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CNBC Exclusive: CNBC Transcript: Amazon CEO Andy Jassy Speaks with CNBC’s Andrew Ross Sorkin on “Squawk Box” Today

WHEN: Today, Thursday, April 13, 2023   

WHERE: CNBC's "Squawk Box"

Following is the unofficial transcript of a CNBC exclusive interview with Amazon CEO Andy Jassy on CNBC's "Squawk Box" (M-F, 6AM-9AM ET) today, Thursday, April 13th. Following are links to video on and

All references must be sourced to CNBC.

ANDREW ROSS SORKIN: We are live in Seattle this morning with an exclusive interview with Andy Jassy, of course, the CEO of Amazon just out this morning with his second annual shareholder letter now as CEO, and we had opportunity to spend some time with you last year at this time, but what a year. It's been a challenging year. You talk about your optimism. But I want to talk about sort of what's happened over the last year this, some new news in this about some of the corporate layoffs and where you see this company at the same time, but in terms of thinking about investments in the future and what that balance looks like.

ANDY JASSY: Yeah well, it's, I think, when, when you I'm very optimistic about what lies ahead for Amazon and I think there are a lot of reasons for it. I'd start with just a couple of data points. If you if you look at our two largest businesses, if you look in our stores' business, which is our retail business, we still only have even though it's a better $434 billion business, we still only have about 1% of the worldwide market segment share in retail and 80% of it still lives in physical stores. And if you look at our AWS business, which is about an $85 billion revenue run rate business, about 90% of that global IT span is still on premises, not in the cloud. So if you believe that those equations are going to flip over time, which we do, and we're seeing, we have a lot more growth in front of us. And so, I look at where we are today and then I think about working through one of the harder macroeconomic years in recent memory, and the fact that we were able to grow our top line on top of an incredible surge during the pandemic and the fact that we were able to innovate across all our businesses, which will impact both the short and long term and the fact that we have changed the way that we're going to invent and collaborate together by getting into the office more and the fact that we were able to meaningfully streamline our costs while at the same time preserving the strategic long term investments that we believe can meaningfully change customer experiences at Amazon for the long term, I think we've got, we've a lot to look forward to.

SORKIN: At the same time, you do talk about macroeconomic headwinds, especially in the context of AWS. How do you see that playing itself out? We keep talking about the R word recession. Do you see that upon us here?

JASSY: Well, you know, we see a couple different things right now, you know, on the consumer side, consumers are spending, but they're just much more careful about what they're spending on and we see a lot of trading down in price point—

SORKIN: You see a lot of trading down?

JASSY: We do. You know, if you, if a variation of a product and you might have seen more people shopping at the higher end, you see people trying to save money wherever they can and people are very deal conscious. It's why we spent so much time with our selling partners trying to find great deals and bargains for people and so you see that on the consumer side. On the enterprise side, most companies are trying to find ways in an uncertain economy to save money however they can and and that impacts in our enterprise business, it impacts things like advertising as you see around the industry, but also in people's technology infrastructure spend. And so, you know, in the case of AWS, we're spending a lot of our time trying to help customers save money at this point and one of the great things about the cloud and AWS is that when you when you have much more demand, you can seamlessly scale up and if you don't have that demand, you can give back to us and stop paying for it. That elasticity is very unique in the cloud. You don't get that on premises and so because we're trying to build a set of customer relationships and a business that will outlast all of us and that are not optimized for any one quarter a year, we're spending most of our time trying to help our customers save money and and what most of them tell us is they say, look, we're not really cost cutting, we're cost optimizing, and we want to reallocate our priorities and our resources on things that can change our customer experiences—

SORKIN: On the AWS side though, how portable do you think the businesses are meaning you can have a great relationship with a company and they can love you for the fact that you've they've been able to scale down, but in a cloud world they could also I imagine move to a rival service quite quickly.

JASSY: I think what most companies find, I mean look, one of the things about the cloud that's different from other types of businesses is that there isn't the type of heavy lock in that you see with some of the software companies which make it impossible to go, a lot of the APIs look the same. But most companies don't want to take the opportunity cost of having to switch their entire platform and everything they've built because remember, people are putting data in a particular provider. They're doing analytics on that data, they're doing machine learning on that data, they're running compute, their databases live there, you can change it. It's just a meaningful amount of work. And if you do a great job for them operationally from a security perspective, and you keep innovating at the incredibly rapid clip that AWS has, people tend to want to build and keep growing on top of you.

