What Jeff Bezos' CEO move means for Amazon's future and his complicated legacy
Jeff Bezos is making way for a new era of leadership at Amazon, removing himself as CEO by July, as the company looks toward the future—which includes platforms everywhere for fast-growing segments of the business including cloud services and advertising.
On Tuesday, Amazon made the abrupt announcement that Bezos would hand over the CEO spot to Andy Jassy, head of Amazon Web Services, which is a portion of the company that on its own would be one of the biggest tech giants in the world. Bezos’ departure comes as Amazon looks to expand aggressively overseas, build a retail logistics empire, an advertising business, and has its sights on video everywhere.
“Can't blame someone who led the company to these heights, to hand over the reins to someone who has the time, will, and energy to build a legacy of their own,” says Nii Ahene, chief strategy officer at Tinuiti, a marketing and intelligence firm that was spawned by the advertising and consumer interest in Amazon.
Bezos and Amazon did not divulge too many details about why the founder chose now to leave, after almost 27 years since starting the company in 1994. But Amazon did release its final quarterly report from 2020 on Tuesday, which showed that it is steamrolling ahead into new business opportunities and markets. At the same time, Bezos has become a focal point for the company’s detractors, which have criticized part of the cutthroat culture that made Amazon a force to reckon with, and also one to fear.
Here is what we know about Bezos' departure and what it says about Amazon’s future.
Amazon faces pressure
“This was a surprise, and I don’t think many in retail expected this to happen this quickly,” said Sucharita Kodali, VP and principal analyst at Forrester, in a research note after the announcement. “Bezos [who is 51] is still relatively young for a CEO and I do wonder if the pressure of the government investigations, which a PR team cannot change, played a role in this decision at this time. His letter seemed to say that he does want to focus on innovation, which seems to be his passion.”
Last year, there were investigations and congressional inquiries starting to build against the company. Amazon is a $1.7 trillion retail giant now, but there have been growing concerns about how it got that big. Bezos is credited as a genius inventor for starting the company as a simple internet-driven bookstore, but he always had the ambition to be the “everything store” that it is close to becoming.
In July, Bezos was called to testify in the U.S. Congress about some of the practices that built Amazon. There have been reports of abuses of data, where people within Amazon could have tapped into information flowing through its market, giving them intel on rivals to build competing products. Amazon under Bezos has also been a shrewd operator wielding all the parts of the business—Amazon.com, Amazon Web Services, Prime Video, Amazon Advertising, Amazon Publisher Services—to negotiate the most favorable position for itself. Congressional investigators have probed how Amazon has treated small brands after they become reliant on its marketplace. The larger Amazon grows the more dependent independent retailers are on the platform to reach consumers, raising anticompetitive concerns.
Those issues have been raised overseas, too, which is where Amazon needs to find new markets. The European Union and India are both investigating Amazon.
Bezos has become a convenient target for Amazon’s critics. His wealth has soared, and the general mood has been against such accumulation of wealth. Bezos is worth close to $200 billion.
Web services and advertising have pointed the way for Amazon’s future. Web Services is on pace to do $51 billion a year in revenue. It is the cloud infrastructure that major corporations and small businesses use to run their own computing. In recent months, Web Services signed Twitter, JP Morgan Chase and ViacomCBS, to name a few.
“Andy [Jassy] has been here since 1997,” said Brian Oslavsky, Amazon chief financial officer, in the earnings call on Tuesday. “He is not only a visionary leader, but he's also a strong operator as I said, and he's got a great track record of developing multiple things and businesses within Amazon. Not the least of which is AWS, which is arguably the most profitable important technical technology company in the world.”
Meanwhile, Amazon’s “other” category, which comprises advertising, grew 64% year-over-year in the fourth quarter to $7.9 billion. The company has become the third part of the digital ad triumvirate that includes Google and Facebook in the U.S.
Kodali says that Jassy will be on the lookout for the next moneymaker. “Can they grow internationally? They haven’t been wildly successful there, at least recently,” Kodali says. “What new businesses will they enter so that a smaller percent over time is retail?”
“As much as I still tap dance into the office, I’m excited about this transition,” Bezos said in his CEO departure letter to employees. Bezos will stay on as the executive chairman of the board of directors at Amazon and be in the loop on big-picture strategies. He said he wants to focus on his pet projects and other ventures, including space exploration through Blue Origin and his ownership of the Washington Post.
His letter to employees was also a summation of his case for how he ran Amazon, highlighting how he employed 1.3 million people, and that Amazon became one of the largest companies to implement the $15 minimum wage.
There are community groups, labor organizers and activists that have called out Amazon’s business practices. In 2020, there were concerns about how warehouse workers were treated on the frontlines of COVID-19, as they are the lifeblood of shipping goods and food to people at home.
This week, Amazon was fined by the Federal Trade Commission for how it recalculated pay for delivery drivers, and allegedly clawed back some of their tips. Amazon agreed to pay $61.7 million in the case.
Amazon has also had conflicts with labor organizers trying to unionize. Amazon’s impact on the world is complex, says Salim Holder, co-founder and CEO of 4th Ave Market, an e-commerce platform that is trying to make its own mark on retail by empowering brands, especially Black-owned ones, and consumers.
Bezos always touted a singular obsession with the consumer, and serving them, but there are higher principals at play sometimes, Holder says.
“The focus [at Amazon] was on getting the consumer what they want and quickly, but they likely didn't have as great an obsession for ensuring the impact to the community was equally positive,” Holder says.