Tech

Bezos will 'break up his own company' before regulators do, Atlantic writer who profiled the CEO predicts

Key Points
  • Atlantic writer Franklin Foer, who recently wrote a cover story on Jeff Bezos and Amazon, said he thinks the CEO will spin off Amazon Web Services before regulators attempt to break up the company in light of antitrust accusations.
  • Foer said people close to Bezos said spinning off AWS "would be the obvious thing for him to do in the face of this."
  • Amazon Web Services represented 52% of Amazon's operating income in the second quarter of 2019.
Jeff Bezos, founder and chief executive officer of Amazon.com Inc., speaks during a discussion at the Air Force Association's Air, Space and Cyber Conference in National Harbor, Maryland, U.S., on Wednesday, Sept. 19, 2018.
Andrew Harrer | Bloomberg | Getty Images

Amazon CEO Jeff Bezos could break up his own company before regulators do so themselves, Atlantic writer Franklin Foer predicts.

Foer, who wrote the Atlantic's November cover story entitled "Jeff Bezos's Master Plan," said in an interview Tuesday on CNBC's "Squawk Box" that people close to the CEO believe spinning off Amazon Web Services from the e-commerce business "would be the obvious thing for [Bezos] to do in the face of this."

"I think that eventually Bezos, who is seeing around corners, is going to break up his own company," Foer said. "AWS exists as its own fantastically profitable business. There's no reason that it needs to be connected to Amazon the e-retailer. And as he looks at what's happening in politics, where there's this increasing bipartisan consensus that Big Tech is a problem, I'm pretty sure he's going to say, 'OK fine.'"

An Amazon spokesperson declined to comment.

Andy Jassy, CEO of AWS, said in an interview in June that Amazon would comply if regulators required a spinoff. But Jassy said there was no benefit to separating AWS now.

AWS accounted for 13% of Amazon's total revenue in the second quarter of 2019, but a whopping 52% of its $3.1 billion in operating income for the quarter.

So far, Google and Facebook have received the lion's share of antitrust speculation. But Amazon still faces headwinds in the form of an antitrust inquiry from the House Judiciary Committee and a reported probe by the Federal Trade Commission. The U.S. Justice Department has also announced a broad review of the tech industry, though it did not call out specific companies.

Lawmakers have previously focused on the data Amazon collects from third-party sellers on its e-commerce platform, where it also sells its own goods, questioning whether Amazon uses data from other merchants to its own advantage. In its recent request for information from the company, the House Judiciary Committee leaders asked how AWS and other areas of Amazon's business share data with one another.

Foer speculated that AWS sees working with the federal government as a big opportunity that could have been a factor in Amazon's decision to choose an area near Washington, D.C., for its second headquarters. AWS has been fighting for a $10 billion cloud contract with the Pentagon and has sold its facial recognition software to law enforcement agencies.

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