Jassy Promotion Dims Amazon Web Services Spinoff

The promotion likely will reduce the chance of Amazon spinning off AWS into its own business in the coming years.

E-commerce behemoth Amazon plans complete changes to its top management by the end of the third quarter. Andrew Jassy, CEO of Amazon Web Services business, will take over as CEO from founder Jeff Bezos, who will become the company’s executive chairman at that time.

The announced promotion comes on the heels of David Clark’s January promotion to CEO of Amazon’s Worldwide Consumer business, after former CEO Jeff Wilke’s retirement.

“Jassy is not only a visionary leader, he’s a strong operator,” said Brian Olsavsky, CFO of Amazon, during the company’s Q4 earnings call. “He has a great track record of developing multiple things and business within Amazon, not the least of which is AWS, which is arguably the most profitable, important technology company in the world.”

In 2020, AWS generated $45.37 billion in sales, 30% greater than what the business generated in 2019. Amazon’s North American and international consumer businesses generated a consolidated $340.694 billion over the same period.

Jassy, a 24-year Amazon veteran, became CEO of AWS in April 2016, after being senior vice president of AWS since April 2006.

The promotion likely will reduce the chance of Amazon spinning off AWS into its own business in the coming years, suggested Eric Sheridan, a managing director, equity research at investment bank UBS, in an investor note.

“Mr. Bezos has built Amazon along the lines of the flywheel effect that is often discussed, and we expect Andy Jassy as CEO to mean a continuation of Amazon’s key themes of delighting consumers and executing as scale builds/compounds (in all of its businesses,” he wrote.

A former Amazon vice president and engineer Tim Bray, who resigned in May 2020, floated the idea of an AWS spinoff that would eliminate conflicts of interest with Amazon’s consumer business CNBC’s Squawk Box in late July 2020.

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

“We’ve heard some concerns around Jassy’s more limited retail experience and what that may mean for a potential AWS spin,” added Doug Anmuth, a managing director, internet analyst at J.P. Morgan, in a research note. “But we don’t think a lot is going to change, with Jassy likely to carry on Bezos’ same core values and beliefs given similar operating cultures between Consumer and AWS. And as part of Amazon’s S-team [senior management team] for years, Jassy has still been close to the consumer business in which he originally started at Amazon.”