Walmart, the US’s biggest retail chain, has been accused of trying to coerce its technology suppliers into shunning Amazon’s cloud computing service.Amazon has accused its rival of attempting to “bully” the IT companies into picking a rival platform.The row follows a report by the Wall Street Journal, which said other unnamed large retailers had also asked vendors to shun Amazon Web Services.The row comes at a time Amazon is expanding its shopping operations.Last Friday, the Seattle-based business announced a $13.7bn (£10.8bn) takeover of the groceries chain Whole Foods. And this week it revealed it had struck a deal with Nike to sell the sportswear-maker’s shoes directly, and that it was launching Prime Wardrobe – a service that lets customers order and try clothes for seven days before deciding which to buy and keep.
Amazon’s Web Services division may not be as well known to the public as the company’s retail operations, but it is a huge money-earner.In April, the company reported the unit had generated $3.7bn in sales over the previous three months.The business provides computing power, online storage, security protection and developer tools to third parties. Its clients include Netflix, Airbnb, General Electric and the CIA.According to market research company Gartner, AWS leads the market in its field. However, Walmart uses Microsoft’s rival Azure service.A spokesman for Walmart acknowledged it had concerns about its suppliers’ use of AWS.”Our vendors have the choice of using any cloud provider that meets their needs and their customers’ needs,” he said.”It shouldn’t be a big surprise that there are cases in which we’d prefer our most sensitive data isn’t sitting on a competitor’s platform.”Amazon suggested this approach was misguided.”We’ve heard that Walmart continues to try to bully their suppliers into not using AWS because they have an incorrect view that AWS is somehow supporting Amazon’s retail business,” said a spokesman.”Plenty of suppliers are standing up to Walmart and refusing to be told that they can’t use [us].”Tactics like this are bad for business and customers and rarely carry the day.”AWS’s use of encryption means that its own staff cannot peer into the data stored on its computer servers by its customers.But one analyst said it was still understandable Walmart and others might not want to help send business its way.
“AWS is a separate part of Amazon’s business, but ultimately this comes back to being frightened of being disrupted, especially in light of the recent acquisition of Whole Foods,” said Nick McQuire, from the consultancy CCS Insight.”The question is whether this fear now will cause a wider backlash among retailers, where you get many within the community switching from using AWS in the cloud to Google, Microsoft or someone else.”