Amazon internal documents 'show' startups may be reducing Cloud budget to spend more on …; company denies; says 'old data'

Amazon Web Services has identified a "fundamental" shift in startup spending patterns. According to internal documents obtained by Business Insider (BI), cloud service providers say companies are delaying cloud adoption to allocate more resources to artificial intelligence (AI) technologies. Startups are redirecting funds from traditional AWS cloud services toward AI models, inference capabilities, and AI developer tools. The documents indicate these companies are distributing costs across newer AI technologies that offer greater flexibility for switching between providers. The trend marks a change from previous years, when AWS frequently represented the first and largest expense in startup budgets. However, an AWS spokesperson said the report was using "old data to reach outdated conclusions." The spokesperson added that startups continue to build on AWS, including AI companies such as Perplexity and Luma AI, which "recently chose" AWS.One of the documents seen by BI warned: “Founders tell us they seek to adopt AWS at a later stage.”The internal documents mentioned in the report were labelled "Amazon Confidential," dated back to March and July, and prepared by AWS employees from the startup business team, including one who works with Y Combinator startups, the report claims.They were reviewed by AWS executives overseeing startup and venture capital relations. Jon Jones, former VP of global startups and venture capital at AWS, was listed as one of the division's business owners, the report added.Additionally, three current and former AWS employees told Business Insider that the issues raised in the documents remain relevant as of September. They requested anonymity because they are not authorised to comment.In an emailed statement, a company spokesperson wrote: “AWS remains the top choice for startups to build because we offer the best core services as well as the most innovative and powerful generative AI offerings. Early stage startups experiment with many services and technologies, but when it comes time to choose the provider they trust with the future of their organizations, they overwhelmingly choose AWS. In fact, we're seeing growth in adoption of AWS as startups are looking to our depth and breadth of services.”