Amazon founder Jeff Bezos is stepping down as the company’s CEO.
Jeff Bezos is going the route of Steve Jobs, Bill Gates and Larry Page, ceding the CEO responsibilities of a powerhouse company in full stride. For more than a quarter century, Amazon has been slowly building up its influence and dominance, going from an online retailer of books to a marketplace for virtually anything you think of. It’s reached new heights of influence and relevance amid our pandemic-driven locked-down lives. Bezos has spent that tine shattering the status quo, changing everything from how we buy everyday items to how we interact with the gadgets in our homes.
Buried a few paragraphs into the company’s blowout fourth-quarter report Tuesday was the announcement that Bezos, the world’s second-wealthiest man behind Elon Musk, would step down as CEO to become executive chairman in the third quarter. In his place will be one of his key lieutenants, Andy Jassy, who runs the highly profitable Amazon Web Services business. The elevation of an Amazon veteran should ensure a smooth transition — not that Bezos is likely to be completely hands-off with the business.
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Since founding Amazon in 1994, Bezos has gone on to reinvent the company dozens of times. In the process, Amazon has muscled in on or outright dismantled whole industries. From a simple online retailer, Amazon expanded into cloud services and artificial intelligence through its Alexa digital assistant, which powers millions of smart homes. It’s even taken a stab at physical retail — which it’s in the process of destroying — through its ownership of high-end supermarket Whole Foods Market and a host of experimental stores.
But millions know Amazon through its core Prime service, which has evolved from a subscription delivery service into a digital platform that offers streaming video and music, photo storage and other services. It’s grown from a luxury to an essential for people reluctant to leave their homes in the middle of the coronavirus pandemic and more comfortable having everything from toilet paper to this week’s groceries delivered to their doorstep. That dynamic was amply illustrated by a fourth-quarter net profit of $7.2 billion, more than double its year-earlier total.
“Jeff Bezos really knows how to go out on a high note,” said Andrew Lipsman, eMarketer principal analyst at Insider Intelligence. “The news of his stepping down from the CEO role will certainly overshadow what was a truly historic quarter.”
Amazon’s dominance has raised questions about the power that the company wields, amid a broader, more skeptical look at the role that Big Tech plays in our lives. Stepping down will presumably allow Bezos to step away from the day-to-day operations of Amazon, giving him time to focus on other pursuits, including his aerospace company Blue Origin.
To think, it all started with physical books. Remember those?
From books to Yeti statues and Hollywood
When Bezos started Amazon (originally known as “Cadabra”) in 1994, the biggest selling proposition was discounts on books. In a warehouse tour with CNET staffer Ron Reagan in 1997, Bezos crowed about the 30% discount offered on every New York Times bestseller. In a video accompanying the story, you can see workers manually printing out orders and picking out books by hand.
That’s a far cry from the robots and automated systems that live in fulfillment centers like its 1.2 million-square-foot (that’s 26 football fields) facility in Fall River, Massachusetts, which ships everything from iPhone chargers to life-size Yeti statues.
It’s also different from the core Prime program, which was introduced in 2005 as an all-you-can-eat delivery service that promised two-day shipping without costs beyond its subscription fee. The model echoed warehouse club programs like Costco’s, which charge a monthly fee to access discounted products.
“It is a smart move for Bezos and Amazon and you can be sure he will still be in charge of vision and direction of Amazon.”
Tim Bajarin, analyst, Creative Strategies
The program started out as a nice-to-have, but became more useful as Amazon stocked more and more products, often at prices cheaper than brick-and-mortar competitors like Walmart or Kmart offered. Amazon began adding new services to Prime, including a streaming video offering complete with original shows, and later photo storage, ebooks and gaming. A year ago, Amazon said it had 150 million Prime subscribers in 19 countries.
Bezos, meanwhile, brought Amazon to Hollywood in 2010 with the founding of Amazon Studios, the company’s original film and video arm. Amazon Studios was initially designed as a riff on the disruption Amazon brought to books with self publishing. At first, the division aimed to mine a community of amateur screenwriters and filmmakers to uncover gems that would normally never get past the gatekeepers of Hollywood: find a hit like Fifty Shades of Gray, but for TV or movies.
But it didn’t take long for Amazon to realize that paying a lot of money to people who are already skilled at film or television tended to deliver better results — aka the Netflix model. In public view, Bezos was probably most associated with Amazon Studios as his personal entry point to showing up in the audience at the Oscars or Golden Globes.
The growth of all of its businesses has turned Amazon into a massive employer. During the past year alone, the company hired hundreds of thousands of employees to meet the increased demand for, well, just about everything as it struggled to keep up with the order volume.
Less visible yet just as important is Amazon Web Services, founded a year after Prime, which offers on-demand cloud computing. Under Jassy, AWS has grown to be the market leader by a large stretch. Even though demand for Prime has driven Amazon’s revenue growth, AWS has long served as the engine for profits. In the latest quarter, AWS made up nearly half of Amazon’s total operating income.
Kindle to Echo
Amazon’s Kindle Paperwhite e-ink e-reader.
Bezos’ push to disrupt things didn’t just apply to retail. In 2007, he unveiled the Amazon Kindle e-reader, which sparked the ebook market. While other e-readers existed, the svelte Kindle allowed wireless downloads of books, setting it apart.
The Kindle marked the start of an explosion of hardware from Amazon, all designed to tie people back to its core online store and Prime service. The most significant was the debut of the Echo speaker in 2014, at the time a curiosity with its voice-activated Alexa digital assistant. But Amazon continued to add capabilities to Alexa, allowing it to offer sports scores, weather updates and headlines from NPR. Its expanded support allowed Alexa to power smart home gadgets like lights and air conditioners.
