UPDATED 21:52 EDT / JULY 19 2017

CLOUD

Amazon drops controversial cloud contract clause to win over more customers

Amazon.com Inc. is trying to make itself appear more friendly by eliminating a controversial clause in its cloud customer agreement contracts that has put off many companies from doing business with it.

For several years, potential Amazon Web Services customers have chosen not to do business with the company because of a clause that prohibits them from suing it over patent infringement. Given Amazon’s reputation for entering new markets and causing massive disruption in them, many businesses decided they couldn’t trust Amazon not to copy their intellectual property, Reuters reported.

Now, with analysts saying that Microsoft Corp. appears to be closing in on AWS with its own Azure cloud services, Amazon has decided to remove that clause in an effort to make it look “friendlier” to corporate clients, Reuters said. It’s quite a timely move from Amazon, coming barely a month after Pacific Crest Securities’ analyst Brent Bracelin predicted Microsoft Azure could generate more revenue than AWS by the end of this year.

As well as removing the clause, Amazon has also added a new policy that says it will protect its customers if they’re sued for patent infringement relating to services running on its cloud platform.

“AWS will defend you and your employees, officers, and directors against any third-party claim alleging that the Services infringe or misappropriate that third party’s intellectual property rights, and will pay the amount of any adverse final judgment or settlement,” the updated customer agreement says.

That new policy is in line with a similar one Microsoft announced for its Azure customers in February. Microsoft’s IP defense plan allows its customers to draw on more than 10,000 of its patents if they need to defend themselves against lawsuits. Up until now, cloud companies haven’t faced many lawsuits, with so-called patent trolls (companies that buy patents simply to sue others) instead focusing on mobile app developers. However, several experts recently told the Financial Times they believe that cloud software providers could become the next big target of patent trolls.

But the steps taken by Amazon and Microsoft to protect their customers should mean that patent trolls’ chances of success are reduced considerably, as few will have the resources to take on the cloud giants and their extremely well-funded legal departments.

Image: Thomas Cloer/Flickr

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