Former Amazon vice president calls for the company to split its retail and cloud businesses

Key Points
  • Tim Bray, a former vice president and engineer who resigned in May, told CNBC the company should spin off its cloud-computing unit, Amazon Web Services.
  • Doing so would "unleash AWS's growth" because it would eliminate any hesitance potential clients might feel about doing business with a company they compete against, Bray said. 
Former Amazon exec calls for a breakup of Big Tech
Former Amazon exec calls for a breakup of Big Tech

Tim Bray, an Amazon vice president and senior engineer who resigned in protest in May, is calling for the company to spin off its lucrative cloud-computing business. 

Spinning off Amazon Web Services from the company's retail business would allow it to grow AWS even more, since Amazon would no longer risk alienating potential clients who are wary of working with a competitor, Bray said in a "Squawk Box" interview on Friday.

"That's a headwind because you could be reluctant to sign a deal with a web services operator if you're worried that by doing so you're funding one of your competitors," Bray said. "I think it would unleash AWS's growth, which is already very good, if it were not joined at the hip with Amazon."

AWS remains one of Amazon's biggest profit drivers. In the first quarter of 2020, operating income from AWS totaled $3.08 billion, accounting for 77% of Amazon's overall operating income. However, AWS only represented 13.5% of Amazon's total revenue for the quarter.

Bray resigned dramatically from Amazon in May via a fiery blog post, in which he spurned the company's decision to fire two former user experience designers, Emily Cunningham and Maren Costa, who were both outspoken critics of Amazon's labor practices. Bray said Amazon's decision to fire whistleblowers was "evidence of a vein of toxicity running through the company culture" and remaining at Amazon would have meant "signing off on actions I despised."

Bray has laid out similar arguments for breaking up Amazon in the past. 

In June, he suggested in a blog post that Amazon might choose to proactively split off AWS from the company as an effort to get ahead of looming antitrust scrutiny.

Amazon's cloud business is reportedly being scrutinized as part of an ongoing antitrust probe by the Federal Trade Commission into the company's retail operations. In addition to the FTC, Amazon is also being investigated by the House Judiciary Committee, which is overseeing an antitrust investigation into big tech companies.

Andy Jassy, CEO of AWS, said in a June interview that Amazon would "follow U.S. law" and comply with regulators if they required a spinoff, but added that there isn't a benefit to separating AWS now. 

Most tech companies are still great long-term investments, Loup Ventures' Munster
Most tech companies are still great long-term investments, Loup Ventures' Munster