Amazon CEO Jeff Bezos to Transition to Executive Chairman

Amazon founder Jeff Bezos will give up his role as CEO of the tech giant and focus on other projects he is ‘super passionate’ about.

Jeff Bezos will transition to executive chairman and hand over the Amazon CEO role to Andy Jassy, who has run the company’s booming cloud computing business.

Amazon.com said chief executive and founder Jeff Bezos will step down and hand over the CEO role to Andy Jassy, who has run the company’s booming cloud-computing business.

The company said that Mr Bezos would transition to executive chairman after the leadership change in the third quarter of 2021.

Mr Bezos said he planned to pivot towards philanthropic work, space and media projects when he steps down, but would “stay engaged” with major initiatives at the company.

“Being the CEO of Amazon is a deep responsibility, and it’s consuming,” Mr. Bezos wrote. “When you have a responsibility like that, it’s hard to put attention on anything else.”

In a letter to employees published on the company’s website, Mr Bezos said that he will focus on new products and early initiatives, staying engaged with important matters at the company, but with time for areas such as the Day 1 Fund, the Bezos Earth Fund, Blue Origin, The Washington Post, and other interests.

“I’ve never had more energy, and this isn’t about retiring,” he wrote. “I’m super passionate about the impact I think these organisations can have.”

In a statement, he said: “Amazon is what it is because of invention. We do crazy things together and then make them normal. We pioneered customer reviews, 1-Click, personalised recommendations, Prime’s insanely-fast shipping, Just Walk Out shopping, the Climate Pledge, Kindle, Alexa, marketplace, infrastructure cloud computing, Career Choice, and much more.

“If you do it right, a few years after a surprising invention, the new thing has become normal.

“People yawn. That yawn is the greatest compliment an inventor can receive.

“When you look at our financial results, what you’re actually seeing are the long-run cumulative results of invention.

“Right now I see Amazon at its most inventive ever, making it an optimal time for this transition.”

Jeff Bezos says he’s never had more energy. Picture: AFP

Amazon currently faces the biggest regulatory challenges in its history, with multiple federal investigations into its competitive practices and lawmakers drafting legislation that could force Amazon to restructure its business. Tension with regulators and lawmakers has directly embroiled Mr Bezos, who was called to testify in front of Congress last summer for the first time.

Mr Bezos’s leadership of Amazon has made him one of the most respected, and feared, leaders in business, as well as fantastically wealthy. He is currently neck-and-neck with his rival rocket entrepreneur, Tesla CEO Elon Musk, as the world’s wealthiest person.

Mr Bezos’s move makes Amazon the latest of today’s tech giants to transition leadership away from the people who started them. The co-founders of Google stepped back from their management roles at its parent Alphabet in 2019, and both Apple and Microsoft Corp. have long been run by successors to their founders.

Mr Bezos left a career on Wall Street to start Amazon.com in 1994 as a scrappy online bookseller during a time when most Americans didn’t own computers. Amazon became an against-all-odds success story that would go on to completely disrupt the bookselling industry along with nearly every other industry in its path, from logistics to advertising.

The executive imbued the Seattle-based company with a “Day 1” philosophy of always maintaining an underdog start-up ethos. However, in recent years, Mr Bezos has stepped back from day-to-day management of the tech giant -- with a brief pause when he became more actively involved in the early days of the pandemic.

Many in his inner circle describe Mr. Bezos’s role over the past few years as akin to that of an executive chairman. The executive famously tries to not schedule meetings before 10am and to make all of his tough decisions before 5pm. Amazon employees say the billionaire is elusive, with many saying they have never spotted him on the company’s sprawling downtown Seattle campus.

Sales surge

The surprise announcement came as Amazon capped off its pandemic-fuelled 2020 financial performance with record quarterly sales driven by a surge in online holiday shopping with people stuck at home.

The e-commerce giant posted fourth-quarter sales of $US125.5 billion and net income of $US7.2 billion. It marked the first time Amazon reported more than $100 billion in quarterly revenue, days after Apple Inc. hit that financial milestone. Amazon’s results beat Wall Street’s expectation of around $US119.7 billion in quarterly revenue and net income of $US3.7 billion.

