David Snead, a lawyer who negotiates contracts on behalf of hosting providers, said that Amazon Web Services contracts are presented as non-negotiable and almost like an appliance. "You just get their cloud services as they are. They aren't presented as something like enterprise-level hosting where you'd expect it to be presented as a contract and negotiate," he said. "I have a bunch of clients who have enterprise-grade cloud services. They have contracts that are much different than AWS and they expect them to be negotiated."
Amazon, however, says it believes it is in line with competitors. "To the best of our knowledge, we are in the mainstream and doing a good job of reducing friction for customers whenever possible," Selipsky said. "However, it is difficult to know exactly what is in a lot of contracts that are out there in force because people don't generally disclose them."
Even analysts that Amazon talks to have a hard time finding specifics about contracts, he said.
Both Shih and Snead said it was unclear to them if Amazon had decided not to pursue enterprise deals or if it was simply unprepared to negotiate with Eli Lilly for the kind of service it was looking for.
"It may be that they simply don't see the enterprise space as an opportunity to get into," said Shih.
Selipsky said Amazon Web Services is designed to serve customers of all sizes and that many Fortune 500 companies already use it.
The situation points to a larger issue in cloud and hosted computing. "The specifics of legal obligations haven't been figured out and put into best practices," said Michael Cote, an analyst with RedMonk. "This is a stumbling block."
He expects it'll be some time before the industry reaches a sort of consensus on legal terms in contracts. He compares such issues with the early days of open source when legal teams didn't know how to handle legal issues around open-source software, so they often simply forbade employees from using it. "It took 10 or 15 years to iron it out. Now everyone understands how to use it and for the most part there are no problems," he said.
In the meantime, legal issues like liability for failures will likely continue to slow down growth in the cloud. "People I talk with, when I ask them why they aren't using cloud services more, they tell me it's because their company won't let them," Cote said. That's typically because the company isn't sure whether the services comply with company policies around a variety of issues like security and liability.
While Selipsky was uncertain whether a benchmark for cloud agreements might emerge, he does anticipate that contract negotiations will get easier as the market matures. "As everyone gains more comfort with how to operate in the cloud, I think we'll all slowly see more efficiency in the process," he said.