributed to Microsoft’s investment in ChatGPT maker OpenAI, whose tech is infused into multiple cloud products.

Because Why Not: All three of the major cloud providers want skin in the generative AI game, and Amazon announced Wednesday it’s launching an AI-image generator tool for advertisers. The tool would allow advertisers to spin up, say, a background against which to set their product. Who had that on their AI-hype bingo card?