Amazon is set to enhance the credits it provides to certain startups for its cloud infrastructure usage, according to information obtained by CNBC. This move comes as Amazon faces growing competition from Microsoft in the realm of artificial intelligence services. From July 1, startups that secured Series A funding within the previous year will now receive $200,000 in credits through Amazon Web Services (AWS) Activate program, an increase from the previous $100,000. However, seed-stage startups will continue to receive $100,000 in credits.

Sources familiar with the matter, who wished to remain anonymous due to the confidentiality of the information, confirmed these changes. Matt Garman, newly appointed CEO of AWS, has been actively engaging with founders in Silicon Valley. During these interactions, Garman emphasized the strategic importance of collaborating with startups, particularly AI companies which he views as ideal AWS customers.

AWS has also revised the terms associated with these credits, extending the expiration period from one year to three years for the new $200,000 credit offer. A company spokesperson highlighted AWS’s dominant market position, noting its extensive startup user base which includes 96% of AI and machine learning “unicorns.”

Despite AWS’s longstanding leadership in the cloud market since its inception in 2006, competitors like Microsoft Azure and Google Cloud are gaining traction, bolstered by advanced AI models. Microsoft’s backing of OpenAI’s ChatGPT has particularly enhanced Azure’s appeal, attracting significant AI-related workloads. Similarly, Google is making significant strides with its large language models, notably Gemini.

The competitive dynamics have shifted noticeably, with AWS striving to enhance its offerings in generative AI, marked by substantial investments into projects like Anthropic. This strategic push follows the recent resignation of AWS CEO Adam Selipsky, with Garman stepping into the role amid a period of intensified competition where, according to one analyst, Microsoft has significantly outperformed AWS in generative AI capabilities.

In response to the evolving market, Amazon has also launched a new 10-week generative AI accelerator program, offering up to $1 million in cloud credits to participants. This initiative coincides with Microsoft’s aggressive courting of startups through partnerships with accelerators like Y Combinator, which now provides $350,000 in Azure credits and additional resources for AI development.

Further strengthening its AI focus, Amazon recently welcomed the team from AI startup Adept, including co-founder and CEO David Luan. The acquisition includes licensing Adept’s advanced technologies and datasets.

While AWS continues to lead the cloud infrastructure market, Microsoft Azure and Google Cloud are rapidly closing the gap, with market shifts reflected in the latest figures from Canalys. This competitive landscape underscores the strategic moves by major players to dominate the burgeoning field of cloud-based AI services.