• The Amazon Labor Union prevailed in a landmark union vote at the company’s Staten Island, N.Y., warehouse in 2022, the first time a group of Amazon warehouse workers voted to form a union.
• But since then, Amazon has appealed the vote and bargaining efforts by the Amazon Labor Union haven’t moved forward. The union also lost two subsequent elections at different warehouses in New York.
• “Workers at Amazon — in the warehouses or behind the wheel — have proven they have the strength, unity, and determination to take on the greediest employer on the planet, and win,” Teamsters General President Sean M. O’Brien said in a statement. “Together, with hard work, courage, and conviction, the Teamsters and ALU will fight fearlessly to ensure Amazon workers secure the good jobs and safe working conditions they deserve in a union contract.”

This week on the GeekWire Podcast: It was a big week for cybersecurity for Seattle’s cloud giants, albeit in very different ways for each.

Microsoft President Brad Smith was in Washington, D.C., testifying before the U.S. House Homeland Security Committee about Microsoft’s security challenges — stay tuned for highlights at the end of the show.

Amazon held its annual AWS re:Inforce cloud security conference in Philadelphia. Generative AI has added some big new wrinkles to cybersecurity, and that was one of the main topics in my recent conversation with one of the people who keynoted the AWS event this week, Steve Schmidt, Amazon’s chief security officer.

Listen below, and continue reading for highlights, edited for context and clarity.

Subscribe to GeekWire in Apple Podcasts, Spotify, or wherever you listen.

How generative AI is changing the security landscape: “Generative AI very definitely does enable attackers to be more effective in some areas. For example, when crafting more effective phishing emails, or crafting solicitations for people to click on links or things like that, it definitely enables the attacker a lot more.

“But it can also enable the defender, because when we take advantage of generative AI, it allows our security engineering staff to be more effective. It allows us to unload a lot of the undifferentiated heavy lifting that the engineers had to do before, and to let them do that thing that humans are the best at, which is looking at the murky gray area, and sifting through the little tiny pieces that don’t seem to make sense, and putting them together in a puzzle picture that all of a sudden makes them go, ‘Aha. Alright. I know what’s going on here.’

“In most cases, when we apply generative AI to the security work that we have to do, we end up with happier security engineers on the other end, because ultimately, they don’t want to do the boring, laborious stuff. They want to apply their minds. They want to think about the interesting angles to the stuff that they’re working on — the stuff that generative AI can’t do right now.”

One use case for generative AI in security: “An easy example is plain language summarization of very complex events. If you think about the security job that I’ve got here, a lot of it is taking little tiny pieces of technical data and forming them into a story about what’s going on.

“Creating that story, and then taking that information and conveying it to business owners, is something that every security professional has to do. It is arguably one of the hardest parts of our job — taking something that’s incredibly complex, technical and nuanced, and putting it in a language that makes sense to a chief financial officer, or a chief executive officer. Generative AI is actually turning out to be very useful in that space.”

Three big questions companies should ask to adopt generative AI securely:

1. Where is our data? “Business teams are sending data to an LLM for processing, either for training or to help build and customize the model, or through queries when they use that model. How has that data been handled throughout that workflow? How was it secured? Those are critical things to understand.”
2. What happens with my query, and any associated data? “Training data isn’t the only sensitive data set you need to be concerned about when users start to embrace generative AI and LLMs. So if your user queries an AI application, is the output from that query and the user’s reaction to the results used to train the model further? What about the file that that user submitted as part of the query?”
3. Is the output from these models accurate enough? “The quality of the outputs from these models is steadily improving. And security teams can use generative AI as one of the tools to address challenges. From the security perspective, it’s really the use case that defines the relative risk.”

How Schmidt’s past experience at the FBI informs his approach: “The thing that I took the most out of my experience at the FBI was a focus on the people behind adverse actions. A lot of my career, for example, I was focused on Russian and Chinese counterintelligence. If you look at the motivators for espionage, in the classic world, they’re exactly the same things that are motivators for hackers, right now. It’s money, ideology, coercion, or ego.”

What he gets from his volunteer work as an EMT and firefighter: “As people, we crave feedback. We want to see that we are successful, we want to see that what we do matters. And in the computer world, a lot of what we’re dealing with is virtual. So it’s really hard to see the result of your action. It’s also really hard to see an individual impact in an area where you’re looking at, like I am, hundreds of millions of machines.

