AWS looks to generative AI tools as battle with Microsoft intensifies

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Microsoft was able to steal a march on the rest of the technology industry in the booming field of generative artificial intelligence due to its close alliance with OpenAI.

But to judge by the number of announcements at Amazon Web Service’s annual tech showcase event in Las Vegas this week, the AI gap in the cloud computing world has narrowed. Microsoft’s biggest cloud rival has now embedded generative AI deeply into its computing platform and infused the technology into many of its services, according to analysts.

Like Microsoft and others, AWS is pushing deeper into a new era of AI-powered automation. The question now is whether customers are ready to trust generative AI with some of their most critical functions, or commit serious money to the technology.

Amazon said on its last earnings call that AI is already a “multibillion-dollar” business and growing at more than 100 per cent. According to AWS chief executive Matt Garman, AI is on the way to becoming a core function in every corporate application, potentially fuelling a new wave of demand for the company’s core computing infrastructure.

“It’s going to need compute, it’s going to need storage, it’s going to need databases and it’s going to need inference as a key part of that application,” he said in an interview with the Financial Times. 

Yet Garman conceded that in the two years since the launch of ChatGPT, the flurry of interest in generative AI has yet to lead to serious use of the technology in business. “A lot of customers did a lot of experimentation,” he said. Most are now trying to identify the handful of uses for AI that might justify deeper investment.

Announcements by AWS at its re:Invent conference in Las Vegas on Tuesday included a third generation of its Trainium processors, used in training large language models. Apple said it had used AWS chips to run some of its services, and had achieved strong results in testing Trainium to train its in-house AI models.

Like other cloud companies, AWS is still heavily reliant on Nvidia’s general processing units. But the latest developments show that it was now on a par with Google, which trains its Gemini models on the in-house chips it has been using for nearly a decade, said Patrick Moorhead, principal analyst at Moor Insights & Strategy. Along with its other chips, including ones for running as well as training AI models, Amazon now had “the broadest array of homegrown silicon” of any of the big cloud companies, he added.

AWS had also narrowed the gap with Microsoft and OpenAI when it comes to the models that act as a foundation for its AI services, according to analysts. Garman said AWS had talked to OpenAI about trying to offer their models to its own cloud customers. Though OpenAI’s exclusive alliance with Microsoft stands in the way, he said he believed the two would find a way to work together in the longer term.

Even Microsoft CEO Satya Nadella no longer talks about its hosting of OpenAI as a crucial competitive weapon. Instead, he claimed recently that LLMs were becoming a commodity and that most of the value would come from the tools and services on top, suggesting that competition with its main cloud rivals, AWS and Google, was shifting to a different level. 

Meanwhile, at the event in Las Vegas, AWS demonstrated how it has been pushing AI into more of its own technology and services, in an effort to get customers to bring more of their applications and services to its cloud.

“The biggest challenge with AWS is how complex it is and how many services it provides,” said Steven Dickens, principal analyst at HyperFRAME Research. Adding AI to simplify things had led to “200 small achievements”, he added. “None of this very sexy, but it’s absolutely vital on a day-to-day basis.”

In one sign of how AI could shift the competitive balance between cloud companies, AWS is trying to use the technology to wrest customers away from Microsoft. It unveiled new AI-powered tools to automate the laborious and time-consuming task of rewriting applications that run on Microsoft’s Windows operating system so that they can run in the AWS cloud.

AWS’s direct targeting of Windows customers follows news, first reported in the FT, that the US Federal Trade Commission has launched an investigation into whether Microsoft has used licensing restrictions to prevent customers from moving to rival cloud providers.

Echoing complaints from others in the industry, Garman said Microsoft had offered its customers preferential terms if they kept their applications in its own cloud rather than picking one of its big rivals, and claimed it had made “fake concessions” to head off an EU investigation into the issue last year. But he also claimed that Microsoft’s actions risked backfiring: “In some ways it’s a tailwind for us, because it’s not earning any trust.”

In the latest attempt to push generative AI deeper into business life, meanwhile, AWS also announced new tools to organise and co-ordinate groups of AI agents so that they could carry out more complex functions. Many of the tasks companies want to automate involve multiple steps, meaning they require a number of specialised agents to complete, said Vasi Philomin, vice-president of generative AI at AWS.

Yet even Garman admits that most customers were only just starting to think about how AI tools like these might be integrated into their processes, or about how to manage the risks.

“We’re still so early in where a lot of these things are going to go,” he said. “Users have to decide when agents can be fully autonomous, when agents still need humans in the loop, when agents need guardrails around them.”