According to Matt Wood, vice president of artificial intelligence at Amazon Web Services, the tool can understand medical language. Additionally, doctors don't have to worry about calling out commas and periods; the software will take care of that automatically. Wood also claimed that Transcribe Medical is very accurate, though Amazon has yet to publish a study that shows just how well it works. Lastly, doctors can use the software in conjunction with Comprehend Medical, a tool Amazon announced last year that can read unstructured medical text and then pull information like dosages and symptoms from it.

"Our overarching goal is to free up the doctor, so they have more attention going to where it should be directed," Wood told CNBC. "And that's to the patient."

For Amazon, Transcribe Medical is just the company's latest foray into the lucrative healthcare industry. Earlier this year, the company announced Amazon Care, a service that allows employees to take advantage of virtual doctor consultations and in-home follow-ups. Moving forward, the issue Amazon is likely to face as it tries to convince both doctors and their patients to use Transcribe Medical is -- as always -- related to privacy.

Wood told CNBC the tool is fully compliant with the federal government's Health Insurance Portability and Accountability Act (HIPAA). Amazon, however, will likely have to go above and beyond the requirements of the law to satisfy privacy critics. HIPAA doesn't provide detailed guidance on how healthcare companies should secure digital patient medical records and hasn't been updated since 2013. The urgent need for updated legislation was highlighted earlier this year when a ProPublica report found that the records of some 5 million patients in the US were easily accessible with free software. The company will need to be specific about how any data will be used, and who has access to it.