“Being a volunteer firefighter, and advanced Emergency Medical Technician, means that if I do my job well, an individual human being who I can see and touch has a better day. And I get that real human feedback that isn’t available from a computer. That’s incredibly satisfying. As a person, I know, I am personally bringing value to this; I am helping that person in a situation which may have been the worst day of their lives, and we’re going to make it better.”

Listen to the full conversation above, or subscribe to the GeekWire Podcast in Apple Podcasts, Spotify, or wherever you listen.

Audio editing by Curt Milton.

In a speech peppered with mentions of his own sports failings and achievements, Amazon CEO Andy Jassy offered up some advice for winning at life and work to graduates of the University of Washington’s Paul G. Allen School of Computer Science & Engineering.

“It’s a pretty amazing accomplishment to get into UW, and then to get into one of the very best engineering schools in the world, and then to actually graduate,” Jassy said in the opening remarks of his commencement speech last week in Seattle. “You may or may not realize that this is a remarkable feat, and it may take you until later in your life to appreciate it.”

He went on to share with grads some of the things that it took him the past 30 years to realize, and that he said he wished he’d known when he was 22.

• Career plans change: Jassy wanted to be a sportscaster out of college, got a couple nibbles on his resume reel and ultimately decided he “didn’t have the passion for that profession to pay the dues necessary to be successful.”
• You don’t have to have it all figured out: Some people know what they want to do from a very young age and go on to do just that. Others should realize that it’s OK if interests change over time, and that “life is an adventure” that takes “a lot of unpredictable twists and turns.”
• Don’t let others tell you who you are: A teacher once said a 5-year-old Jassy wasn’t very athletic, but he went on to become a two-sport all-section athlete in high school who later played intercollegiate sports. “Nobody writes your book for you. You write it. And in almost every imaginable case, whatever was initially written can be amended and rewritten.”
• Put yourself out there, take your shot: Jassy said he wasted a lot of energy early in life worrying about asking the wrong question or not knowing the answer to others’ questions. “In my life, my biggest regrets were not the occasions I failed. In fact, in some cases, they’re some of my proudest scars. Rather, my biggest regrets have been the times I didn’t take the risk and leave it all out there.”
• Be a willing and ravenous learner: The memorable people Jassy went to school with or worked with maintained an excitement about continuing to improve. “To me, the second you think there’s little left to learn is the moment you either realize you’re in the wrong situation or starting to unravel if you remain where you are.”
• Control your attitude: How successful people are in what they choose to do, especially early in life, has to do with attitude, Jassy said. “Do you work hard? Do you do what you said you were going to do? … Can you work in teams? Do you care more about the mission of the organization versus your own outcome? These seem pretty simple and obvious, but you’d be surprised by how infrequently people exhibit these characteristics.”

Watch Jassy’s full speech and read the transcript below:

I have been in this arena many hundreds of times as a basketball fan. I’ve always dreamed of being in the Dawg Pack. This is not quite the Dawg Pack, but it’s probably as close as I’ll get.

Thank you, and congratulations to all the 2024 Allen School UW graduates.

It’s a pretty amazing accomplishment to get into UW, and then to get into one of the very best engineering schools in the world, and then to actually graduate. You may or may not realize that this is a remarkable feat, and it may take you until later in your life to appreciate it, but I’m guessing most of your parents and family realize what it means and are proud of you.

When I thought about what I might share with you today, I thought it might be interesting to share what I’ve learned the last 30 years, that I wish I knew when I was 22.

First, I am not going to be a famous sportscaster. That’s what I wanted to do when I was graduating from college and spent three summers in between years of college interning and making a resume reel. I sent my reel to about 80 small-market stations, got two nibbles, couldn’t pull the trigger on either of them because I didn’t want to live in those cities, and then found that I didn’t have the passion for that profession to pay the dues necessary to be successful.

Second, I’m going to pursue a lot of different jobs. Some I simply interview for and don’t get an offer. Others, I try for some time and decide they’re not what I would want to spend my life doing. These include TV production, consulting, investment banking, sales, coaching a high school soccer team, working in a golf retail store and starting several new businesses. You don’t have to know definitively at 22 years old what you’re going to do long term. In fact, you don’t have to know at 25 or 30, or in my case, until I was about 40. Some people have known what they wanted to do from a very young age and done just that. Many of you, as engineering-focused graduates, may be in this group, and if so, that’s great. However, if you aren’t in that group, or if your interests change over over time, that’s also fine. Life is an adventure. It takes a lot of unpredictable twists and turns. You meet people who influence you along the way, you’ll find yourself surprised by what inspires you that you would not have guessed. There are more interesting opportunities to make a difference than you probably realize. Be open to what’s out there, and if you don’t find your groove right away, that’s OK. Life is long for most of us. Figuring out what you don’t want to do early in life is perhaps as important as figuring out what you do want to do.

