Amazon pioneered cloud computing in 2006 and quickly amassed a wide base of customers by hosting data in its own centers rather than in clients'. This spared many startups from the high cost of managing proprietary computer servers.
There are many challenges that Amazon faces as it expands its cloud computing business, known as Amazon Web Services (AWS). Since Snowden exposed the vast reach of the National Security Administration, government agencies and companies around the world have been re-evaluating where to store the most sensitive data. Some larger companies prefer to work with cloud providers that can offer them the option of dedicated servers or a private cloud model.
That has paved the way for rivals such as Microsoft, which has provided companies more direct oversight of cloud data. Microsoft is willing to work with third-party data center managers, such as Fujitsu Ltd or Outsourcery Plc, when clients are required to keep data within a country's borders. The software company is also willing to help companies add cloud capabilities to existing data centers, a "hybrid" model that Amazon has only just started to offer.
Microsoft can also draw on the corporate and government relationships it has cultivated over decades while AWS has only just started to build such ties. Many insurance companies which crunch data to produce financial risk models are in Europe and already work with Microsoft. Amazon does not have that advantage.