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Amazon’s Whole Foods Acquisition Could Hurt Microsoft

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Potential loss of Azure customer

When Amazon (AMZN) announced its acquisition of Whole Foods (WFM), it focused on the potential retail opportunity, steering clear of speaking about its cloud computing ambitions in making the move.

However, acquiring Whole Foods could be a double blessing for Amazon, in that the acquisition may be a major setback for Microsoft (MSFT). According to CNBC, Whole Foods is a major Microsoft cloud customer. Whole Food uses Microsoft’s Azure Active Directory software, which gives its ~91,000 workers easy access to cloud applications. Whole Foods is also an Office 365 subscriber.

Since Amazon and Microsoft are cloud competitors, Amazon could decide to move Whole Foods from Azure to its Amazon Web Services (or AWS) platform once it completes the acquisition. Such a move would be a blow to Microsoft in the promising but competitive cloud infrastructure business.

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Major blow to Microsoft

While Amazon and Microsoft are both leading cloud vendors, Amazon has a much larger market share, according to Synergy Research Group. As leaders, Amazon and Microsoft are targets for smaller cloud vendors such as Alphabet’s (GOOGL) Google and Oracle (ORCL), which are gunning for market share. Therefore, the loss of Whole Foods’ cloud business could be a major blow to Microsoft and a big boost for AWS. Whole Foods’ cloud usage is set to increase in coming years as the retailer aims to operate 1,200 stores in the near future, compared with 462 stores today.

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