SORKIN: I want to talk about AI because that's a huge component. You talk about that in your letter as well. But I just you talked about layoffs and just right sizing the business. 27,000 jobs have been eliminated. Oppenheimer came out last week I don't know if you saw and said that you need to cut more. Do you think is this is this the end?

JASSY: Look, I've said it a couple of times that having to reduce 27,000 roles was the hardest thing I've had to do in my career and professionally  and very difficult to do and it's, you know, there's no equation on what the right amount of streamlining is. Otherwise everyone would, it would be much easier for people to think it through. But I think it's a pretty significant streamline of cost. We've, you know, we went through a process in every one of our businesses, where we looked at where we had our resources allocated and which things we really had conviction, we're going to have good returns for customers and for the business and we made some reprioritization decisions which led to those reductions, but I think it's a pretty good balance. And you know, we don't have an intention of doing anything more meaningful, but any responsible leadership team will keep looking at their business and the economy and proceed adaptively.

SORKIN: So at one point in the letter, you talk about 2008 and investing in AWS through 2008. In this letter, you talk about continuing to invest in the grocery business, the international business, the healthcare business, what does that look like to you?

JASSY: Well, you know.

SORKIN: Kuiper which is a moonshot.

JASSY: I think the when we think about what to invest in, we look at two different constructs. The first is, you know, that we exist to make customers lives better and easier every day and relentlessly event to do so. And then we look at if we're going to invest in some experience where we think we can make customers lives better, we ask ourselves a few questions. We say number one, if we were successful, could it be big and move the needle at Amazon with with the right ROICs. Number two is being well served today. Number three, do we have a differentiated approach to it and number four, do we some competence in that area. And if not, can we acquire it quickly and when we like the answers to those, we invest. So sometimes those you know that construct leads to investments, new extensions that seem pretty logical, international expansion, category expansion. There's some retail product categories that are very large where we've been nascent, like grocery or business to business that we invest in. Other times that investment strategy leads to things that are maybe not as obvious to people. AWS was a good example that. I think that fewer people might have guessed that we will build a lower Earth orbit satellite that we call Kuiper. But I, if you look at the need, there are hundreds of millions of households who have and businesses that have no connectivity to the internet so that I think we can solve a big—

SORKIN: Has that investment construct though changed in the past 12 months because clearly there were investments in products and divisions and businesses that you were pursuing that you decided not to anymore.

JASSY: The construct didn't change. I think that our our conviction on the things that we're investing in that could be successful evolves, you know, and I, there's this song lyric I've told you about before from the Foo Fighters that I really like. It's a song called "Congregation" which is, "you need blind faith but no false hope." And so when you're inventing and you're working on something new, you have to have that belief because most people haven't been there before. But you have to constantly be checking in to make sure that you still believe it's going to be successful. So the construct doesn't change but there's, you know, as you're checking in and making sure you have no false hope if you don't have conviction any longer, there's going to be a great customer experience and then you can get the right return then you have to adjust.

SORKIN: You made a big acquisition in the healthcare space this year. When you think about acquisitions right now, how do you feel about buying things? I noticed in the, in the grocery part of your letter, to me there was a suggestion how are you going to grow that business meaningfully. You seem to think that that's a big growth area and I thought to myself, would you buy another supermarket company?

JASSY: Well, I think you know, every decision whether you're an acquirer or not has to do with you know, what your strategy is and what you think. We have a history where we are confident and have had success building, inventing ourselves. But when there's a customer experience that we think is very meaningful where we either believe we don't have the people or the capability or the time to build and we find somebody who's done a really great job of it then we'll consider acquiring. That's kind of what we did with One Medical in the healthcare space where, you know, we had launched a pharmacy few years earlier, which people really wanted us to have an online pharmacy and it's grown really quickly and customers said, well, we'd like you to help solve a broader piece of the healthcare experience that is very unsatisfying. And primary care is really at the center of that and we we came across One Medical which I mean if you think about how we go see the doctor today and you are going to tell your grandkids that they're not going to believe that what you did was you made an appointment three or four weeks in advance and drove 20 minutes to the doctor and waited in the waiting room for 20 minutes and then they call you go in the exam room for 20 minutes. Doctor will see you for five minutes you go to the pharmacy, that is not going to exist in the future. And so if you look at something like One Medical, the experience they've build, it's an amazing digital app. You can chat with with medical practitioners, you can do video conferencing, if you need to see somebody in person, you can do it same day. And if you need something from a pharmacy, it's connected to Amazon pharmacy and others, it comes quick. It's a very different experience that they built.

