(GeekWire)— Last year’s acquisition of Whole Foods raised tensions between Amazon and the retail community to new heights, and Walmart, the retail giant of the 20th century, is now making it clear that the enemy of its enemy is its friend.
Walmart signed a “strategic partnership” agreement with Microsoft late Monday night, pledging to expand its use of the second-place cloud infrastructure player as part of “a broad set of cloud innovation projects,” it announced in a press release.
The two companies have entered into a five-year agreement that covers both Microsoft Azure and Microsoft 365, with plans to overhaul existing Walmart applications in “cloud-native” fashion with help from Microsoft engineers, they said in a press release.
Microsoft CEO Satya Nadella made no bones about the competitive aspects of this deal in an interview with the Wall Street Journal Monday night: Amazon’s tension with the retail community “is absolutely core to this,” he said.
Over the past year since the Whole Foods acquisition, retailers like Walmart, Target, and Kroger have been distancing themselves from Amazon’s lucrative cloud business, which generates the lion’s share of the company’s profit.
And newly promoted Azure chief Jason Zander told GeekWire in an interview last month that Microsoft was planning to go after retail customers with new vigor in the coming year, hoping to exploit the unease with which traditional retailers hold Amazon.
That tension has led some to wonder — including yours truly — if Amazon Web Services might fare better as a standalone company that could compete for mega-business like Walmart’s workloads without the baggage from its corporate sibling. Such a breakup would be quite messy, and AWS CEO Andy Jassy has scoffed at the idea several times over the years, but AWS rivals could gain significant ground on the cloud leader if other retail customers follow suit.
Microsoft’s announcement rounds out what was a less-than-stellar Prime Day for the online retailing giant, which endured several glitches within its formidable e-commerce engine Monday as Prime Day festivities kicked off.