Amazon may be revving up its rivalry with Microsoft in the cloud.
The e-commerce giant appears to have big plans for business productivity apps, a market that’s currently dominated by Microsoft. The previously unannounced and still largely guarded plans seem to have come to light in a lawsuit Amazon filed recently against a former employee.
Amazon sued Gene Farrell, a former vice president in its cloud computing unit, Amazon Web Services (AWS), charging that Farrell violated his non-compete clause by taking a job at a hot startup called Smartsheet. Amazon alleged that in his former position, where he oversaw AWS’ business productivity apps, Farrell had access to the cloud service’s “most critical confidential and proprietary information.” And now he’s working for a “competitor,” Amazon said.
“Farrell was involved in and privy to AWS’s strategy, roadmap, pipeline, customers, strengths and weakness for cloud-based productivity products including the development of new products not yet publicly launched or announced,” Amazon alleged in its suit.
A head scratcher
The head scratching part of the suit — and the thing that possibly points to Amazon’s future plans — is AWS doesn’t really have a product that directly competes with Smartsheet.
A VC favourite that’s raised about $US121 million and is valued at about $US850 million, according to PitchBook, Smartsheet is an AWS customer whose service is designed like a spreadsheet. The closest competitors of its product are really Microsoft Excel (for those who like to use spreadsheets for everything), Microsoft Project, Microsoft Planner, and other online collaboration task management tools like Trello, Asana, and Jira.
While AWS offers some business productivity tools, including file sharing, email and calendars, and some communication and collaboration apps, it doesn’t have anything like Smartsheet.
Amazon is essentially arguing that because it offers a few business productivity apps of its own, all such apps are competitors to AWS, Smartsheet CEO Mark Mader said in a statement emailed to Business Insider.
The lawsuit is an “enormous overreach” by Amazon, Mader said.
A bigger reason for this suit?
But the lawsuit may indicate something else — that is working on a direct competitor to Smartsheet.
In its initial complaint and in a highly redacted copy of a motion related to the case, Amazon hints that Farrell was working on a new product for the company.
“Prior to quitting, he worked on a critical component of a product” Amazon said in one document. It redacted the rest of the statement, which may give more information about that product.
In another document Amazon said the material and plans Farrell had access to were closely held.
“This information is not available to those outside of Amazon, and even within the company was accessible only by those with a legitimate business reason for needing such information.”
So it would seems from those documents that Amazon has big plans for AWS and likely has more business productivity apps in the works. If that’s the case, those yet-to-be revealed plans may encroach not only on Smartsheet’s domain, but on those of Microsoft and other companies.
This wouldn’t be the first time Amazon has gone down the path of launching services that compete with those of its customers. It already competes with Logicworks, a company that makes cloud computing management software that also happens to be an Amazon customer. In an interview with Business Insider in December, Logicworks CEO Kenneth Ziegler warned other companies about the dangers of working with Amazon.
“Don’t partner with Amazon if you think there’s no chance they are going to get to your business,” Ziegler said. “The fact is, Amazon is going to compete with you. I don’t care what business you are in.”
To be sure, Amazon doesn’t spell out its plans in its lawsuit against Farrell. And that suit could be more about how the company views non-compete clauses than about a new product in development.
The company has a reputation for being heavy-handed with requiring and enforcing such agreements. It even used to ask seasonal and hourly workers to sign them, though it removed that clause from those workers’ contracts back in May, 2016.
Farrell declined comment. Amazon has not yet responded to our request for comment. As part of the lawsuit Amazon is seeking a ruling that would prohibit Farrell from working at Smartsheet for 18 months, or the full duration of the non-compete clause.
Here’s Smartsheet CEO Mark Mader’s full statement on the suit:
“We’re aware of the lawsuit and we think it’s unfortunate that Amazon would resort to legal intimidation as a way to prevent talented executives from leaving their company. We are also surprised by what we see as an enormous overreach in terms of how Amazon is defining productivity software as it relates to their competitive set. Smartsheet partners and integrates, versus competes, with storage, document creation, and communication platforms. Smartsheet’s product focus is on management and automation of front office knowledge workers and in no way competes with Amazon’s software offerings. Gene Farrell is a proven business leader with a track record of being on the cutting edge of technology innovation. We’re confident that he’ll play an important role as we continue to advance Smartsheet’s leading position in collaborative work management.”
Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.
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