July 28, 2021
After founding Amazon and turning it into the fourth largest company in the world, with a market capitalization approaching two trillion dollars, Jeff Bezos has stepped down as CEO and has had the chance to focus on his other interests, including going to space in a rocket designed by his space company, Blue Origin. Bezos’s successor, who became CEO on July 5th, of this year is the former CEO of the Amazon subsidiary, Amazon Web Services, Andy Jassy. Jassy is taking over the company as it gears up to face a number of regulatory challenges.
While Amazon thrived throughout the COVID-19 pandemic, thanks to the fact that many brick and mortar stores were forced to close, the company has faced increasing scrutiny from politicians, and competitors for just how big the company has become. Among their concerns is the fact that Amazon sells its own products, under the label ‘AmazonBasics’ and often promotes its own products over those of competitors selling on the site. This is seen as an unfair business practice as Amazon is accused of using data from third-party sellers and then competing against them on their own site with cheaper products.
Additionally, Amazon requires third-party sellers to agree not to sell their products for less anywhere else on the internet, including on their own websites. This has caused the Attorney General of Washington D.C. to sue Amazon, alleging that this practice hurts consumers by inflating prices.
Jassy will not only be worried about antitrust suits and regulation for non-competitive practices. Amazon employees who have planned walkouts in protest of poor treatment have alleged that the company has retaliated against them. The National Labor Relations Board is considering an investigation into this behaviour, and is also deciding whether a new union election is required in Alabama.
Finally, Amazon Web Services has become so dominant in the cloud hosting business that it wields a tremendous amount of power in determining which websites should be taken offline. This became a significant issue when Parler, a social media site used to plan the January 6th attack on the United States Capitol, was told by Amazon Web Services that the company would no longer host Parler and effectively took it offline. While the Parler decision was largely seen as the right one, it raised questions of whether a private company should have this much power in the first place and how it could be used in the future.
Jassy’s tenure will largely be shaped by how Amazon navigates this wide range of challenges. Bezos managed to stave off antitrust issues while he was CEO, but he has created a lot of the tensions and problems that Jassy will now seek to solve as he hopes to maintain Amazon’s growth and prevent the company from being broken up by regulators.
Author: Max Borins