Amazon is doubling value of credits for some startups to build on AWS as Microsoft cloud gains ground

Amazon will double the value of credits it offers some startups to use its cloud infrastructure, CNBC has learned, as the company faces heightened competition from Microsoft in artificial intelligence services.

Starting July 1, startups that have raised a Series A round of funding in the past year will be eligible for $200,000 in credits through AWS' Activate program, up from $100,000 before, the Amazon cloud unit said in an email to venture capitalists this week. Seed-stage startups will still be eligible for $100,000 in credits, AWS said.

Two people briefed on the changes confirmed the credit increase, though they asked not to be named because the information is private.

Matt Garman, who was recently promoted to CEO of AWS after running sales and marketing, was meeting with founders in Silicon Valley this week, the people said. Garman told the execs that collaborating with startups would always be a primary focus, one of the people said, adding that Garman described AI companies as AWS' ideal customers.

An AWS spokesperson confirmed the increase in credits and Garman's visit to Silicon Valley. The spokesperson added that in the past, the $100,000 would expire in one year, while the $200,000 credit will now expire in three years.

Amazon, which is best known for its massive online retail operation, derives most of its profit from AWS, a business it launched in 2006, well before rivals Microsoft and Google hit the scene. AWS leads the market, with $25 billion in revenue in the first quarter, up 17% from a year earlier.

But Microsoft Azure and Google Cloud are growing more quickly, and are benefiting from rapidly advancing AI models. Backed by Microsoft, OpenAI launched ChatGPT in late 2022 on Azure, and has since attracted a