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Why cloud users should care that Amazon just kicked Apple TV to the curb

Barb Darrow
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Barb Darrow
Barb Darrow
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Barb Darrow
By
Barb Darrow
Barb Darrow
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October 2, 2015, 2:27 PM ET
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Jeff Bezos, CEO of Amazon, duringa press conference in this September 06, 2012 file photo in Santa Monica, California. Photograph by Joe Klamar — AFP/Getty Images
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Amazon, the corporate parent of cloud computing giant Amazon Web Services, just kicked Google Chromecast and Apple TV off of its retail island. The move raised an understandable amount of ruckus.

Amazon (AMZN) cited compatibility issues as the reason, saying that the two digital media players do not work well with Amazon Prime’s video streaming service. A spokesman noted that as Amazon Prime Video becomes a more important part of Amazon Prime overall, it is “important that the streaming media players we sell interact well with Prime Video in order to avoid customer confusion. Roku, Xbox, PlayStation, and Fire TV are excellent choices.”

Fair enough, though there may be hidden competitive pressures, too. One source pointed out that the App Store offered with the new Apple TV (AAPL) will offer Hulu, Netflix, and HBO streaming media feeds—but apparently not Amazon Prime Video. So there’s that.

Still, the optics of the move are dicey. To many, it appears that Amazon tossed out two key players simply because they were tough competitors.

If that’s the case, those on the cloud services side of the house—customers and partners of Amazon Web Services—should keep a close eye on what follows. If AWS were to start applying a walled-garden principle to its cloud, there could be trouble ahead. AWS Re:Invent, the business unit’s biggest event of the year, is next week; it should be interesting to see what kinds of questions get asked of the division’s executives.

Amazon, the largest public cloud provider by far, sells a ton of competitive technology that runs on its infrastructure. AWS offers databases from Oracle (ORCL) and Microsoft (MSFT), for example, even though it fields its own database services. Oracle and Microsoft are building cloud kingdoms of their own and both view AWS as a huge threat. (And if they don’t, they should.)

Just as Amazon’s retail division once sold competitive technologies from Google (GOOG) and Apple in its online marketplace, AWS sells competitive applications and tools on its cloud. Will it continue as competitive pressures mount and Microsoft and Google field formidable public cloud capability of their own? (Fortune has reached out to Amazon for comment.)

Fortune does not normally quote anonymous bloggers or Twitter accounts, but in this case we defer to Cloud_Opinion, a “parody and tech commentary” account on Medium, which recently published an astute observation of the potential problems with Amazon’s recent moves.

Four points from that post:

  • “This is a good indicator of how Amazon will react when their back is against the wall and failures are piling up.”
  • “Currently AWS enjoys an uncontested lead in the cloud market. Indications are that other competitors are still struggling to get a strategy in place.”
  • “Microsoft may start giving serious competition in late 2016.”
  • “When things get heated in the cloud space, AWS would look to borrow playbook from retail business.”

Amazon CEO Jeff Bezos has long touted a customer-driven strategy in which Amazon sells whatever its customers want. Which prompts the question: Why halt sales of Google Chromecast and Apple TV? Clearly, Amazon’s own video services compete with those two offerings, as well as with Netflix (NFLX), one of AWS’s biggest customers.

For more on how Amazon built its cloud, see the video.

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