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Jeff Bezos will hand CEO role to Andy Jassy; Amazon reports record profit

Amazon's founder will remain as executive chairman. Jassy is head of Amazon Web Services and has been with the company since 1997.

Amazon CEO Jeff Bezos
Amazon CEO Jeff Bezos is planning to transition out of his role. 
James Martin/CNET

Amazon CEO Jeff Bezos will step down later this year, turning over the reins of the world's largest e-commerce company to Andy Jassy, a longtime lieutenant who runs Amazon Web Services. Amazon nested the news in its announcement of fourth-quarter earnings, which beat expectations. 

The transition comes as Amazon navigates a tricky period in its history. The company is reaping huge profits as consumers, locked at home because of the COVID-19 crisis, become more reliant on both e-commerce and online services. That in turn has attracted regulatory scrutiny from lawmakers concerned about the power Amazon has over the retailers who use it as an online storefront. 

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Amazon's power was on ample display in the fourth quarter. Net income rose to $7.2 billion, or $14.38 a share, from $3.3 billion a year ago. Net sales jumped 44%, to $125.6 billion. Both figures handily beat Wall Street estimates of $7.23 per share in earnings and $119.7 billion in net sales, according to Yahoo Finance. (Amazon had previously forecast sales of between $112 billion and $121 billion.)

Bezos will leave his role after having built a juggernaut that reshaped online retail and that gained cloud computing market share by building on the infrastructure Amazon needed to run its own giant sales platforms. He also oversaw efforts that created devices from the Kindle e-reader to the Echo smart home system, forays into television and movies with Prime Video, and ventures into the world of groceries, including the purchase of Whole Foods Markets. He even got into podcasts, with a subscription service and the purchase of podcast publisher Wondery.

Jassy is an experienced Amazon hand, who started with the company in 1997. He shaped AWS from inception and became head of the division in 2016.

While most people know Amazon for its e-commerce operations, AWS typically accounts for the largest chunk of Amazon's revenue. It brought in $12.7 billion in net sales in the fourth quarter. AWS dominates the market for cloud services, accounting for around a third of the market share. The division provides businesses with database storage and cloud computing services, including support for machine learning and artificial intelligence endeavors.

Jassy isn't nearly as well known as Bezos, but he's spoken on controversial issues in tech. In 2019, he criticized President Donald Trump for bringing politics into the bidding process for a major Department of Defense contract that Microsoft ultimately won.

He's also defended Amazon's development of facial recognition tools, saying governments should have access to the most advanced technology to keep their citizens safe. In a 2019 interview with PBS' Frontline, Jassy indicated he was aware of the potential for AWS technology to be abused. "If there's any kind of documented proof of people misusing the technology, we will suspend people's ability not just to use the technology but to use AWS," he said, addressing the concerns about law enforcement's use of facial recognition.

The company followed through on the sentiment last month, suspending cloud hosting services to social media platform Parler for failing to moderate content that advocated violence after Parler was used by rioters who stormed the Capitol on Jan. 6.

Amazon headed into the last three months of 2020 having generated enormous profit, even though it spent billions to address logistical problems presented by the coronavirus pandemic, which saw the company struggle to keep up with a surge in orders in April. At the time, Bezos warned Amazon could spend more than $4 billion on dealing with the pandemic that quarter. Amazon projected it would spend that much again in the final three months of 2020 dealing with the pandemic.

The company has also faced the challenge of keeping its vast workforce safe from the coronavirus. In October, Amazon said the virus had infected 20,000 US front-line employees, including grocery workers at Amazon-owned Whole Foods Market. The company rolled out safety and testing measures to protect workers.

Holiday sales were widely projected to lift Amazon's revenue as e-commerce companies experienced a boost from customers on lockdown, and they delivered. In its press release, the company said it shattered its holiday records, "delivering more than a billion toys, home, fashion, electronics, beauty, and personal care products to customers worldwide."

On a call with investors, Amazon CFO Brian Olsavsky said the company will have to keep spending to address pandemic demands. "Hopefully, the vaccine gets going," he said.