British Software Vendors Could Lose AWS Business After Brexit

By Guest Author  |  Posted 2016-07-13 Print this article Print

AWS Marketplace is now accepting software sellers based in the EU, but AWS doesn't know how Brexit will affect UK companies.

By Ben Sullivan

Despite Amazon claiming Brexit won't harm its cloud operations in the United Kingdom, thousands of British software companies could lose business with Amazon Web Services (AWS) if and when the United Kingdom leaves the European Union (EU).

This is because they could lose the right to sell their software to customers via Amazon Web Services' Marketplace platform, which has only just started accepting providers based in the European Union.

AWS Marketplace is similar to Amazon's own retail marketplace, where software providers can sell their products to AWS customers via an online store.

Customers are charged by the hour, week, or year depending on seller preferences, and many companies on AWS Marketplace offer trial periods for customers to test products such as security tools or business intelligence software.

AWS Marketplace

Until now, only companies based in the United States have been able to sell services through AWS Marketplace. So far there are 970 suppliers, a figure likely to increase following the EU expansion announced today at AWS Summit in London.

The benefits for U.K. developers are obvious. Their software has traditionally been sold through regular sales channels, but now can be exposed to the millions of AWS customers around the world.

But David McCann, vice president of AWS Marketplace, told TechWeekEurope he doesn't know if AWS will be able to include British service providers on the Marketplace after Brexit.

"Right now, it's European Union," said McCann, when asked whether countries not in the European Union, but in Europe could sell through AWS Marketplace.

"It's the EU countries. All 28 EU countries, including Britain, which is still in the EU. We don't know what's going to happen. Right now the Amazon position is we're going to continue business as usual. For the next two years, Britain is part of the EU, whatever changes after will obviously conform with whatever the rules are."

European Expansion

Organizations in the European Union haven't been able to sell via the Marketplace until now because of tax laws. To be able to sell products, a company has to register itself to the U.S. government, which can be a long and confusing process.

British companies such as Sophos, which sells its security products through Marketplace, have been able to negate this requirement because they have a business registered in the United States.

But for smaller British software vendors, especially startups, it may become difficult to do the same once the United Kingdom is out of the EU.

And they risk a potentially devastating loss of business. AWS Marketplace has been growing exponentially year over year since its creation in 2012.

AWS Marketplace doesn't declare its revenue, but publicly measures its performance in the metric of server hours, i.e., the amount of total hours its customer are using on software bought through the platform.

In April 2015, AWS Marketplace said customers used 105 million server hours per month. Six months later, in October 2015, that figure was at 143 million. Three months ago, in April, AWS Marketplace said that its customers had used 205 million server hours.

"The money spent on software, worldwide, exceeds the money spent on compute, storage and network," explained McCann.

"Companies spend twice as much on software as they do on hardware. Marketplace is a strategic play by AWS to give our customers a good experience. Long term, we're at 960 software companies [on Marketplace]. When I joined two years ago, we were just on 500 software companies.

"As we grow, more and more software companies join and they want to give us their products," he added.

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