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Amazon’s Cybersecurity Move Threatens Startups

When security company ForeScout Technologies was preparing for its initial public offering last year, Chief Strategy Officer Pedro Abreu kept hearing the same question from investors: What happens if Amazon Web Services takes over your market?

Mr. Abreu’s answer was that ForeScout could survive because its technology works on any cloud service or servers, not just AWS. That answer seems to have worked—Forescout went public last October, and its stock is up 45% since the IPO. But executives at other cloud security startups are increasingly getting the same question, especially since AWS launched multiple security products last fall. AWS’ decision to jump into the market highlights a risk for startups pitching their services to companies on AWS. While AWS may promote these startups’ products to its customers, it often ends up offering these services itself.

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Enterprise Strategy Group Senior Analyst Doug Cahill said the startups are paying close attention to what AWS is doing. “They know that the onus is on them to clearly convey how they differentiate [from Amazon].” For now, he said the startups appear to bring enough to the table to distinguish their offerings from Amazon’s. 

Randall Hunt and Kevin Clements commented on this article.
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‘They know that the onus is on them to clearly convey how they differentiate [from Amazon].’