Once a reliable cash cow, Amazon's cloud business slows as companies pull back on service

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Amazon is kicking off its annual security-focused cloud computing conference amid a slowdown in its profitable cloud business Amazon Web Services, or AWS.

AWS is the market leader in the cloud arena, and its customers include some of the world’s biggest businesses and organizations, such as Netflix, Coca-Cola and government agencies. But Amazon executives have said the unit is facing short-term headwinds as companies look for ways to save money by reallocating their spending or cutting back on features they don’t need.

Google and Microsoft, which offer competing cloud businesses, posted strong showings in their respective businesses during the most recent quarter, but they’ve also seen some slowdown in recent months. Still, it’s easier for them to keep growing compared to Amazon, which can face more hurdles since it’s already a market leader and has to grow a larger customer base, said Sid Nag, an analyst at the information-technology research and consulting firm Gartner.

Last month, the tech giant said it plans to spend more than $12 billion on cloud infrastructure in India by 2030, adding to multi-billion-dollar cloud investments it announced earlier this year in Malaysia and Australia. Amazon is also planning to build five new data centers in Oregon after it was awardedGenerative AI, which recently boomed in popularity followed by the release of Open AI’s ChatGPT, is. But Amazon seems to be playing catch-up to its competitors.

Amazon is also facing more challenges in the grocery arena, an $800 billion market where it’s attempting to gain market share with its Amazon Fresh and Go convenience stores, as well as Whole Foods, which it purchased in 2017. The company said in February it was shutting down some Amazon Fresh and Go stores that weren’t living up to their promise. It has also paused expansion on its Fresh supermarkets as it aims to find the right formula that will allow it to scale its business.

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Once a reliable cash cow, Amazon's cloud business slows as companies pull back on serviceCompanies are trimming their expenses amid concerns about high inflation and fears that a recession might be around the corner. Many of them are being more cautious about their cloud costs, leading to a slowdown in one of Amazon's profitable businesses.
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