Tech

Amazon's next CEO will inherit a company riddled with challenges Bezos leaves behind

Share
Key Points
  • Amazon CEO Jeff Bezos will step down from his role later this year, and Amazon's cloud boss, Andy Jassy, will take over.
  • Amazon still has a bright future ahead of it, but given its size and influence, Jassy will grapple with new issues his predecessor never had to.
  • Here's the kind of company Jassy will inherit when he takes over.
Andy Jassy, chief executive officer of web services at Amazon.com Inc., listens during the Amazon Web Services Summit in San Francisco on April 19, 2017.
David Paul Morris | Bloomberg | Getty Images

Amazon CEO Jeff Bezos will step down from his role later this year, following his epic run growing the company from nothing into a $1.6 trillion technology behemoth.

His successor is Andy Jassy, the longtime executive who serves as the CEO of the company's wildly profitable cloud business, Amazon Web Services.

So, what kind of company is Jassy inheriting from Bezos? While no one thinks Amazon's best days are behind it and Bezos is getting out before things go downhill, the company's size and influence have led to increased scrutiny along with the rest of Big Tech.

"Andy's got a promotion, and his job now includes testifying to Congress, so good luck with that," former Amazon Vice President Tim Bray told CNBC's "Squawk on the Street" in an interview Wednesday. Bray later added: "Andy's a smart guy. He's a good leader. I suspect he'll do well. But let's not claim it's going to be an easy job."

Here are the biggest issues Jassy will inherit when he takes over.

Amazon is a target in antitrust investigations

Amazon is a likely next target for regulators, state attorneys general and lawmakers who are increasing their antitrust scrutiny on Big Tech companies. Facebook and Google were sued in the U.S. last year for alleged antitrust violations. But Amazon could be up next this year as investigations throughout the U.S. and EU continue.

And it won't be Bezos taking the heat in the lawsuits and congressional hearings any more. He'll get to skate by as Jassy takes the tough questions and scrutiny.

Lawmakers are already on alert. Shortly after Amazon announced Jassy would be the new CEO, Rep. Ken Buck, R-Colo., a member of the House Subcommittee on Antitrust, tweeted that he'd like to question Jassy. This is the same House subcommittee that released that epic report last year laying out alleged antitrust violations by Amazon, Apple, Google and Facebook.

Third-party sellers

Much of the antitrust investigations into Amazon focus on its relationship with third-party sellers. These sellers make up a large percentage of overall sales on Amazon, but many have complained and struggled with the constraints Amazon puts on the platform.

Most notably, there's antitrust concern around Amazon's promotion of its own competing products ranging from clothing to toilet paper in search results and placement on the site. Amazon has repeatedly denied it favors its own products over others.

Warehouse workers are unionizing

Amazon faces its first major unionization effort in several years. On Feb. 8, workers at one of Amazon's warehouses in Alabama will begin voting on whether to form a union.

Amazon has done its best within its legal limits to quell the unionization efforts, and we'll know the result when votes are counted March 30. If successful, it could spur more workers across the country to unionize as well, an issue Jassy will have to tackle as he manages a global workforce of more than 1 million employees.

AWS faces more competition in the cloud

Jassy's baby, AWS, is still the dominant cloud computing platform. According to the latest analysis from research firm Canalys, 33% of cloud spending in Q4 2020 went to Amazon. But Microsoft saw its market share grow to 20% of computing spend in the quarter and posted impressive 50% growth year over year for the quarter for its Azure cloud. Google Cloud is a distant third in terms of market share, and it's still showing steep losses despite its growth. But Google continues to find big cloud deals, like its recent partnership with Ford.

AWS is Amazon's magical money-printing machine. It had an early start, but the other players are finally gaining ground. Jassy's big challenge will be to maintain AWS' dominance and profitability, which fuel investment in the rest of Amazon's empire.

Bezos is still boss

Just because Bezos won't be CEO doesn't mean he'll disappear from Amazon completely. When Jassy takes over later this year, Bezos will become executive chairman of Amazon's board, and Jassy will have to report to him.

Bezos is still a major shareholder of Amazon and his immense wealth is tied to the stock's performance. He has a huge incentive to keep things running smoothly.

It's similar to the structure Disney set up when former CEO Bob Iger stepped aside last year and became executive chairman of the company's board, supervising new CEO Bob Chapek throughout the transition. So, although Bezos won't be managing Amazon day to day, his influence won't go away with Jassy in charge.

VIDEO0:2800:28
Andy Jassy to become Amazon CEO, Jeff Bezos to become executive chairman