Andy Jassy has been one of Jeff Bezos’s key executives at Amazon for a long time now. He knows the business inside and out. But he’ll be facing some substantial challenges when he takes the CEO position in the third quarter of this year, with Bezos stepping back to the role of executive chairman.
Bezos was a former hedge fund guy who drove from New York City to Seattle with his wife MacKenzie in 1994 to bet it all on an online book business. (Things went pretty well.) Jassy joined Amazon in 1997 as a marketing manager. He proved himself by kickstarting the AWS cloud storage business in 2003 and growing it into a market-leading, billion-dollar business.
These are the issues that will await Jassy on Day 1.
1. The antitrust threat
Amazon has a history of first helping, then hurting its friends. The Wall Street Journal’s Dana Mattioli and Cara Lombardo reported that Amazon has on a number of occasions invested in a startup, learned its product and strategy, then used that knowledge to develop a competing product. In the cloud world, AWS has slowly crept into more and more industries, and many of its customers have reportedly worried that AWS may use what it learns to open businesses that compete with theirs. Amazon did something like that in the healthcare industry with Amazon Pharmacy. Jassy has called these allegations “folklore.”
But the most serious example of Amazon’s frenemy games comes from its dealings with sellers on its core e-commerce platform. Sellers have complained that Amazon watches for successful products on its platform, launches its own Amazon-branded version of the product, then gives that product preferential treatment in its marketplace. And legislators have take notice. Elizabeth Warren made it a marquee campaign promise to bar tech companies from operating a marketplace and selling their own products on it.
Now the FTC is investigating Amazon’s practices and may eventually file a large antitrust case against the company. Committees in both the House and Senate are also working on plans to overhaul antitrust law, which could result in giving the FTC more latitude and lawyer power to go after Amazon. Jeff Bezos has always been the face of Amazon’s defense in such matters, and it’s possible he could remain so. But the problem will rest on Jassy’s desk, and he will be neck-deep in the day to day legal strategy to defend the company.
2. Labor unrest
For its entire history, Amazon has managed to keep its employees from unionizing. But Jassy takes the helm just as that grace period may be coming to an end. In Birmingham, Alabama, roughly 6,200 full-time and temporary workers will cast ballots this month and next favoring or opposing forming a union. The votes will be tallied on March 30 in the first union election in Amazon’s history. If the Birmingham employees vote to unionize, and the movement begins spreading to other Amazon fulfillment centers and facilities, it will become an issue that requires Jassy’s daily attention.
Amazon employs a lot of people. As the nation struggled with a job-killing pandemic in 2020, Amazon had added 400,000 by the end of October, bringing its total headcount to over a million people. Now the figure stands at almost 1.3 million, trailing only Walmart, which employs 2.2 million. Unionization would have a whole spectrum of effects, from political to legal to administrative.
3. Further growth
Amazon has benefitted handsomely from the pandemic, as people shelter in place and order things online for home delivery. On Tuesday it reported its biggest quarter ever, bringing in $125.56 billion in revenue for the fourth quarter of 2020. Its stock price has more than doubled, from $1,507 in mid-March to its current price of $3,380. But the pandemic will end. While some of the buying habits we’ve picked up during work-from-home and shelter-in-place are likely to stick, the market for online goods and services will probably dip as people begin hand-shopping for groceries and buying more products at brick and mortar shops. Investors will see that coming. But there are things Jassy can do to keep people hooked. Creative Strategies principle analyst Tim Bajarin says Jassy will continue focusing on the core ecommerce business.
“What he’ll be able to do is focus on the existing business, on pushing for better delivery times and expanding on the [services] they provide today,” Bajarin says.
And if there are major strategic decisions to be made, Executive Chairman Bezos will be there.
“If you think Bezos is no longer in control you’re kidding yourself,” Bajarin says. “He’s still going to be driving the direction of the company.”