Amazon’s vertical integration strategy depends on a key assumption: foundation models will commoditize, and value will accrue to infrastructure and orchestration rather than model capability.
If this assumption proves correct, Amazon wins. AgentCore governance, Trainium economics, and Bedrock’s multi-model marketplace become the durable advantages. Model providers compete for slots on Amazon’s platform the way apps compete for distribution on the App Store.
If this assumption proves wrong—if one model achieves sustained, decisive superiority—Amazon’s position weakens. Enterprises might accept Google’s vertical lock-in to access Gemini, or pay Microsoft’s premium for OpenAI exclusivity.
Current evidence slightly favors Amazon’s thesis. Models have converged significantly over the past two years. Claude, GPT-4, and Gemini perform comparably on most enterprise tasks. The gaps that exist are narrowing, not widening.
The Enterprise Application Gap
Amazon’s weakest layer is enterprise applications (Layer 5). Connect proves the model works for contact centers, but Amazon lacks presence in the workflows where most knowledge work happens—document creation, spreadsheet analysis, email management, project coordination.
Microsoft’s M365 Copilot embeds AI into these workflows. Google’s Workspace AI does the same at smaller scale. Amazon has no equivalent. An enterprise could use AWS infrastructure, Bedrock models, and AgentCore governance—but the AI that employees interact with daily still runs through Microsoft.
This gap limits Amazon’s ability to capture value from the largest AI use case: augmenting knowledge workers. Amazon can power the agents, but Microsoft hosts the applications where those agents deliver value.
The Developer Ecosystem Risk
Developer preference shaped cloud adoption in the 2010s. Startups chose AWS because developers knew it and liked it. Enterprise IT followed where developers led.
AI platform adoption may follow a similar pattern. Developers choosing GitHub Copilot, working in VS Code, and deploying on Azure create momentum that influences enterprise decisions. Amazon’s Kiro competes against an established incumbent with deep distribution.
Amazon partially mitigates this through the framework-agnostic approach. Developers can build agents on whatever framework they prefer and deploy on AgentCore. But the IDE and code assistant layers—where developers form habits and preferences—remain Microsoft’s territory.
Strong but Incomplete Integration
Amazon has achieved vertical integration across all six layers of the AI stack—a position only Google matches. Custom silicon, foundation models, agent infrastructure, AI tools, enterprise applications, and consumer distribution. The coverage is real.
But integration breadth doesn’t equal integration depth. Amazon leads clearly at Layer 3 (agent infrastructure) and Layer 6 (commerce distribution). It competes effectively at Layer 1 (silicon) and Layer 4 (AI tools). It relies on partnerships at Layer 2 (foundation models) and lacks breadth at Layer 5 (enterprise applications).
The strategy makes sense given Amazon’s starting position. Rather than trying to out-research Google on models or out-distribute Microsoft on enterprise apps, Amazon focuses on infrastructure and orchestration—the layers where its existing advantages compound.
The risk is that the layers where Amazon lags prove more important than the layers where it leads. If frontier-model capability drives platform selection, Google and Microsoft have an advantage. If enterprise-application presence drives agent adoption, Microsoft wins. If developer tooling preference drives infrastructure decisions, Microsoft wins again.
Amazon has built the stack. Now it must prove the stack wins.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
