AWS CEO Jassy: We would follow the law if regulators demand Amazon spin-out

Key Points
  • Andy Jassy, CEO of Amazon's cloud business, says he doesn't see clear benefits for Amazon Web Services spinning off from the rest of the company.
  • Still, he says, Amazon would follow whatever the law demands.
  • Half of Amazon's operating income comes from its cloud business.
Andy Jassy, CEO Amazon Web Services speaking at the 2019 Code Conference in Scottsdale, Arizona.
Asa Mathat | Vox Media

Andy Jassy, CEO of Amazon's cloud business, said Monday that, although he doesn't see clear benefits for Amazon Web Services spinning off from the rest of the company, if the U.S. government were to force that move, then Amazon would have to comply.

The comments came after the Washington Post reported on an agreement between two federal agencies that put Amazon under the jurisdiction of the Federal Trade Commission. Meanwhile, the Department of Justice has plotted an investigation of Alphabet's Google, the Wall Street Journal reported. The reports follow calls for the breakup of large technology companies from Sen. Elizabeth Warren, a Democratic presidential candidate.

Amazon introduced the first core AWS services in 2006. Around 13% of Amazon's total sales and roughly half of Amazon's operating income came from AWS in the first quarter.

Amazon Web Services has the greatest market share among providers of public cloud services that other companies can tap for remote computing, storage and database management. Alibaba, Google and Microsoft are among the other companies working in the space.

Jassy said he didn't know if people at Amazon were necessarily surprised by recent discussions about regulating the company.

"When you're able to build multiple customer experiences in different business segments that people really respond to, your business is going to get larger. I think as your business gets larger, there's going be more scrutiny," Jassy told Kara Swisher, Recode's editor-at-large and a CNBC contributor, at Recode's Code Conference in Scottsdale, Ariz.

He said the AWS group now numbers in the tens of thousands and is growing quickly inside a parent company with more than 600,000 employees.

"If people want to inspect more closely, we'll be proud of it," Jassy said.

Swisher asked him what would happen if U.S. regulators required Amazon to spin off AWS.

"I can't speak to what the government is thinking or will do," he said, adding the the company would "follow U.S. law."

Jassy has often been asked if Amazon could be planning to separate AWS and turn it into its own business. Historically, Jassy has said no.

On Monday he said he still felt there were no major obvious advantages to such a move. He added that customers should not want it to happen because having to do things like hold earnings calls could distract from more important tasks such as keeping cloud services functioning at a high level.

Companies can be motivated to spin out businesses if they no longer want them on financial statements or can't afford to fund them at the level they should be funded, Jassy said. Neither is the case with Amazon and AWS, he said.

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