Profit can be a really weird number, especially when it comes to data centers. So looking at pure earning statements numbers is likely going to be misleading no matter how you try to look at (unless you actually look at bank statements, you can create as many interpretations as you want).
First, data centers require A LOT of upfront capital. This capital is then capitalized over years, which is how it ultimately affects "profit". So depending on the capitalization schedule, how much they are investing in future growth, etc. will all affect this number. It's why, in short, Bezo's doesn't ever look at these numbers, but instead free cash flow (FCF).
“Percentage margins are not one of the things we are seeking to optimize. It’s the absolute dollar free cash flow per share that you want to maximize, and if you can do that by lowering margins, we would do that. So if you could take the free cash flow, that’s something that investors can spend. Investors can’t spend percentage margins.”[0]
So, the real metric to look at is the FCF/DCF generated by AWS. If we had that number, I think you could basically conclude that it's "printing money".
There are so few clouds, that it doesn’t work like this. When I saw it first hand the way it was done is prices were set to match competition. Occasionally somebody would reduce the prices, and others would match it. Since offerings are not exactly the same, there are variations, but overall for basic services like VMs and storage neither cloud will give you significant advantage in price.
Even if Google’s prices were half that of Amazon’s, it’s really hard to quantify the savings since the platform offerings are not identical, plus engineering switching costs could easily outstrip a company’s yearly cloud costs.
Which is then fueled by cheap credit and already existing high levels of free cash flow. It's not a problem until demand dries up, which as you are probably aware, does not look like its slowing down anytime soon.
There is no need to put profits in scare quotes. There are GAAP standards for publishing profits and anyone with an accounting background understands what profits mean.
Is looking only at FCF valid for startups/investments too? Or is higher profit % still important? I think Amazon might be a special case with its size and stage.
First, data centers require A LOT of upfront capital. This capital is then capitalized over years, which is how it ultimately affects "profit". So depending on the capitalization schedule, how much they are investing in future growth, etc. will all affect this number. It's why, in short, Bezo's doesn't ever look at these numbers, but instead free cash flow (FCF).
“Percentage margins are not one of the things we are seeking to optimize. It’s the absolute dollar free cash flow per share that you want to maximize, and if you can do that by lowering margins, we would do that. So if you could take the free cash flow, that’s something that investors can spend. Investors can’t spend percentage margins.”[0]
So, the real metric to look at is the FCF/DCF generated by AWS. If we had that number, I think you could basically conclude that it's "printing money".
[0] - https://25iq.com/2014/04/26/a-dozen-things-i-have-learned-fr...