I think this is fantastic news. AWS needs serious competition from industry titans. It doesn't matter if a startup charges half the price if it might not be around in a year or two. Nobody gets fired for buying Microsoft.
Somewhat off-topic, but I hate this quote. Replace Microsoft /w IBM/Oracle/etc and it's still a straw man argument.
I recently worked for someone who came on to replace the CTO of Java-shop, brought in a number of Microsoft developers, and was unceremoniously fired after less than 2 years.
Your example has the CTO coming in and changing one industry standard technology over another due to personal preference, and that's the reason he got fired. The story could just as easily been the other way around.
If a startup like Heroku comes along that's a more direct customer to AWS, despite being the darling of a site like this (myself included), nobody in enterprise land is going to touch it with a 10 foot pole. MS could compete toe to toe with Amazon for this business, and that's my point.
At their core, Microsoft tends to be very practical when it comes to B2B relationships.