Amazon’s success kicked off a race to control the smart home, with Google pushing its own assistant in its Home line of speakers, and Apple pushing Siri in its HomePod lineup.
Bezos has had his share of flops. Most notably, Amazon tried to break into the phone market with the Fire Phone, which featured a multicamera and 3D display gimmick, but it was panned for the way it hooked into shopping as one of its key drivers.
Still, Bezos has never been afraid to experiment, as evidenced by Alexa-powered glasses and the Echo Loop ring. Amazon in October offered its most ambitious lineup of new products, which included a new cloud gaming service, a Ring camera drone and bulbous new Echo Dots, cementing its position as a tech hardware leader.
Then there’s Amazon’s Prime Air drone delivery service, which people thought was a glorified publicity stunt when Bezos showed it off during a 60 Minutes interview in 2013.
Back to physical
Though Amazon is responsible for the destruction of a number of brick-and-mortar stores — do you remember Virgin Megastore, CircuitCity or Barnes and Noble? — that hasn’t prevented Bezos from experimenting with physical retail.
Bezos in 2017 spent $13.7 billion to acquire Whole Foods Market in what was its largest acquisition ever. All of a sudden, the online retailer had roughly 460 physical stores.
Later that year, it launched Amazon Books, a throwback to its original mission statement. In 2018, the company began rolling out its cashierless Amazon Go stores, as well as an experiment with an alternative to Whole Foods.
Beyond the concept stores, Amazon has long owned a large number of fulfillment centers and warehouses, where many of its controversies have erupted. The company has long fielded complaints about the treatment of its warehouse workers, including pregnant employees who sued the company for discrimination.
Amazon also ran into criticism early in 2020 as it struggled to protect its workers from the coronavirus, prompting lawmakers to press the company to do more to address coronavirus infections. The company also drew criticism for firing three warehouse workers who spoke out against working conditions, although it argued that the employees “violated internal policies.” The company has stepped up its spending in the area and spent $4 billion on COVID-19-related costs in the fourth quarter.
From tech titan to tabloid fixture
Bezos’ high profile has made him a target of just about everyone. In 2018, Sen. Bernie Sanders, a liberal independent from Vermont, introduced a bill that would tax the wealthy. The name of the proposed legislation? The Stop Bad Employers by Zeroing Out Subsidies, or Stop BEZOS, Act.
Jeff Bezos and MacKenzie Scott.
Jorg Carstensen/dpa/AFP/Getty Images
Former President Donald Trump routinely targeted the tech billionaire, Amazon or The Washington Post in his Twitter broadsides. Bezos’ ownership of the Post was a particularly sore point for Trump, who often received unflattering coverage in the paper. (Before Trump was elected, Bezos pushed back, offering to send Trump into space on a Blue Origin rocket.)
Bezos became the stuff of gossip rags after he and then-wife MacKenzie Bezos announced their divorce on Twitter. This was followed by a story from the National Enquirer that detailed his relationship with Lauren Sanchez, the wife of WME talent agent Patrick Whitesell, which also included a series of text messages sent to each other.
The story took a strange twist a month after the divorce announcement when Bezos published a lengthy Medium post alleging an apparent blackmail plot by the National Enquirer. He said the publication was threatening to release nude photos of him unless he ended a private investigation into how the tabloid got ahold of his text messages to Sanchez.
Bezos also said the publication called for him to say publicly he found no proof that the Enquirer’s reporting was politically motivated. Besides having a feud with Bezos, Trump had close connections to the Enquirer.
“Rather than capitulate to extortion and blackmail, I’ve decided to publish exactly what they sent me, despite the personal cost and embarrassment they threaten,” Bezos said in the post.
The twists continued after a private investigator alleged that Saudi Arabia hacked Bezos’ phone and private information. Gavin de Becker, the investigator, came to that conclusion after Bezos hired him to figure out how private messages about a personal relationship were leaked to a tabloid. A United Nations report came to the same conclusion.
The Saudi government has denied the allegations.
Feeling congressional heat
Jeff Bezos grabbing a quick bite during the Congressional testimony Wednesday.
GIF by Laura Hautala/CNET
In 2020, the continuing rise of Amazon coincided with increased scrutiny from lawmakers, who questioned whether the company was abusing its power as an online marketplace for other smaller vendors. Bezos was among the four big CEOs — the others were Apple’s Tim Cook, Alphabet’s Sundar Pichai and Facebook’s Mark Zuckerberg — who faced the US House of Representatives’ antitrust subcommittee in July.
The questioning centered on Amazon’s use of its private label and whether it gives the company an unfair advantage over other companies using the platform to sell their goods. It’s an issue likely to persist as lawmakers dig into the power of Big Tech.
“Bezos is still relatively young for a CEO and I do wonder if the pressure of the government investigations, which a PR team cannot change, played a role in this decision at this time,” said Forrester analyst Sucharita Kodali.
It’s not like Bezos needs the money — he’s worth nearly $200 billion, according to Forbes. He’s expected to spend more time on other initiatives like Blue Origin, as well as his Bezos Day One philanthropic organization.
Tuesday’s surprise move took many industry observers aback, but analysts believe Bezos will be around to offer his vision and ensure that Amazon keeps experimenting.
“Strategically, it is a smart move for Bezos and Amazon and you can be sure he will still be in charge of vision and direction of Amazon,” Creative Strategies analyst Tim Bajarin said on Twitter.
CNET’s Joan E. Solsman and Queenie Wong contributed to this report.