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Why Salesforce and Amazon are becoming each other's best allies in the battle against Microsoft — and how they could become even closer

Salesforce CEO Marc Benioff and Amazon Web Services CEO Adam Selipsky
Salesforce CEO Marc Benioff, left, and Amazon Web Services CEO Adam Selipsky.
Salesforce

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  • AWS and Salesforce are becoming each other's most important allies against common enemy Microsoft.
  • Ties between the two run deep, and an alliance provides both with tech they don't currently have.
  • Analysts said it's possible AWS could buy Salesforce, though continuing to partner is more likely.
  • See more stories on Insider's business page.

Amazon and Salesforce are increasingly becoming each other's most important allies against shared rival Microsoft.

While Amazon Web Services still holds the top spot in the cloud market, Microsoft is catching up, according to Synergy Research: Its primary advantage over AWS is that it can offer a full range of cloud tools, from productivity and collaboration through its ubiquitous Microsoft 365 suite, to cloud infrastructure with its Azure platform.

At the same time, Salesforce is fending off Microsoft, too. While Salesforce is still the dominant provider of cloud-based customer relationship management software, analysts previously told Insider that Microsoft Dynamics 365 is rapidly gaining ground and that the firms are competing for the same "digital transformation" chunk of customers' IT budgets. 

That's where the AWS and Salesforce partnership comes in, analysts say. 

Since first partnering in 2016, ties between Salesforce and AWS have only grown deeper: They recently announced an expansion of their partnership to make it easier to share data and build custom apps on both platforms, and new AWS CEO Selipsky was formerly at the helm of Salesforce-owned Tableau.

Slack , which Salesforce is set to acquire by the end of the month, is also part of the so-called "Rebel Alliance" that Amazon has considered building. While it's unclear whether the plan will come to fruition, the idea is that AWS would bundle and sell productivity software to challenge Microsoft's dominance of the productivity market.

There are so many benefits for both Salesforce and AWS in teaming up against Microsoft that analysts even suggested an (admittedly unlikely) way they could be even stronger together: Merging the two companies.

AWS and Salesforce each provide the other with things they don't currently have, but Microsoft does: Together, they fill gaps in each other's offerings, says Dan Newman, CEO and analyst at Futurum Research.

AWS has its leading cloud infrastructure platform (Microsoft's answer is its Azure cloud) but lacks other software tools, while Salesforce has its wide-ranging software suite (akin to Microsoft's 365 software) but lacks infrastructure. 

For AWS, partnering with Salesforce also gives its customers business apps and low-code tools that can easily be run on AWS infrastructure, according to Gartner analyst Jason Wong. Amazon hasn't had much success with its own business applications or no-code tools, he added. 

For Salesforce, deep integrations with AWS also allow its customers with a lot of CRM data to use AWS's artificial intelligence tools to analyze and process it, according to Valoir analyst Rebecca Wettemann. This would give clients something "more custom" than what they can do with Salesforce's AI tools, dubbed Einstein, that could equal what Microsoft offers with Azure and analytics. 

Reputationally, AWS and Salesforce are both leading enterprise-approved brands, so customers likely wouldn't hesitate to use both: "These two names are not going to see a lot of resistance in the market because they're both very trusted," Newman said.

Beyond the partnership discussion, rumors have regularly swirled that Amazon could one day buy Salesforce. Analysts said it's unlikely — especially given the regulatory spotlight on Amazon — but not totally impossible. Buying Salesforce is only an option if Amazon spun out AWS as a separate business, Wettemann said.

To Newman, AWS buying Salesforce isn't out of the question because of Amazon's "significant resources," but might not create enough additional value beyond what they have now: "I don't think they would have tied that partnership up if they were legitimately considering an acquisition," he said.

Lopez agreed that the two companies are stronger as a pair, but don't need to officially tie any knots:

"They'd probably move faster if they didn't."

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