On one hand, as Amazon opens up the pieces that comprise its architecture, they begin to compete for external customers. On the other hand, Amazon itself keeps using its own solutions.

By the way, it’s not just that Amazon prevents its divisions from becoming ‘fat and inefficient’ by opening them up to external competition. Crucially, thanks to commoditising early and getting tons of companies to use its platform, Amazon can now see how others innovate on top of it (having low-level access to consumption information) and quickly follow on anything new, basically innovating but without risky R&D of their own[0].

[0] Simon Wardley wrote about Innovate—Leverage—Commoditise (ILC) approach here: http://blog.gardeviance.org/2014/03/understanding-ecosystems...

I’d also recommend his book (https://medium.com/wardleymaps/on-being-lost-2ef5f05eb1ec) and the intro to value-chain mapping (http://blog.gardeviance.org/2015/02/an-introduction-to-wardl...). It’s not about Amazon per se, but it helped me personally understand the strategy.