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At AWS Public Sector Summit, Amazon braces for a changing cloud industry

 Public clouds are coming into the core technology infrastructures of government agencies everywhere. By the same token, governments around the world are intensifying their scrutiny of public cloud providers and other large providers of internet-based business and consumer services.

At its latest public sector summit this week in Washington D.C., Amazon Web Services Inc. clearly positioned its vast solution portfolio for myriad opportunities with government, educational and nonprofit clients. It was also careful not to ruffle any feathers among those who feel that may it has grown too large and powerful for the common good.

On SiliconANGLE Media’s livestreaming studio theCUBE at the event, AWS executives discussed how public sector customers have begun to adopt public cloud services. The company’s representatives treaded carefully around political and regulatory minefields while also calling attention to how the firm is investing in satellite networking to extend its value for government agencies and other clients that need truly global cloud access. (* Disclosure below.)

Government agencies start flocking to the cloud

On the verge of the U.S. Department of Defense’s award of its $10 billion JEDI contract, Amazon Web Services may soon acquire a lucrative piece of fresh business.

From the discussions at AWS Public Sector Summit 2019, it’s clear that AWS isn’t counting its proverbial chickens. Nevertheless, it highlighted the fact that government agencies, educational institutions and nonprofits around the world are adopting public cloud services as rapidly as their private sector counterparts.

On theCUBE, Teresa Carlson, vice president for worldwide public sector at AWS, said the “blockers” that formerly deterred government agencies from using public cloud services have practically disappeared. The chief blocker, she said, had been the procurement model under which the government had to pay upfront.

“So these models were like, ‘Pay me a lot of money upfront and let’s hope that we use all that technology,’” said Carlson.  “So now we come along and say, ‘Actually no you don’t need to pay us anything upfront. You can try it and pay as you use it and then scale that.’ And then they’re like, ‘Wait a minute, we don’t know how to do that model.’….[But] we’re [now] at the point where [cloud] is the new normal and you cannot change gravity.”

Though security had long been a blocker to cloud usage in the public sector, said Carlson, it’s now an adoption accelerator. “They’re saying security is the No. 1 reason why [government agencies are] moving to the cloud,” she said. “Once you start having security issues, [agencies] on their own start removing blockers because they’re like, ‘We’ve got to move faster because we want to be more secure.’”

Regulatory scrutiny intensifies

Like the other “FAANG” companies (Facebook, Apple, Netflix, Google), Amazon has recently found itself in political and regulatory crosshairs. Clearly, the growing popular disenchantment and cynicism surrounding larger internet companies has fostered considerable business risk for them and their stakeholders.

Jay Carney, senior vice president for global corporate affairs at AWS, addressed this climate head-on during his appearance on theCUBE. Carney said AWS is bracing for the possibility of greater regulation of its core business.

“We think that where we do fall into scrutiny for regulation, we welcome the scrutiny,” Carney stated. “We’re a big company, obviously, and we’re very focused on serving our customers. Part of delivering for our customers means ensuring that we work with elected officials and regulators and pass that scrutiny well. We’ll see what the future brings in different spaces. Our concern, or our hope in general, if it’s around privacy or other areas of tech regulation, that uniformity is obviously preferable to having, say, 50 state laws, whether it’s around facial recognition technology or broader privacy initiatives.“

Carney even addressed the fraught issue of antitrust, and whether Amazon’s business units, including its cloud and retail operations, have inordinate power in their respective markets.

“Consumer harm is the standard” for antitrust, he noted. “Our mission as a company is to reward the customer with more convenience, more selection and lower prices,” he said. “Certainly, we fulfill that mission and don’t meet that standard when it comes to any way you might look at that competitively.”

Carney also said there’s a “misconception” about Amazon. “Because we’re a consumer-facing business primarily, and because we are involved in a lot of different things, some more successfully than others, we’re perceived as bigger than we are,” he said. “The fact is retail, our original business, our core business, is the biggest marketplace there is. In the United States, we’re less than 4% of retail, and we’re not even the biggest retailer in the United States. Cloud, AWS, we’re here at the Public Sector Summit…. We have intense, high quality competition, and deep-pocketed competition.”

Indeed, he said, Amazon’s 18-year-old Marketplace is a way for others sellers to sell beside Amazon itself. “What used to be 100% Amazon product and inventory for sale on, has now, 2019, risen to over 55% not being Amazon,” he said. “Third-party sellers, small and medium sized businesses, more than a million of them in the United States, sell in our store and get access to all the customers we have through our store. That side of our business is growing much faster than the Amazon retail business, and I think it demonstrates the value proposition for all of the small and medium-sized businesses. “

Space becomes public cloud’s final frontier

At AWS’ re:Invent conference last fall, the company announcedAWS Ground Station, an offering that it calls the first fully managed satellite ground station as a service. The Ground Stations are to be located in 12 existing AWS regions around the world by the middle of this year.

On theCUBE this week at AWS Public Sector Summit, Brett McMillen, AWS general manager for Ground Stations, said the investment in satellite networking is to support growing customer requirements in many industries and to take advantage of the improving cost-effectiveness of satellite uplink/downlinks in the public cloud. He cited a couple of drivers for the latter-day space industry.

“One is that they keep abilities that were able to put up in space for the same amount of weight and the same amount of payload is increasing dramatically,” he said. “The other thing that’s happening is that the cost to put satellites in orbit is dropping dramatically.”

As a result, he said, AWS can get many more organizations to launch satellites. “What’s turning out is that there’s a tremendous number of images and sensing capabilities, it’s coming down, actually more than the humans are able to analyze,” he noted. “And that’s where the cloud comes in. You download this information and then you start using things like machine learning and artificial intelligence and now you can see anomalies and point them out to the humans.”

There’s much more coverage of the summit this week on theCUBE(* Disclosure: TheCUBE is a paid media partner for the AWS Public Sector Summit. Neither Amazon Web Services Inc., the sponsor for theCUBE’s event coverage, nor other sponsors have editorial control over content on theCUBE or SiliconANGLE.)

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