Amazon
- Amazon Web Services recently issued guidance to staff on tariffs and data sovereignty concerns.
- AWS aims to reassure customers amid uncertainty over tariffs and other geopolitical issues.
- Amazon previously hinted that third-party sellers might raise prices on its site due to tariffs.
As tariffs spark growing uncertainty across Amazon's retail operations, the company's cloud division is quietly moving to head off similar concerns from business customers.
According to an internal document obtained by Business Insider, Amazon Web Services has issued new guidance to frontline sales and technical staff, instructing them on how to respond to customer questions about tariffs, data sovereignty, and potential restrictions tied to US government policy.
Among the talking points: If an AWS customer asks about possible price increases due to tariffs, employees are told to avoid direct answers and instead reaffirm pricing terms for those covered under existing Private Pricing Agreements (PPAs).
"In the event that AWS does increase prices, these increases will not change any agreed upon discounts, credits or service-specific rates in your PPA," the internal document stated.
While AWS may be less directly impacted by tariffs than Amazon's e-commerce business, the document reveals the company is concerned enough to prep staff with answers to potential tough customer questions.
The document covers questions ranging from potential price hikes and data-privacy concerns. It even broaches the possibility that US President Donald Trump might ban foreign companies from using AWS.
In a recent CNBC interview, Amazon CEO Andy Jassy acknowledged the situation remains fluid and emphasized efforts by the company's e-commerce business to keep consumer prices low. Still, he hinted that some third-party sellers might raise prices in response to tariffs. He also noted that, despite the uncertainty, Amazon continues its data center expansion.
Amazon, whose stock has dropped about 15% this year, is set to report first-quarter earnings on Thursday.
A spokesperson for the company referred BI to a statement from the internal document:
"We're closely monitoring the situation, and we are working to assess the impact on our business. As we navigate the evolving trade policy landscape, our focus remains on delivering value to our customers and innovating on their behalf."
Do not 'speculate'
Tariff-driven price hikes have already become a flashpoint in Amazon's retail division.
As BI previously reported, internal teams have struggled with forecasting, and vendors say Amazon has offered cost relief in exchange for strict margin guarantees. Meanwhile, third-party sellers say they're being forced to raise prices due to rising import costs.
Amazon
What this means for AWS pricing remains unclear. Internal guidance tells employees not to "speculate," citing the rapidly evolving nature of trade policy.
Some cloud industry experts suggest tariffs could squeeze AWS more than the company lets on.
AWS relies heavily on high-end computing gear, much of it manufactured in China or Taiwan. While some semiconductor components were recently exempted from tariffs, other critical data center parts may still be affected. Trump has paused most new tariffs for 90 days, but a 145% tariff on Chinese goods remains in effect.
"AWS and other hyperscalers could choose to absorb the cost or pass it on to customers," said Travis Rehl, CTO of cloud consultancy Innovative Solutions. "I'm unsure which direction they'd take."
Ben Schaechter, CEO of cloud cost optimization firm Vantage, said tariffs could force AWS to tighten future discounts or slow infrastructure growth due to higher hardware costs.
The bigger threat, some say, is reduced cloud spending.
"Amazon's AWS business should see limited tariff impact, though a broader economic slowdown is a risk to IT spend."
Randall Hunt, CTO of cloud advisory firm Caylent, told BI that customers are already cutting back in broad spending in anticipation of slower growth and rising costs.
Data sovereignty and Trump-era fears
The growing uncertainty over Trump's actions has pushed Amazon to prepare for even more extreme scenarios, including potential US government demands for cloud customer data or a move to block non-US users from accessing AWS.
If asked about potential US government data requests, Amazon instructed employees to emphasize that AWS does not disclose customer information unless legally required and that all requests are thoroughly reviewed.
The guidance also clarifies AWS's position on the CLOUD Act, or Clarifying Lawful Overseas Use of Data Act. The CLOUD Act, passed in 2018, gives US law enforcement agencies the authority to access data held by US-based companies, even if stored abroad.
AWS has not provided enterprise or government customer data stored outside the US since at least 2020 and it will challenge any "over-broad" or unlawful requests, the document stated.
"The CLOUD Act does not provide the U.S. government with unfettered access to data held by cloud providers," the document added.
Chip Somodevilla/Getty Images
On the question of whether Trump could block foreign access to AWS, the document stops short of addressing whether the president has the authority, but notes there's no indication such action is imminent.
In fact, it argues that doing so would contradict the administration's stated goal of supporting US tech companies abroad.
"AWS is closely plugged into US policy and this Administration's efforts, and can confirm we have heard nothing about restricting cloud services to non-US customers in response to addressing trade imbalances or unfair trade barriers, and expect their focus to continue to be on tariffs as the 'rebalancing' mechanism," the document said.
Sanctions and 'Buy Canada'
AWS also addresses fears that US sanctions could restrict access to its services in certain countries. The guidance notes that full country-wide sanctions are rare and that in the past, companies have been given time to wind down operations when sanctions do occur.
"US country-wide sanctions or services restrictions are exceedingly rare," the document said. "But in the theoretical case that such sanctions ever came to pass, AWS would do everything practically possible to provide continuity of service."
Finally, AWS is preparing for patriotic backlash in some markets, such as a potential "Buy Canada" movement. Employees are told to clarify that AWS's Canada office is a registered Canadian corporation headquartered in Toronto, and that customers can choose to store their data locally and encrypt it.
Still, the guidance urges caution. Employees should be careful framing AWS as a "Canadian business," given the complexity of the term.
"Whether AWS is a 'Canadian business' will depend on how that is defined in particular circumstances," the document concludes.
Have a tip? Contact this reporter via email at ekim@businessinsider.com or Signal, Telegram, or WhatsApp at 650-942-3061. Use a personal email address and a nonwork device; here's our guide to sharing information securely.
from Business Insider https://ift.tt/LU9iRNq
