Amazon as global marketplace for AI
Will customers, company stakeholders and competitors make it so?
Three years ago, I told my Amazon peers and manager that going big on the Metaverse was a bad idea: not only was the real thing more than 2 decades away, Amazon had no competitive advantage in bringing it about. I was overruled.
AI is a completely different ballgame:
Amazon had plenty of effective and efficient uses of AI before ChatGPT was released onto this world. Moreover, Amazon has had extensive experience in online marketplaces, to the extent that the FTC calls them a monopoly.
So you’ll understand my enthusiasm with the news this week:
Instead of focusing on 1 LLM, AWS wants to offer a buffet of choices, becoming the global marketplace for AI. We have seen the success of this buffet of choices at the DMSB AI Strategic Hub (DASH) at our business school in Northeastern University:
But will Amazon succeed in becoming the AI Hub for its target audience?
I like to look through the lens of the 3Cs: Customers, Company, Competitors.
Customers: Who Would Choose Amazon, and Why?
Starting with the most important C and empty chair in Amazon meetings:
Who will prefer Amazon's AI approach:
Technology-agnostic enterprises: Organizations that want flexibility in their AI strategy rather than commitment to a single model or provider
Businesses with fluctuating AI needs: Companies requiring different AI capabilities for different use cases (e.g., different language models for customer service versus content generation)
Risk-averse adopters: Organizations concerned about putting all their AI eggs in one basket, preferring Amazon's "buffet of choices" approach
Mid-sized companies: Businesses without the resources to evaluate and integrate multiple AI vendors independently
Why they prefer Amazon:
Model-agnostic approach: AWS Bedrock provides access to multiple leading LLMs, allowing businesses to select the right tool for each job
Simplified procurement: One vendor relationship with access to many AI solutions reduces contractual and integration complexity
Hardware optimization flexibility: Customers can select underlying hardware, including AWS's own chips, to balance price and performance
Reduced vendor lock-in risk: The ability to switch between AI models as technology evolves reduces dependency on any single AI provider's roadmap
Company: is Amazon internally set up for success?
From my 5 years as Principal Research Scientist at Amazon, I know the company has:
Organizational advantages:
Marketplace experience: Amazon has so much experience building and scaling B2C and B2B global marketplaces that it can ‘run faster than the competition’
AI integration: we all know Amazon leveraged AI for its core operations (recommendations, demand forecasting, logistics) long before genAI became mainstream with the launch of ChatGPT. Integration is key for value.
Cloud infrastructure: AWS provides the necessary compute infrastructure that powers most AI models, giving Amazon visibility into usage patterns and needs
Democratizing AI for Enterprises: AWS's existing relationships with enterprise customers create a natural channel for AI marketplace offerings
People advantages:
The people I had the pleasure of calling my colleagues, are agile, discerning, hard-working, smart, and realistic. Well, with the exception of the guy who insisted on Thinking Big on the Metaverse in 2022. But he no longer works there.
Strategic advantages:
Bedrock platform: Reportedly AWS's fastest-growing service, providing a foundation for accessing multiple LLMs
Strategic investments: Amazon is backing key AI players like Anthropic, the maker of Claude, which currently is my favorite LLM.
Comprehensive AI services suite: Beyond Bedrock, AWS offers numerous AI and machine learning services: SageMaker, Rekognition, Textract, Polly, you name it!
"Move to AI" modernization pathway: Amazon offers a systematic approach to help organizations identify and implement high-impact AI opportunities
Competitors: Does Amazon Outperform Rivals in AI?
Here we have a mixed bag of advantages and disadvantages as compared to Microsoft, Google, and IBM. Above is how Claude organized and visualized these according to AI Research Innovation Leadership and Enterprise Market Reach and Integration. While Amazon outperforms competitors on the latter, Google is a research pioneer, and Microsoft currently combines both dimensions in a ‘good enough’ score on each.
Amazon Advantages over competitors:
Neutrality position: Unlike Google, Microsoft, and IBM who prioritize their own AI models, Amazon positions itself as a neutral marketplace
Infrastructure scale: AWS's global infrastructure provides reliable, low-latency access to AI services worldwide
Enterprise cloud: Existing AWS customers can easily add AI services to their cloud portfolio without new vendor relationships
Deep data on consumer journeys, AWS usage, and Alexa requests
Internal AI use cases: Amazon can showcase its own AI success stories across e-commerce, logistics, and advertising, such as AI-generated video I showed greatly benefits advertisers in the short and the long run
Key competitor weaknesses:
Google: Less focus on enterprise AI and facing data privacy concerns that could hinder AI service expansion
Microsoft: Complex ecosystem that can be difficult to navigate, with slower innovation in consumer AI
IBM: seen as outdated in AI, with a narrower focus on large enterprises that limits scalability
Competitor Advantages over Amazon:
Sure, Amazon has excellent deep data on consumer journeys, AWS usage, and Alexa requests, and a global reach.
But competitors are further ahead in natural language processing (Google’s BERT and Microsoft’s Azure). Here are a 2 other competitor advantages:
Google
Pioneer in AI Research: Google is a leader in AI research, particularly in areas like natural language processing (NLP) and deep learning. Tools like Google Cloud AI, TensorFlow, and BERT (for NLP) are industry standards. Google’s Google Brain and DeepMind are at the forefront of AI research.
AI and Data Integration: while Amazon has deep data of consumers browsing and buying products, Google has access to search, entertainment and utility services (e.g. YouTube, Google Maps). Moreover, Googlehas integrated AI across its ecosystem for better AI-powered services.
Microsoft
Azure Cloud and AI Integration: Microsoft’s Azure cloud platform is a major competitor to AWS, and it’s been aggressively expanding into AI. Microsoft has strong ties with enterprises and offers robust AI tools through Azure Machine Learning and Cognitive Services.
Partnerships with OpenAI: Microsoft’s strategic partnership with OpenAI (creator of GPT-3, ChatGPT, etc.) strengthens its AI offerings significantly. This partnership gives Microsoft access to some of the world’s most advanced language models and tools.
IBM
Enterprise AI Expertise: IBM has long been a leader in enterprise AI solutions, particularly with Watson. However, we were disappointed when we tried Watson 6 years ago to answer marketing questions at the AMA, and i have not tried it yet since. Watson offers AI-driven analytics, automation, and decision-making tools for businesses. Its focus on AI ethics and explainability could be a differentiator.
Industry-Specific AI Solutions: IBM has a strong presence in industries like healthcare, finance, and manufacturing, providing specialized AI solutions for businesses in these sectors.
What are your experiences with these competitors?
Conclusion, unless you have a better one:
Amazon is in a strong position to become a global marketplace for AI, thanks to its strength in cloud services (AWS), vast consumer data, and extensive infrastructure. However, competition from Google, Microsoft, and IBM is fierce, with each competitor excelling in different areas of AI—whether that’s AI research, enterprise AI, or consumer AI applications.
Ultimately, Amazon's success in this space will depend on:
Balancing enterprise and consumer needs in AI, as it has in e-commerce;
Innovating AI products to stay ahead of competitive and regulatory challenges;
Building trust for ethical AI and user privacy in voice and facial recognition.
The bottom line:
Yes, I predict Amazon will become a global marketplace for AI because Amazon's AWS, e-commerce ecosystem, and AI tools make it a serious contender. Key will be keeping and hiring the right people (Company) to serve the right Customers in the right way and win them in the face of stiff Competition.