Disclosure: Short TWLO. If you look at Amazon's playbook (e.g. in Retail and Transportation), Twilio should be concerned: 1) Partnering with Twilio and other

Disclosure: Short TWLO. If you look at Amazon's playbook (e.g. in Retail and Transportation), Twilio should be concerned: 1) Partnering with Twilio and other aggregators gives Amazon a fast path to market with broad reach. This is consistent with how they have approached groceries, transportation and other verticals. 2) Amazon is willing to be aggressive on price to win market share. They have already undercut Twilio and they will no doubt continue lowering rates as needed. The current rates are still very high relative to SMS cost and they will come down. 3) Amazon is establishing the relationship directly with developers. Others have tried to do this on price (e.g. Plivo) but they haven't had the developer base and Twilio has been great on developer marketing. AWS is very formidable here. Note that Twilio had to come out and say that they were a partner. 4) The reality is most of Twilio's business is on the most basic APIs for making phone calls and SMS messages. Twilio may have a lot of other capabilities, but 99% of them don't matter. In addition, AWS will keep adding capabilities. 5) AWS will keep asking Twilio for price concessions at each negotiation renewal point and RFP aggressively. With more volume they will have more power. Given the commodity nature of SMS, there is not much Twilio can do about it. 6) You can look at the position UPS is in to get a sense of how this can play out. Amazon will chip away at the most lucrative parts of the business and look at going direct. Leaving UPS (or Twilio) with the less interesting edge cases. The one counter I have read is that porting out of all the markets will be complicated for Amazon. If Amazon has done a reasonable job with vendor contracts, they will have the right to selectively renew or port-out on a per market basis. There is a scenario in which Amazon acquires Twilio. It might happen. But never bet on a company because you hope they will be acquired. EDIT: It may actually be worse for Twilio given Jeff Lawson’s tweet. “Helping to power” seems to indicate that Twilio is just one of several vendors as opposed to “powered by Twilio”. Can someone from AWS or Twilio confirm?