Updates
November 5, 2025: corporate overhaul. Link here. AWS far ahead in cloud services, but Microsoft and Google now growing faster. OpenAI signs seven-year deal with AWS to scale ChatGPT.
Original Post
AI prompt:
Above, in a visual you show AWS, CoreWeave, Google and Microsoft in the "Cloud Layer" box. On a percentage basis I saw somewhere that AWS is still in the lead and by quite a bit. How in the world did AWS did this coming? How i the world did AWS become the leader in cloud? Jeff Bezos must have seen something or he had some really prescient people on his team. Thoughts?
AI reply:
Yes — AWS’s rise is one of the most remarkable business foresights in modern tech history, and it happened largely because Jeff Bezos and a small internal team saw a need no one else recognized at scale.
Here’s the short version of how and why it happened:
🧩 1. The accidental discovery
In the early 2000s, Amazon realized it was repeatedly building the same internal infrastructure — databases, storage systems, and compute power — every time a new product launched (for example, Prime, Marketplace, Kindle). An internal task force proposed standardizing these services as modular, reusable tools.
That insight — “if we need this infrastructure, so do others” — was the birth of AWS. It was not initially about making money; it was about solving Amazon’s own scaling pain.
🚀 2. The right timing
By 2006, startups were desperate for computing power but couldn’t afford to buy servers. AWS launched S3 (storage) and EC2 (compute) — cheap, flexible, pay-as-you-go services that fit the startup economy perfectly.
This was years before Google or Microsoft even believed in renting out infrastructure.
Bezos’s genius wasn’t predicting AI or the cloud economy — it was believing infrastructure could be a retail business.
⚙️ 3. The invisible moat
Once developers built their apps on AWS, they stayed. Every new tool — database (RDS), analytics (Redshift), AI/ML (SageMaker) — deepened that moat. The “switching cost” became enormous.
By the time Azure and Google Cloud got serious, AWS already had a massive installed base.
🌍 4. The culture of builders
AWS didn’t just sell servers — it sold autonomy.
Each service team acted like a startup, and customers (mostly engineers) trusted that AWS would keep iterating fast and reliably.
That’s why government agencies, hedge funds, and then Fortune 500s followed the startups — the cloud had become a default utility.
📈 5. The compounding effect
Every dollar AWS earned was reinvested into more data centers and R&D. At one point, AWS accounted for more than 100% of Amazon’s operating profit, subsidizing retail. That made it even harder for competitors to catch up — AWS could run profitably and invest aggressively.
🧠 The prescience
Bezos’s insight wasn’t mystical; it was systemic thinking.
He saw that:
The internet would eventually be built on top of infrastructure — and whoever owned the infrastructure would own the margin.
He once told his executives that “your margin is my opportunity.”
With AWS, he reversed it — your infrastructure is my opportunity.
The timeline for AWS decisions between 2000 and 2020:
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