SORKIN: The word quick is used a lot at Amazon, ultra-fast service. What's the balance you think, especially in an economy right now like this, between trying to get stuff to people within hours and the cost of that versus getting it to them in a day or two or three?

JASSY: Yeah, I think you don't have a choice. If you want to provide a great customer experience. I think you have to do both well, and you know, I think it's been true forever. Customers always love broad selection. They've always loved low prices and they love getting their products quickly. And so, I think that if you want to provide the best possible customer experience, you have to find ways to get it to them quickly. It's why we've invested so much in our fulfillment network, and we're really excited about how many, how many more shipments are coming one day and same day, and at the same time while you're providing that you can't do it at a cost structure that isn't economic. And we've worked really hard over the last number of months to to get the cost serve in our fulfillment centers and our operations area lower and we're really pleased with the progress we're making. And at the same time while we're getting cost --, I think we're changing the speed in a very meaningful way.

SORKIN: Can we talk about AI? You say at the end of your letter, you could write an entire letter about AI. We talk about ChatGPT and everything—

JASSY: Waiting for it.

SORKIN: We're all, we're all, we don't even have to wait anymore. I mean that's the amazing part about it. You folks have made an announcement this morning actually about some new efforts on on the AI front at AWS in terms of both the software side and the chip side of this business. But where do you see this is all going? And when you think about for example, ChatGPT or what Google's doing sort of how do you compare yourself to that since that seems to be what we talk a lot about these days?

JASSY: Yeah. Well, just some context, I mean machine learning, we've been using machine learning in a really meaningful way across Amazon for over 20 years and it's in everything we do, you know, the personalized ecommerce recommendations, the, you know, the way we do pick paths and fulfillment centers and Alexa, I mean, virtually everything we do and then we in AWS, we have over 25 machine learning services. We have the you know the broadest set of functionality and set of customers and machine learning so it's a big part of our heritage but the last six to nine months, you've seen this really exciting development in large language models and generative AI which fuel things like ChatGPT. And so, the announcement you're talking about today is in our AWS business where if you think about what AWS has been doing for many years, we've been really trying to democratize technologies that large and small companies alike can afford and have access to build amazing customer experiences. And so if you think about running these large language models there's three pieces to it. The first is they all need compute, you're going to train models, and then the models spit out inferences or predictions and so that compute the key pieces are the chips inside of it. And so we've been working on specialized chips from the for training called Trainium and for inference called Inferentia, they have the combination of price and performance in a really advantageous way relative to what you can do otherwise. Then most companies want to use these large language models but the really good ones take billions of dollars to train and many years most companies don't want to go through that and so what they want to do is they want to work off of a foundational model that's big and great already, and then have the ability to customize it for their own purposes. And that's what Bedrock is, which we announced today, which is it'll give you access to large language models from anthropic from stability AI from AI21 and from ourselves. We're externalizing some of our own models we call Titan. And unless you—

SORKIN: These are not consumer models. These are models to build software.

JASSY: Yeah, they're big, large language models that you can build these generative AI experiences on top of and you just have to fine tune them for what's specific about your application. So that's Bedrock, which I think will change the game for people and then you know, they're going to be these applications built on top of these largely in which models. ChatGPT is an example that we announced today is something called CodeWhisperer, which is for developers. And so if you're writing code instead of having to write everything and do all the art and science yourself, you can in a natural language way just say what you want to do and CodeWhisperer will generate the code for you and that will substantially change developers' productivity.

SORKIN: So when you saw what though ChatGPT did and the relationship it has with Microsoft and you see what Bard's doing, do you, where should Amazon be in that conversation?

JASSY: Well, I think, as I mentioned earlier, we we have been using machine learning in a very deep way in every one of our businesses. We have our own large language models that we've been working on for multiple years that fueled a lot of our experiences and I think you should expect, in general, I think you should expect that generative AI has the chance to transform every customer experience that you know. We are using it investing a very deeply across all of our businesses and Amazon and then for AWS, we're going to make sure that every other company can use it as well.

SORKIN: Want to talk about the advertising business, which has been a big growth space for you. But at the same time, I think it is maybe indicative of what's happening in the economy right now. What are you seeing?

