Amazon reported a year of record growth last Tuesday, the day Jeff Bezos, Amazon founder, decided to step down as CEO.
The numbers show a 38% increase in net sales from 2019, netting the company $21 billion in income. Amazon’s share price was up about 1.5% following the announcement.
Bezos steps away from Amazon at a time when its market value hovers around $1.7 trillion, making it one of the most valuable companies in the world.
And we might never know the real reasons behind Amazon’s founder Jeff Bezos’s stepping down, but depending on how one sees it, they could be due to some arguments market experts are making, and we’re reporting.
Here we go.
Reason No.1: Build cloud services where the sky is the limit
Danny Allan, chief technology officer and senior vice president (SVP), product strategy at Veeam told AMEinfo:
“The new CEO of Amazon will be Andy Jassy, who has been at the head of the successful Amazon Web Services (AWS) for several years. This switch demonstrates, among other things, the enormous value and growth of AWS within Amazon. The company is a leader in cloud infrastructure and a source of innovation. It is precisely this cloud market that is also the place for further growth for Amazon. Andy Jassy knows this better than anyone and is the man who must provide continuity and stability as Amazon’s new leader.”
In Jassy, Bezos is tapping a longtime Amazon employee who joined in 1997 and built the company’s cloud services business, which started as a small addition to its e-commerce operations but has grown in recent years to account for roughly 60% of operating profit.
Reason No. 2: Focus on goodwill
Jeff Bezos is leaving the helm of the company he founded 27 years ago.
Bezos will transition to the role of executive chair in the third quarter of this year, which starts July 1, the company said.
In a memo to employees, Bezos said the transition will give him “the time and energy I need to focus on the Day 1 Fund, the Bezos Earth Fund, Blue Origin, The Washington Post, and my other passions.”
In addition to dedicating time to his space exploration company Blue Origin, Bezos said he plans to focus on his philanthropic efforts including the Day 1 Fund and the Bezos Earth Fund, which are focused on helping homeless families and starting preschools in low-income communities and climate change, respectively.
Reason No. 3: Escape antitrust proceedings
It’s not clear what this announcement means, whether Bezos wants to genuinely give up power or whether he wants to continue making decisions while having someone else testify before Congress or in potential antitrust proceedings.
This week, Amazon announced that third-party businesses in the US sold 1bn products through Amazon’s marketplace, making it not an online retailer, but almost an economy in itself.
Amongst its many offerings are cloud computing, retail and logistics arms, podcasting to low-orbit, satellite-delivered broadband, home security, microchip development, prescription drug distribution, trucking, and military contracting.
According to the Guardian, Bezos could build Amazon the way he did because traditional business tactics that had been illegal, like pricing goods below cost to drive rivals out of business, had become commonplace and legalized by a judiciary that accepted these arguments.
When Bezos faced a competitor, Diapers.com, he reportedly had Amazon spend hundreds of millions of dollars a month to undersell his rival and then offered to buy them out on the cheap. Faced with unlimited capital willing to bear losses, they had no choice but to sell out, said the Guardian.
Amazon is now a middleman in multiple sectors of the economy, setting the terms and conditions by which Americans conduct online commerce. “They aren’t gaming the system,” one literary agent told the Wall Street Journal in 2019. “They own the system.”
“As Jeff Bezos steps back, or does whatever it is he is doing, we should also recognize that this framework is falling apart. Amazon’s sister monopolies, Facebook and Google, are facing existential antitrust suits in which the government is asking for them to be broken up. Amazon itself is being investigated by the Connecticut attorney general,” added the Guardian.