I worked as a system engineer there from 2001-2006. That all sounds a wee bit apocryphal. At the time S3 came into being Amazon was rather insanely jealous of Google and Google Mail's storage capacity and the Google File System whitepaper published in 2003. I can certainly believe that aggravation over not being able to provision storage may have been used to 'sell' that to the S-team and/or might have been the proverbial last straw, but those ideas were all in the air -- "we should build our own GoogleFS" was very common talk. The number of home-grown, shitty distributed filesystems that had no replication and N single points of failure caused all the SEs to pull their hair out -- "oh another royal clusterf*, hand built by yet another software dev team, and tossed over the proverbial chinese wall for us to maintain, when we had no input into the design, awesome..."

I also don't think that EC2 was borrowed from Alexa at all. There were political reasons why that development happened in Cape Town (it insulated them from Seattle politics and in particular from the VP who was over my head who hated the whole idea).

I think Alexa led to the Amazon search engine -- which i thought was called something like a6 (kind of like i18n is short for "internationalization" but with a6 being short for "amazon" -- but that doesn't quite sound right and I think I'm thinking of an Audi -- it was something like that though). They were in SF and setting up a satellite there to hire engineers away from Apple and Google. I also recall them doing some good work on SEO and fixing our URLs and such to get better search placement on Google which drove significant revenue. I don't think they had anything to do with EC2, but there could be some kernel behind the scenes that I wasn't aware of -- however it all smells wrong to me.