Third, don’t let others tell you who you are. When I was in Pre-K, my teacher wrote in my report card that I was I was not going to be athletic because I struggled to hop on one leg. My parents were apparently pretty distraught about this, while I was blissfully ignorant of this assessment. It was, of course, a silly generalization, and I went on to be a two-sport all-section athlete in high school and played intercollegiate sports in college. I ignored this judgment because I was five years old and was never told. But as we get older, we’re no longer sheltered from many of the judgements people make of us. And I have experienced, first and secondhand, what it feels like to believe what uninformed people say about you. Remember, nobody writes your book for you. You write it. And in almost every imaginable case, whatever was initially written can be amended and rewritten. You will control what happens to you, not some teacher or boss or reporter or peer or even a family member. And whatever you are now, you can keep evolving, if you want.

Fourth, and somewhat related. I wished I’d understood that every presentation or meeting I was going to do was not a pass/fail referendum on my competence. I wasted so much angst and energy earlier in my life worrying people would think I was an idiot if I asked a dumb question or didn’t know the answer to somebody else’s question, or my hypothesis was flawed, or people just didn’t like my creative idea. There is no person in the world who performs perfectly, or has it right 100% of the time, or whose ideas are coherent or sensible every time. That’s not reality. It is, however, a sure bet that you will never do something needle-moving if you don’t put yourself out there and take a shot. In my life, my biggest regrets were not the occasions I failed. In fact, in some cases, they’re some of my proudest scars. Rather, my biggest regrets have been the times I didn’t take the risk and leave it all out there. In retrospect, you always wonder what would have happened if you had.

Fifth, be a willing and ravenous learner. If I look at the people I’ve gone to school with or started working with at various jobs, perhaps the single biggest factor in what all of us are doing now is the propensity we had to learn. To be a great learner, you have to be observant, self-reflective about what you’re doing well, how people are responding to you and what you could be doing better. You have to be excited about continuing to improve, versus frustrated that there’s more to do or threatened that you still don’t know at all. A lot of people get to a point in life where it’s disconcerting to them that they still don’t have it all figured out. To me, the second you think there’s little left to learn is the moment you either realize you’re in the wrong situation or starting to unravel if you remain where you are. And then to be a great learner, you can’t just assess and talk about what you need to change. You have to then put it into action and make it so. Believe me, life is much more fun and rewarding if you’re learning.

Finally, an embarrassing amount of how successful people are in whatever they do, particularly early in your life, has to do with attitude. Do you work hard? Do you do what you said you were going to do? Do you have a positive, can-do attitude versus a naysaying, energy-sucking approach? Can you work in teams? Do you care more about the mission of the organization versus your own outcome? These seem pretty simple and obvious, but you’d be surprised by how infrequently people exhibit these characteristics. There are so many things that you can’t control in your life, but you can control your attitude, and it makes a big difference.

One last thing about working hard. It seems a little less in vogue today. I also recall early in my career how much pressure I got from certain friends that wasn’t cool to be putting in the extra hours. But if you study those who you think are great at anything — programming, parenting, business, sports, art, writing, teaching, whatever — they’re almost always the hardest workers at their craft. They either love or just plain accept and embrace the process of what it takes to be excellent. You can’t cheat that process, it always catches up with you.

2024 graduates, you have so many options in front of you, and consider this chapter one of your options. They’re going to keep presenting themselves to you over time. Be curious. Be experimental. Control what you can control. Leave it all out there in whatever you go after, and then be kind to yourself when certain things don’t pan out, and many won’t. Remember that you write your own story. And I wish you the very best of luck on the adventure you’re about to embark on. Thank you. Congratulations.

Amazon is adding $1.4 billion to its Housing Equity Fund and has pledged to preserve and create an additional 14,000 housing units in the regions that include Seattle, Nashville, Tenn., and Arlington, Va.

CEO Andy Jassy announced the news at an event held today at Seattle’s Pacific Medical Tower, an early headquarters for Amazon.

