Will Alibaba’s IPO force unwelcome changes on Amazon Web Services? The question may seem far-fetched, but really is not. Suppose Amazon’s investors look at Alibaba’s big margins and wonder why Amazon’s profits are so anemic?

That’s a paraphrase of a Facebook post by Roger McNamee, a VC friend that I’ve admired for many years. The suggestion is that Amazon CEO Jeff Bezos may be forced to start wringing profits out of Amazon and, this is my concern, Amazon Web Services (AWS) will hurt as a result.

“Amazon Profit Weakness Highlighted by Alibaba IPO Filing” is the headline on a Bloomberg story that sums it up nicely:

Alibaba’s ability to churn out profits underscores how Amazon Chief Executive Officer Jeff Bezos’s strategy of pouring money back into the business and pressuring already razor-thin margins isn’t the only way to become one of the world’s biggest online-commerce companies. That may exacerbate investors’ recent dissatisfaction with Amazon — they have pushed down the company’s shares 25 percent so far this year, as Bezos ramps up spending on fulfillment centers and delivery operations.

If investors start demanding changes at Amazon, how much money will the company be able to invest in AWS? Maybe AWS can finance its own growth, but it is still a sideline business for the online retailer. If AWS went away, Amazon would remain and do just fine.

More than a side business

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While Amazon is potentially cash-impaired, AWS’s biggest competitor won’t be. Google is focused on the cloud and it’s anything but a sideline business at the Googleplex. Sure, Google can survive without dominating the public cloud and clobbering AWS, but why should it?

Infoworld recently published a column detailing “Five reasons why Google can catch Amazon in the cloud.” It is an excellent long read and includes analyst comments and numbers I won’t delve into here. It makes a strong case.

• My take:

If Google is sufficiently motivated, the company is positioned to define AWS’ pricing and can afford to do compete with anything Amazon might do. In a battle of attrition, Google would have to be the favorite.

Yes, I understand AWS has an 85-percent share of the cloud business and Google has had a tough time gaining traction. Still, the fact remains that Google has to win in the cloud while AWS is a sideshow to a much larger retail business.

This makes me wonder whether AWS might be better off as a separate company, spun from Amazon to file what today might be a gangbusters IPO. Would independence make AWS a better competitor? Could an independent AWS find it easier to invest in growth? It’s worth a thought.

Or perhaps AWS could find a buyer. I am not as hot on this idea as an IPO, but it’s likewise a possibility.

It’s also possible that AWS is important enough to Amazon’s own needs that the company would be happy merely to not lose money on its operation. In that scenario, losing market share to Google might not be such a big deal.

This column isn’t meant as criticism of AWS in any way. This scenario may not play out, but it certainly is possible. It’s another case where I’d be happy to be wrong.

Still, if Google gets really serious about battling AWS, it would be hard to bet against the search giant.

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