JASSY: Well, you know, we have if you look at our advertising business, it's continued to grow at a at a pretty rapid clip, even when most advertising focused businesses have I think slowed over the last several quarters and a lot of that is just our advertising is uniquely effective as we're able to if you think about on Amazon, when you're an advertiser, we have the ability with the machine learning algorithms that we built and we continue to spend most of our resource on that because we understand shopping behaviors, we're able to when customers search for something, we're able to place advertisements there that are relevant to what their search are so customers respond better to them which means they're more effective which means advertisers like advertising there. So it's, you know, most of our resource continues to be in making those machine learning algorithms more targeted and more relevant for customers. I think we've done a pretty good job, we have more we can do. I think you should also remember in our advertising business that most of it is in our own and operated properties. We still have a lot of opportunity to thoughtfully integrate advertising into our video, into our live, sports into our audio products, into groceries. So it's still pretty early days for us with respect to what's possible to advertise.

SORKIN: You mentioned live sports. You have football now.

JASSY: Yeah.

SORKIN: Where does this all go meaning what what should we imagine that you're going to be buying into lots of other sports? What does Prime look like in the future?

JASSY: Well, I think as it relates to the, the video piece of it, we're trying to build the best destination and the best collection of streaming video content anywhere and a lot of that will be our own content and you mentioned Thursday night football, which we're really excited about and I think that was it was a really good first year. And we really appreciate the partnership that we have with the NFL there. Some of it has to do with our own content, "Lord of the Rings" was was a big release for last year. I'm very excited about "Citadel" that's coming up. We were talking about "Daisy Jones & the Six"—

SORKIN: "Daisy Jones & the Six." I just watched it.

JASSY: But you know so it's a lot of that kind of content— 

SORKIN: I don't want to scoop you on the end though—

JASSY: Yeah, don't.

SORKIN: You haven't seen the last—

JASSY: I'm right in the midst.

SORKIN: You're in the midst, okay.

JASSY: My wife wants to tell me, my college roommate wants to tell me, you want to tell me. Hold on. Let me just watch the end of it. But, you know, some of that content too is third-party content. We have a number of third-party media partners, you know, Discovery+ and HBO Max, and Paramount+, and Starz and Showtime where their content is available to the Prime customers so we're trying to build the best collection of streaming content for people to see. And live sports turns out to be something that people really like. You know, it draws a lot of people are in our our Thursday football had the largest number of new Prime customers signing up for it and live sports has been successful for us in Europe too with with EPL and UA so I think you can expect that we'll do more sports—

SORKIN: You bought MGM. Do you think you could see more consolidate, I mean, we all debate consolidation in the media space whether it be Warner Brothers Discovery or what happens to Paramount+ or or others.

JASSY: Yeah, could be I mean we we acquired MGM. It's, we're so excited about they have such incredible IP and we've just started finding ways to bring it to customers and I think it's, you know, there's a number of hard parts that to business I think everybody's trying to figure out that business model. We have a little bit different business model because Prime is bundled but we'll see.

SORKIN: How much you focus on the stock price these days?

JASSY: I don't spend a lot of my time focused on the stock price. It's kind of at Amazon, remember, I've been Amazon almost 26 years now so I kind of grew up here and we have always had this perspective that you can't be too, first of all, we tend to be long-term focused. We, there's that adage that in the short term the stock market is a voting machine in the long term, it's a weighing machine and we've really seen that over 26 years in any one period of time and maybe, you know, further up or further down but it really matters what you do for customers over a long period of time.

SORKIN: But, you've changed the comp structure right around stock that was an issue earlier this year. By the way there was announcement this morning, you're not, you're taking more comp this year in stock company said.

JASSY: Nope, that's right.

SORKIN: And what was that a result of?

JASSY: I think, you know, when I became CEO, I was given a grant and that was intended to be my compensation for the foreseeable future, and we don't we don't give our most senior people new grants every year so that's—

SORKIN: You talk to Jeff a lot?

JASSY: I do. I talk to him regularly.

SORKIN: What do you guys talk about? What is, what does he think is happening?

JASSY: We, you know, we we talk about different things happening in the business. We talk a lot about large language models and generative AI, we're both really excited and passionate about it. You know, we're investing in a very significantly across Amazon. We talk about all sorts of things. It's very nice to be able to have a sounding board and, you know, Jeff's just so talented. We've been close for a long time. It's nice.

SORKIN: There was a report that he's not buying the Commanders anymore.

JASSY: I don't know.

SORKIN: You don't know?

JASSY: I'm a Giants fan.

SORKIN: Andy Jassy, thank you for joining us this morning.

JASSY: Thanks for having me.