New AWS customers will be able to run a free Amazon EC2 Micro Instance and a free Amazon RDS Micro Instance for a year, while also leveraging a free usage tier for Amazon S3, Amazon Elastic Block Store, Amazon Elastic Load Balancing, and AWS data transfer.
If you're interested, here are the exact terms of the AWS free usage tier.
I also see this as a shot across the Oracle bow (I'm imagining Larry Ellison on his America's Cup race boat now).
It's a pretty obvious interpretation when you consider that they made the announcment in the middle of Oracle's yearly OpenWorld conference and the fact that Amazon is holding a webinar specifically about Amazon RDS on Oracle in a few weeks.
Oracle has been doing a lot of talking about it's upcoming IaaS to challenge Amazon, and it seems that Amazon has responded quickly to try and squash any doubt that it will continue to dominate in that space and in cloud persistence services that use Oracle's own database.
But let's not forget that you still have to pay your Oracle license before you can use it with RDS.