Bezos successor takes over as scrutiny over labor, antitrust practices grows
Andy Jassy steered Amazon Web Services to market dominance. Now he'll lead Amazon after taking over for Jeff Bezos on Monday.
Laura HautalaFormer Senior Writer
Laura wrote about e-commerce and Amazon, and she occasionally covered cool science topics. Previously, she broke down cybersecurity and privacy issues for CNET readers. Laura is based in Tacoma, Washington, and was into sourdough before the pandemic.
ExpertiseE-commerce, Amazon, earned wage access, online marketplaces, direct to consumer, unions, labor and employment, supply chain, cybersecurity, privacy, stalkerware, hacking.Credentials
2022 Eddie Award for a single article in consumer technology
Five months since Jeff Bezos announced that Andy Jassy would be the next CEO of Amazon, the time for the handoff is here. Bezos bowed out on Monday, becoming executive chair of the company's board at a time when Amazon has racked up unprecedented earnings while attracting regulatory scrutiny.
Jassy, already a chief executive in his own right as the head of Amazon Web Services, has become the face of a company trying to portray itself as a thoughtful employer, a steward of the environment and a good corporate citizen. To that end, the company last week added two new principles -- "Strive to be Earth's best employer," and "Success and scale bring broad responsibility" -- to a list of guidelines for employees in leadership roles.
Amazon has grown larger than ever, thanks in part to the pandemic. Its already enormous retail business has spent the past year scaling up to meet the surge in demand from pandemic shoppers stuck at home. The company will benefit from consumers' increased penchant for shopping online for food, beverages and pet supplies, trends that e-commerce observers say will remain intact even with storefronts open again in the US. Additionally, Jassy's own
unit controls a third of the market and holds fearsome power when it comes to what services it keeps online.
Pushing against this image of a friendly Amazon are ongoing antitrust probes, lawsuits and potential legislation. The company's ability to compete with other brands on its own online marketplace has helped prompt a group of federal lawmakers to propose legislation that would essentially separate those business categories and strip away any competitive advantage for Amazon.
The National Labor Relations Board is also reportedly considering an investigation into a pattern of retaliation against workers who organize walkouts at Amazon, after finding in some cases the company illegally fired or disciplined these workers. Amazon also awaits a decision from the labor board on whether its actions during a union organizing campaign at an Alabama warehouse violated labor laws, which has the potential to prompt a new union election. The International Brotherhood of Teamsters has announced that building worker power at Amazon is its top priority.
As with Bezos before him, Jassy will have to deal with this scrutiny while undertaking a massive leadership role. How he'll handle investigations, in addition to steering divisions of the company he wasn't previously in charge of, remains to be seen. He quietly built Amazon's cloud service business into a market leader and the company's most profitable segment. But he hasn't faced the questions of regulators and Congress.
His past press appearances show Jassy is comfortable speaking to controversy and conversant in Amazon's stances on its size and dominance. But he wasn't the person in charge of the company then.
Analysts weren't surprised by Jassy's promotion. A seasoned Amazonian who has worked closely with Bezos, Jassy built up AWS from its beginning in 2003. In a foreword to a 2017 book about cloud computing, Jassy wrote that his team took an internal software tool developed to increase efficiency in Amazon's engineering teams and made it into a valuable product for other businesses, too. This led to the creation of Amazon Simple Storage Service, or Amazon S3.
Since then, AWS has come to dominate the cloud computing industry, and Jassy has continued to rise in prominence at the company. By 2020, Jassy had come to own more than $35 million worth of Amazon shares as part of his compensation. On Monday, he was granted an additional 61,000 shares that will vest over ten years. By the market's opening on Tuesday morning the additional shares were worth more than $215 million.
Amazon didn't make Jassy available for an interview for this story. His past speeches and writings show Jassy embraces Bezos' ethos of going all in on a new idea, building on any success or moving on if it flops.
"This is an astute approach to succession planning," said Nicholas McQuire, an analyst at CCS Insight who focuses on executives. "Bezos created the blueprint for internet businesses: rapid innovation, huge scale and relentless focus on the customer," he said, adding that Jassy is one of the few people who can replicate that formula.
"Often you're going to have to reinvent yourself multiple times over" to build a business that will last for decades, Jassy said in a keynote address at AWS' re:Invent conference in December He went on to praise Netflix for "cannibalizing its own DVD rental business" when it anticipated how important streaming would become.
Jassy's grasp of why cloud computing became essential to businesses everywhere also applies to Amazon's larger success story. "With the cloud, you provision what you need, scale up seamlessly when needed, and shed resources and costs when it's not needed," Jassy said in the foreword to the 2017 book.
It's the kind of flexibility that's at the center of Amazon's ethos.
Jassy will have to face controversy
Carrying on a corporate mantra that has made Amazon a success for shareholders is one thing. Another is facing external criticism and attempts at regulation. That same taste for scaling has put Amazon in the crosshairs for its market dominance and potential power to quash or acquire competitors.
In a 2019 interview with PBS' Frontline, Jassy dealt with questions about whether Amazon has too much power. At the time, he said Amazon doesn't see itself as so big, only making up about 1% of the retail sector internationally. It will be a different task to convince antitrust regulators that Amazon reaping $1 of every $100 of global retail sales isn't astounding. (Its share in the US is higher).
Watch this: Jeff Bezos steps down as Amazon CEO after building an empire
Regulators are particularly concerned about Amazon's private label business and its potential ability to unfairly undercut other retailers on its platform with cheaper competing products.
Jason Schloetzer, a professor of business administration at Georgetown University, said Jassy will have to take a diplomatic approach as the face of Amazon. Still, the incoming CEO likely won't have to give up his political stances, he said. "It seems that there is a groundswell of organizations starting to take these more public stances," Schloetzer said. "It's part of the movement of organizations trying to have a positive role in society, rather than just being there to generate shareholder value."
Then there's Amazon's ability to control what exists on the internet. AWS commands more than a third of the cloud market. Technically, AWS could also take a lot of the internet offline. In the same Frontline interview, Jassy alluded to this power.
"If there's any kind of documented proof of people misusing the technology," he said, "we will suspend people's ability not just to use the technology but to use AWS."
Jassy was addressing concerns that law enforcement would abuse its facial recognition technology. But his words took on new meaning this year when AWS suspended cloud hosting services to Parler, a social media platform used during the Capitol riot on Jan. 6, for not moderating content calling for violence.
Now Jassy will have to take heat from Congress and regulators not only as Amazon's CEO, but also as the owner of the decision to take Parler offline. Whether or not AWS was right to do so, he'll have to explain what it means that the company could.