Amazon Sues Former Exec Hired By Smartsheet, Hints That A Still-Secret Competitive Effort Is In the Works

The lawsuit Amazon has filed against a former AWS employee bound by a non-compete agreement gives credence to a report earlier this year that the public cloud leader is developing its own cloud-based office collaboration software.

Amazon makes the argument to the King County Superior Court in Washington that its non-compete is actionable because it has a competitive product to Gene Farrell's new employer, document collaboration vendor Smartsheet. Amazon, in its court complaint, said it would only provide evidence of its product out of the purview of the public.

The lawsuit, filed Friday and first reported by tech news site GeekWire, claims Farrell accepted the job as head of product at Smartsheet, a Bellevue, Wash.-based software vendor, even though his non-compete agreement prevented him working for 18 months at a rival.

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Farrell is now in a position to share Amazon's cloud secrets, many of which he helped formulate, according to the legal complaint.

Smartsheet, founded in 2006, has historically been a large AWS customer and AWS even offers on its website a case study of Smartsheet's initial deployment on its infrastructure.

But the fast-growing Software-as-a-Service vendor is shifting at least some of its substantial infrastructure spend to HPE.

At the HPE Discover conference last week, HPE CEO Meg Whitman said Smartsheet has already moved some of its workloads to HPE's private cloud, seeking to buck a public cloud bill that was becoming "increasingly expensive."

Farrell started at AWS in 2012, and advanced over four years to the position of vice president of the enterprise applications & EC2 Windows team.

Smartsheet, in a statement, said the company carefully vetted his hire, and doesn't see itself in any way as a competitor to Amazon.

"We are also surprised by what we see as an enormous overreach in terms of how Amazon is defining productivity software as it relates to their competitive set," the statement said.

Smartsheet CEO Mark Mader told GeekWire the suit left him "dumbfounded" as the two companies operate in "two totally different worlds."

But Amazon's lawsuit against Farrell makes clear the nature of the conflict isn't yet entirely known to the public, and AWS plans to keep it under wraps for some time.

The complaint states "Amazon will submit to the court more detailed information regarding these efforts, under seal, and attorneys eyes only, at the appropriate time."

Amazon warned Farrell, who helped develop AWS' enterprise applications business, that it viewed his new position as violating the agreement, the court complaint reads. "Farrell not only knows AWS’s confidential business strategies, he was instrumental in formulating them."

The complaint added: "Farrell has deep and detailed knowledge of the technical details of Amazon’s future product and service offerings, the business, and competitive considerations that drove the decisions to develop and deploy them, and the strategy for launching these new products."

Those arguments provide a tantalizing hint of what's in the works.

In February, tech news site The Information reported AWS was developing office productivity software to compete in the SaaS market.

Those efforts, which at the time were reported in their early stages, consisting of upgrades to WorkMail, a cloud-based email app released early last year, and its WorkDocs file storage product, according to business partners anonymously cited by The Information.

As for the HPE deal, Whitman said Smartsheet wrestled with the "sheer complexity" of the migration to the private cloud and the funding to make the switch to its on-premises infrastructure.

With the HPE partnership, Smartsheet installs, configures and tests the HPE infrastructure but only begins paying for it once it is "poised to become revenue generating," said Whitman.

One large AWS partner told CRN that the claim Farrell could disseminate product secrets isn't consistent with Amazon's own explanations for how it develops the cloud business.

"AWS claims not to have a roadmap, so how would Gene take anything that would not be developed in the next six to nine months?" the partner asked.

"Nine or more months from now, AWS and Amazon claim they don’t know what they will create, customers will tell them," that partner added.

Smartsheet, in its statement, said it doesn't see itself as a competitor to business productivity suites in general, because it "partners and integrates, versus competes, with storage, document creation, and communication platforms."

Google, the pioneer in the cloud-based office productivity market, named Smartsheet a "recommended partner" in November of 2015. At that time, Google Apps (now branded G Suite) was the market leader in that category.