Bloomberg Línea — New products and applications, as well as generating insights from data to attract new customers using Generative Artificial Intelligence (AI), all require heavy technological infrastructure, especially in Latin America. These are opportunities that are on Amazon Web Services’ (AWS) radar, said Cleber Morais, CEO of AWS Brazil, in an interview with Bloomberg Línea.
The executive emphasized the need for “this infrastructure to be prepared to serve the customer with particular attention to the security pillar, which becomes increasingly critical.”
In a landscape marked by the growth of cloud services, Amazon Web Services has chosen Brazil as a crucial market to drive digital transformation in Latin America. AWS has invested over $3.8 billion in data centers in Brazil since 2011. Globally, AWS generates annual revenue of around $88 billion, according to the most recent results.
In the recent investor conference, Andy Jassy, CEO of Amazon who succeeded Jeff Bezos in June 2021, shared a uniqueness of the AWS business: as demand increases, the need for capital investment also grows. This is due to the upfront investment in data centers and hardware, which is later amortized over time.
In this scenario, AWS Brazil has leveraged investments, especially in Generative Artificial Intelligence (AI) technology. The company globally launched the AWS Generative AI Innovation Center and the AWS Generative AI Accelerator program, both aimed at empowering startups and clients to develop innovative AI-based solutions. The investment is estimated at $100 million.
Morais stressed that the democratization of technology is driven with a focus on security and scalability of solutions, fostering fintechs and a developer ecosystem. The company not only capitalizes on innovation opportunities but is also a partner for large Brazilian companies, including Natura, Embraer, Vivo, and the Brazilian Institute of Geography and Statistics (IBGE).
Brazilian Cloud Market
Pietro Delai, Director of Enterprise Solutions at IDC for Latin America, said that “in the comparison of the total cloud market in 2022 versus 2021, Brazil grew slightly above the Latin American average.” IDC Latin America, a branch of the International Data Corporation, is a consulting and market research company focused on the information technology and communication industry.
“Brazil is raising the market average,” he said. However, the country does not lead cloud growth in the region in percentage terms, as Colombia grew slightly more, according to Delai.
In the same aforementioned conference, Jassy expressed his desire to increase capital investments in the Generative AI area, indicating that this would be a sign of success for customers using their services.
In the second quarter, AWS sales increased by 12% compared to the previous year, totaling $22.1 billion. AWS’s operating profit was $5.4 billion, compared to $5.7 billion in the second quarter of 2022.
Amazon CFO Brian Olsavsky mentioned at the conference that he expects a reduction in capital spending related to fulfillment and transportation compared to the previous year. This reduction will be partially offset by increased infrastructure investments to support AWS growth, including additional investments in Generative AI and language models.
“I think when you talk about the potential big explosion in Generative AI, which everyone is excited about, including us, we’re in very early stages of that. I think it’s going to be transformative, but it’s still very early,” said Jassy during the analyst and investor conference.
Market Potential
In April of this year, the company laid off employees in its cloud services operation amid slowing sales growth even in the most profitable unit of the business. This affected AWS professionals in Latin America, based in Costa Rica.
Amazon Brazil has around 8,000 employees and indirect workers. AWS’s presence in Brazil began over a decade ago and preceded even the entry of the e-commerce operation in the country.
“Similar to cloud services, we work towards democratizing Generative AI models, text-to-video, text-to-speech. There are issues of security and scalability worked on behind the scenes,” Morais said during the AWS Summit held in São Paulo last month.
Morais recalled that the company “made the decision to invest in AWS Brazil 11 years ago, ahead of the UK, Canada, and Japan,” citing three major markets and the potential for local growth.
Morais also mentioned how AWS fostered a developer community in Brazil, driving the country’s technological advancement and contributing to the rise of fintechs.
At Amazon, most of the corporate technology spending is dedicated to hardware and local data centers that AWS aims to supplant with its own tools. For the AWS leader in Brazil, the cloud unit’s focus is on data security and privacy. He said that customer data remains encrypted and under individual control.
“The cloud is the right solution for uncertain times,” he said. “Small and medium-sized businesses have the same security benefit as a large bank, for example, has internally. This becomes a competitive advantage. These smaller companies use all the benefits of the technological infrastructure we provide. It’s a democratization of cloud resources,” Morais stated.
One of the examples cited was a partnership with the government of Pará for a system that helps the government with environmental licensing analysis, as well as investments in renewable energy, such as a solar park, still under construction, in collaboration with EDP Brasil and EDP Renováveis.
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