- Airbnb's recent IPO filing revealed flexibility in Amazon Web Services contracts, as the firm disclosed that it received a three-year extension on its commitment to spend $1.2 billion on Amazon cloud services.
- The key to negotiating cloud contracts is pretty simple, according to cloud-industry consultant Corey Quinn, whose firm Duckbill Group helps companies save on cloud costs: Call your account manager.
- AWS account managers are often incentivized to drive adoption of new services or convince customers to devote more overall IT spend to AWS, which can mean discounts and credits for those that spend more than $1 million per year, Quinn wrote in a new blog post.
- AWS did not comment in response to a Business Insider inquiry for this report.
- Are you an Amazon Web Services employee? Contact reporter Ashley Stewart via encrypted messaging app Signal (+1-425-344-8242) or email ([email protected]).
- Visit Business Insider's homepage for more stories.
Along with other cloud providers, Amazon Web Services typically offers discounts to customers that commit to a multi-year contract and a minimum amount of spending. Airbnb's recent IPO filing revealed there's some flexibility in those contracts.
Airbnb originally agreed to spend at least $1.2 billion on Amazon cloud services through 2024, but received a three-year extension on the contract per a September 30 amendment, pushing the date to 2027, shortly after CEO Brian Chesky publicly said Airbnb was planning to "get more efficient" with Amazon Web Services spending.
Cloud-industry consultant Corey Quinn, whose firm Duckbill Group helps companies save on cloud costs, said Airbnb is the latest example showing how even existing AWS contracts are up for negotiation. Snap, he notes, renegotiated its AWS contract in 2017: It turned its five-year, $1 billion commitment into a $1.1 billion commitment over six years. AWS did not comment in response to a Business Insider inquiry for this report.
The key to negotiating cloud contracts is pretty simple, according to Quinn: Call your account manager.
"Here's one of the biggest secrets of AWS contract negotiation: The account manager is your advocate within AWS," he wrote in a Wednesday blog post on cloud contract negotiation.
AWS account managers are often incentivized to drive adoption of new services or convince customers to devote more overall IT spend to AWS, Quinn said.
"To shine a bit more light here, when you're spending big money with AWS (read: more than $1 million per year), potential discounts and credits become available to you," Quinn said. "These programs are often fairly opaque and it's hard to know what's possible, if you're getting a good deal, and what you can expect in the process and outcome."
Quinn's tips received an endorsement from Tim Bray, a prominent former Amazon engineer, who tweeted in response the post: "Matches my experience looking on from inside."
Amazon chief financial officer Brian Olsavsky even said in July that the company's cloud business has been actively looking for ways to help customers scale down usage so that they can save money during the pandemic.
"What we see are companies working really hard right now to cut expenses, especially in the more challenged businesses like hospitality and travel, but pretty much across the board," Olsavsky said. "We're actively — with our salesforce — looking at ways we can help them save money."
Those comments, however, seem to counter earlier reports that Amazon Web Services was unwilling to work with customers to cut their cloud costs amid the pandemic.
Large customers like Airbnb, especially, may be in a position to negotiate: Multi-year cloud contracts not only give providers like AWS a steady, stable revenue source they can rely on, but they also disincentivize customers from shopping around with competitors.
While most companies don't disclose cloud spending, publicly traded firms sometimes tell investors when they agree to these multi-year contracts. Business Insider recently pored over earnings statements and other securities filings to compile a list of company's current public commitments to cloud providers.
Here's how much companies like Slack, Zoom, Netflix, Snap, and Pinterest are spending with cloud providers AWS, Google, and Oracle.
Do you have insight to share? Contact reporter Ashley Stewart via encrypted messaging app Signal (+1-425-344-8242) or email ([email protected]).
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