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Founder Jeff Bezos will step back after about 27 years and hand over the presidency in the third quarter of 2021 to his former Crown Prince Andy Jassy, who leads the burgeoning cloud division. For the group, however, this shouldn’t mean a major change, as CEO Bezos remains the strong man in the background. Amazon quickly tried to downplay importance: Bezos will remain “very involved,” especially in big decisions, CFO Brian Olsavsky said.
A familiar Bezos
Meanwhile, Jassy’s promotion comes as no surprise – the 53-year-old has long been considered a favorite to succeed Bezos, who is only four years older. Jassy is a veteran of the company and a close confidant of Bezos. He created the lucrative cloud business and is responsible for Amazon Web Services (AWS), the division’s flagship, which has long become the group’s profit center. In light of the strong figures Amazon recently released, Bezos spoke of a “sweet spot for transition.” But Jassy also faces big challenges. In the cloud business, competition is increasing and regulatory pressure is increasing.
Bezos doesn’t want to retire yet
Bezos is likely to have a lot of influence on Amazon in the future. In a memo to employees, the 57-year-old stated that his decision was not about retiring. “I’ve never had more energy,” Bezos said. In your future role as Chairman of the Board of Directors, you want to focus your attention on new products and initiatives. The “New York Times” described the leadership change as possibly a “symbolic step”, which in fact did not change much. However, Bezos also said that this would give him more time for other projects such as his foundations, his space company Blue Origin or the newspaper “The Washington Post”, which is privately owned.
The online bookstore grew into a large corporation
On July 5, 1994, Bezos and his then-wife MacKenzie founded an online bookstore in a garage near Seattle. This resulted in one of the most valuable corporations in the world: Amazon. What started with books grew into the world’s largest Internet department store. Today, Amazon runs countless companies with its cloud services offering IT applications for start-ups and Internet storage space. The group also has its own supermarket chain in the United States and streaming services. By setting up its own delivery logistics, Amazon is putting pressure on parcel companies like UPS, Fedex and DHL, and no one really knows which industries will be next.
Bezos made the success of his company as a majority shareholder incredibly rich. With an estimated fortune of $ 197 billion (163.57 billion euros), he is currently the second-richest person in the world behind Tesla boss Elon Musk, according to the “Bloomberg Billionaires Index” (as of Wednesday). For a long time, Amazon had a difficult position in the stock market due to chronic red numbers, but since Bezos has been reliably turning a profit, he has also become a Wall Street darling. In September 2018, Amazon became the second public company after iPhone giant Apple to break the magic mark of a trillion dollars in market value. Most recently, its market capitalization was a whopping $ 1.7 trillion.
Even the news of Bezos’ resignation failed to surprise investors Tuesday night: The stock was clearly at plus on Wednesday before trading. Business is doing brilliantly: In the three months to the end of December, Amazon topped the $ 100 billion mark for the first time thanks to an order boom in the crown crisis and a strong Christmas business. Compared to the same period last year, sales increased 44 percent to $ 125.6 billion. Amazon could more than double its net profit at $ 7.2 billion. In fiscal 2020, the company earned $ 21.3 billion, an increase of 84 percent and a new record.
Meanwhile, Amazon’s biggest profit driver is not online commerce, but cloud business with IT services and internet storage space. In this sense, it is logical that Andy Jassy, the head of this division, has been promoted to future CEO. Amazon’s cloud platform, AWS, used by many businesses and applications, increased quarterly sales by 28 percent to $ 12.7 billion. Operating profit was up 37 percent to $ 3.6 billion, so Amazon’s winning machine is still in full swing. But the market is becoming increasingly competitive: With Microsoft and Alphabet, Google’s parent company, financially strong rivals are increasing the pressure.
Jassy also expects some other challenges, for example from antitrust authorities and other regulators. Amazon is accused of destroying the retail sector with its great market power and low prices. There are also frequent criticisms due to controversial working conditions. The most powerful enemy was still in the White House until recently: Former US President Donald Trump and Bezos were united in a bitter feud. The main reason was not so much the business, but Trump’s dislike of the Washington Post, which often reports critically on him. But even under Joe Biden’s new administration in the US, suspicions about Amazon are likely to remain high: Some high-ranking representatives of the two main US parties are even calling for the group to disband.
