Tech startup files lawsuit against Amazon.com following failed web-traffic arrangement

3D printed clouds and figurines are seen in front of the AWS (Amazon Web Service) cloud service logo in this illustration taken February 8, 2022. REUTERS/Dado Ruvic/File Photo Acquire Licensing Rights

Nov 20 (Reuters) – A defunct tech startup that helped “Fortnite” maker Epic Games and other customers provide fast internet connections has sued Amazon.com’s (AMZN.O) cloud-computing unit AWS, accusing it of unlawfully ending a web-traffic agreement and driving it out of business.

Wyoming-based Subspace omega LLC filed its lawsuit against Amazon Web Services on Saturday in Seattle federal court, alleging violations of U.S. antitrust law and other state and federal laws. Subspace said it was seeking $417 million in damages.

Subspace shuttered in 2022 after five years in operation, following a move by AWS to end its “peering” agreement with the company, according to the lawsuit. Such arrangements let networks connect, often without cost to each other, to facilitate better web service to end users.

Subspace has claimed that Amazon’s move to end its agreement meant the company could no longer perform under its contract for Epic Games, which Subspace said was its largest client.

The lawsuit said Amazon took over Subspace’s “network optimization” services for Epic Games, whose multiplayer shooter game Fortnite is among the most popular online games.

An Amazon representative did not immediately respond to a request for comment on Monday.

Attorneys for Subspace did not immediately respond to a request for comment. Epic Games, which is not a defendant, declined to comment.

Amazon’s AWS, a major source of profit for the ecommerce giant, is the world’s largest cloud-computing provider. The unit delivered revenue of $23.1 billion in the third quarter.

In its lawsuit, Subspace claimed that “AWS had no legitimate business justification for refusing to peer with Subspace.” The agreement had “created a better network experience for their mutual network customers and thus was mutually beneficial for both companies,” it said.

Subspace said it had peering arrangements with network providers including Google and Microsoft, both of which offer competing services. Subspace said in its lawsuit that its services “were primarily used to accelerate real-time online applications for hundreds of millions of end users worldwide.”

The company said its business model became “unviable” after Amazon’s refusal to continue its peering agreement.

The lawsuit accuses Amazon of “malicious and anticompetitive tactics calculated to drive Subspace out of business.”

The case is Subspace omega LLC v. Amazon Web Services Inc, U.S. District Court for the Western District of Washington, No. 2:23-cv-01772.

For Subspace: Brett Vinson of Reynolds Burton and Vinson; and Tony Lee and Thomas Urban II of Fletcher, Heald & Hildreth

For Amazon: No appearance yet

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Reporting by Mike Scarcella

Our Standards: The Thomson Reuters Trust Principles.

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