Google App Engine Goes Up Against Amazon, But That's Not the Point

Sure, Google App Engine, the service Google’s announcing tonight, looks pretty similar in concept, if not details, to the trio of Web services offers, including the EC2 computing engine, the S3 storage service, and the SimpleDB database product. Just like Amazon’s Web services, App Engine lets developers (for now) and companies (eventually) run their applications on Google’s computing infrastructure. So no doubt they’ll compete at some point.

But I think all the talk about how it’s a shot at Amazon misses most of the point. For one, the services are different when you get down into the weeds, as O’Reilly Radar’s Brady Forrest points out in a detailed post, and as heavy Amazon Web services user Don MacAskill at SmugMug confirms. Nate Westheimer at Silicon Alley Insider thinks it’s more of a shot at Facebook, in fact. Also, Amazon’s Web services business remains fairly small, if ultimately very significant.

So I don’t think Google really cares that much about trying to edge in on Amazon’s territory as much as it cares about having as many applications out there working on the Google cloud. That gives it not only good visibility into the kinds of applications people want and the problems it may need to overcome with them, but also a bird’s-eye view into the most promising new startups it might want to acquire. It’s pretty apparent that Google knows as well as anyone else that a lot of Web startups are going to be for sale as the economy sours even further, and Google is ready to snap up the ones that are most promising. So much the better if they’re already using Google technology.

Amazon’s interest in Web services, besides the small amount of money it will bring in for the foreseeable future, is a little different. It wants to enable startups to get going much more quickly and easily, as CEO Jeff Bezos explained in this exchange with me in late 2006, and that’s likely to help Amazon more than it hurts it:

Me: Enabling people to much more easily create new companies also creates more competitors for your competitors. Did you think about that?

Bezos: Absolutely! The fundamental point is, it’s going to happen, and if it’s going to happen, you might as well participate in it.

So yeah, Google and Amazon will be competing more closely than people today realize. But I think the competition will transcend these particular Web services.

Before it's here, it's on the Bloomberg Terminal.