Few companies have seen growth take off like Amazon during the global health crisis. The explosion in online shopping vaulted the company’s sales to record figures as the e-commerce sector grew by around 50 per cent throughout last year, according to some analysts. Roughly 40% of online shopping in the U.S. happens at Amazon, according to research firm eMarketer, helping drive a 76 per cent increase in the company’s share price last year and raising its market valuation to more than $US1.6 trillion.

Sales in the December quarter received an added boost from Amazon’s annual “Prime Day” shopping event, moved from its usual summer schedule to October due to the pandemic. Amazon makes billions of dollars from the two-day event.

Amazon sales for all of 2020 rose 37 per cent year-over-year to $US380.06 billion and are expected to advance again this year. Amazon said sales for the current quarter should come in at between $US100 billion and $US106 billion. Wall Street has forecast sales of around $US95.8 billion.

The online shopping boom has been broad based. United Parcel Service Inc. Tuesday said sales in the December quarter rose 21 per cent. The package delivery giant said Amazon accounted for 13.3 per cent of its total 2020 sales.

Although the pandemic turned into a sales bonanza for Amazon, the Seattle-based company initially struggled to handle the surge in demand. The company recovered in part by rapidly scaling up. It added more than 400,000 employees, lifting its global workforce to more than 1.1 million staff and increased its fulfilment and logistics square footage by about 50 per cent last year.

The efforts appeared to pay off. “There was a flight to reliability from consumers throughout the year, and that was especially true during the holiday seasons when there were shipping concerns,” said Andrew Lipsman, an eMarketer analyst. “That advantaged Amazon.”

Amazon’s other major business, the cloud-computing services Mr Jassy has overseen, where the company rents server capacity and software tools, also saw strong demand during the pandemic with companies broadly accelerating their digital investments.

Amazon Web Services has been the company’s main profit driver. The pace of growth in that segment has slowed, though, as its scale has increased and rivals such as Microsoft Corp. and Alphabet Inc.’s Google have pushed to steal market share. AWS, as the cloud business is known, saw fourth-quarter sales rise 37 per cent from the year earlier period to $3.56 billion.

Amazon also has been building up its advertisement business where it competes with companies such as Facebook Inc. and Google. The company doesn’t break out those sales that analysts say are becoming a larger contributor to total sales.

Amazon’s results are expected to add to a strong earnings season for Big Tech, underscoring how the pandemic has lifted those companies’ fortunes while devastating other sectors of the economy. Microsoft last week posted record quarterly sales driven by increased demand for video games and accelerated adoption of its cloud-computing services. Apple and Facebook finished their fiscal years with their most profitable quarters ever.

Amazon’s success has come while the company confronts regulatory and labour battles. The Federal Trade Commission Tuesday said Amazon would make a $61.7 million payment over its failure in the past to pay some Amazon Flex drivers the full amount of tips they received from customers. Amazon, the FTC said, ended the practice in 2019 only once it became aware of the federal investigation of its practices.

Drivers under Amazon’s Flex program use their own vehicle to deliver packages for the e-commerce giant. The FTC said Amazon changed the terms for driver payments without disclosing the adjustment.

“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 spokeswoman said.

Rep. Ken Buck (R., Colo.), who has criticised other Amazon practices, tweeted “This is a drop in the bucket for Amazon” and added “We must do more to curb their anticompetitive behaviour.”

Employees at one of its warehouses in Alabama also are voting on whether to unionise in a move that could reshape the relationship between the company and its workers. And federal regulators in Washington, D.C., have continued to probe the retailer’s business practices as part of a broad investigation into the market powers of large tech companies. In addition, Connecticut is investigating how Amazon sells and distributes digital books, and California is looking into how Amazon treats sellers in its online marketplace.

The company also is facing questions about rising costs and other issues with some of its businesses. Amazon said it spent roughly $10 billion on coronavirus safety measures last year, including regularly testing workers for COVID-19. Physical store revenue, which includes that from Whole Foods Market, has decreased recently as the pandemic has changed shopping patterns.

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