Amazon's Jeff Bezos will pass CEO role to Andy Jassy as company reports record profit
Amazon's Jeff Bezos will pass CEO role to Andy Jassy as company reports record profit
Amazon's founder will remain as executive chairman. Jassy is currently head of Amazon Web Services and has been with the company since 1997.
Feb. 2, 2021 4:43 p.m. PT
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Amazon CEO Jeff Bezos is planning to transition out of his role.
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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.)
Jassy is an experienced Amazon hand, who started with the company in 1997. He shaped AWS from inception and was made 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 then-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.
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Parler loses bid to require Amazon to reinstate its account
The social media platform says it will press on with its claims that Amazon Web Services violated antitrust law.
Jan. 21, 2021 1:09 p.m. PT
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Amazon doesn't have to reinstate cloud hosting services for Parler, a judge ruled Thursday in a Seattle federal court. The ruling is a blow to Parler, a social media platform popular with right-wing extremists, which went offline earlier this month when Amazon Web Services suspended its account. Amazon said it took the action because Parler wasn't moderating posts from users advocating violence. The site has since returned online in a limited form.
The ruling Thursday rejected the social media company's request that the judge order Amazon to reinstate its services to Parler. Amazon said in a previous court filing that there was no legal precedent for a court to order a company to host content that promoted violence.
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Parler's request was part of a larger lawsuit alleging that Amazon violated contract and antitrust law by withdrawing its services in the aftermath of a pro-Donald Trump mob storming the US Capitol on Jan. 6. The judge didn't dismiss the case entirely Thursday, but in her written order she cast cold water on Parler's allegations. Parler has "failed to demonstrate that it's likely to prevail on the merits of any of its three claims," Judge Barbara Jacobs Rothstein wrote in her ruling.
In a statement, Parler said it was "disappointed" by the order. The company also noted the lawsuit is in its early stages, adding, "We remain confident that we will ultimately prevail in the main case."
Amazon said in a statement that it "welcomed" the ruling. "This was not a case about free speech," the company said. "It was about a customer that consistently violated our terms of service by allowing content to be published on their website that actively encouraged violence (and without an effective plan to moderate it)."
As the lawsuit continues, both companies will have a chance to collect additional evidence from each other to bolster their arguments.
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Amazon to pay $61.7M to settle FTC charges it withheld tips from Flex drivers
The e-commerce giant is paying up over charges it did not pay out customer tips to drivers for Amazon Prime Now and Fresh.
Feb. 2, 2021 8:25 a.m. PT
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Drivers for Amazon Prime Now and Fresh may have had some tips withheld by the e-commerce giant.
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Amazon will pay more than $61.7 million to settle Federal Trade Commission charges that it didn't pay its Amazon Flex drivers the full amount of tips owed to them, the agency said on Tuesday. The FTC says that money represents the "full amount that Amazon allegedly withheld from drivers" over a two-and-a-half-year period. The government agency says that Amazon "stopped its behavior only after becoming aware of the FTC's investigation in 2019."
The FTC said it'll distribute the funds to "compensate drivers," and those impacted can sign up for updates from the agency.
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Per the FTC's complaint against Amazon and its Amazon Logistics subsidiary, the e-commerce giant "regularly advertised that drivers participating in the Flex program would be paid $18-25 per hour for their work making deliveries to customers" and also told drivers that they would "receive 100% of the tips you earn while delivering with Amazon Flex."
Amazon Flex drivers deliver products for the company's Prime Now and Fresh services. In addition to telling drivers that they would receive 100% of their tips, the FTC says that "Amazon also assured its customers that 100% of any tips they paid would go to the driver."
In late 2016 Amazon moved away from the $18-$25 hourly rate plus tips to a lower rate, according to the FTC release, and did not tell drivers of the change. The FTC alleges that Amazon then "used the customer tips to make up the difference between the new lower hourly rate and the promised rate," which led to drivers "being shorted more than $61.7 million in tips."
The FTC says that Amazon stopped using that model in August 2019 "after the company received notice of the FTC's investigation." It then returned to a model where drivers get an "identified" base pay "plus 100% of tips."
"While we disagree that the historical way we reported pay to drivers was unclear, we added additional clarity in 2019 and are pleased to put this matter behind us," an Amazon spokesperson said in a statement. "Amazon Flex delivery partners play an important role in serving customers every day, which is why they earn among the best in the industry at over $25 per hour on average."