“We’re here to talk about the importance of affordable housing, especially in communities like ours, where rents have outpaced salaries and may have made it harder for people like teachers and nurses and first responders to live close to their jobs and remain part of the communities they support,” Jassy said.

The new commitment brings the company’s support for affordable housing to more than $3.6 billion, which is being used to fund more than 35,000 housing units in the company’s “hometown communities,” as it describes them.

The three Amazon hubs have all struggled to meet housing needs for lower-income residents as high-paying tech jobs have exacerbated each region’s economic divide.

Amazon launched its Housing Equity Fund with a $2 billion pledge in January 2021. The fund has supported an increase in the affordable housing inventory through below-market loans and grants to public agencies, housing partners and minority-led organizations. The effort’s initiatives include a partnership launched with the National Housing Trust to aid moderate-income individuals and families in purchasing homes.

Amazon leaders shared today that they’ve beat by two years their original funding and housing goals, contributing $2.2 billion to the effort and providing more than 21,000 affordable homes.

Jassy explained that their efforts are targeting households that earn 30% to 80% of area median income, residents “who often don’t typically qualify for subsidies but whose pay hasn’t kept pace with escalating rates.”

Speaking at the event, Seattle Mayor Bruce Harrell expressed his gratitude for the company’s support and said he’d be bragging about the city’s partnership with Amazon at an upcoming U.S. Conference of Mayors.

“When you look across our beautiful city, you realize that a lot of the new construction … these kinds of projects just don’t happen organically,” Harrell said. “They happen because people with resources and the wherewithal to think about other people who are less fortunate than them need a place to stay.”

Mayor Lynne Robinson from Bellevue, Wash., highlighted the broader, positive impacts that Amazon’s actions will have in the community.

“The biggest stress in a child’s life is housing instability. And the Housing Equity Fund is working directly to alleviate that stress in our families,” Robinson said. “It’s an investment in our future.”

‘Keeping the whole industry going’

Organizations working to deploy more housing also applaud support from Amazon and other tech companies.

Ben Maritz is the CEO of Great Expectations, an affordable housing development company in Seattle. Maritz, whose company has benefited from Amazon’s Housing Equity Fund, told GeekWire that the company’s efforts have been a huge help to the sector.

Lower-income housing projects have been hard hit by the high interest rates, creating gaps in the amount of funding developers need and the cash they can access. The Amazon fund is providing “essential” support, Martiz said, loaning money at reduced rates that allow projects to go forward.

“It’s keeping the whole industry going,” he added. “They’re great. They’re easy to work with.”

Amazon reported that it has funded more than 8,600 units in the Seattle area, and increased the affordable housing stock by 30% in Bellevue, Wash. where it has been building out its office space.  

Maritz said that Microsoft is also playing an important role in the sector by helping developers buy tax-exempt bonds that cut building costs for affordable housing and by aiding with financing for land acquisitions.

Shoko Toyama, vice president and chief development officer at the nonprofit Plymouth Housing, likewise praised the two corporations.

“We appreciate the support tech companies, including Amazon and Microsoft, have made to being leaders in this space in our region,” Toyama said by email, “both through their direct investments and through their vocal support of affordable housing, including throughout the Puget Sound region.”

Both companies contributed to a Plymouth Housing campaign that created 600 permanent homes for people experiencing homelessness, Toyama said, and they’ve donated to the organization’s operational programs as well.

Business, civic and community leaders have clashed for years over the right strategies for addressing the Seattle region’s housing crisis and the obligations of success tech companies in remedying the problem.

In 2019, Microsoft announced $500 million of support for affordable housing efforts in the Seattle area, sparking a movement among tech giants. Amazon, Apple, Google and Facebook, which later rebranded as Meta, soon followed suit, making pledges of roughly $1 billion or more to fund housing development in their communities. Microsoft itself added another $250 million to the cause a year after its initial commitment.

Bumpy road to partnerships

With others in its cohort, Amazon stacks up as one of the world’s tech behemoths, valued at nearly $2 trillion. The company reported revenue of $574.8 billion last year, up 12%, and profits of $30.4 billion.

Many in the region have argued in the past that the company wasn’t doing enough to offset the impacts caused by its growing ranks of high-paid workers.

The Seattle City Council in 2018 passed — and then quickly repealed — a controversial “head tax” targeting Amazon and other high-revenue businesses.

The council ultimately approved JumpStart Seattle, a payroll tax that currently applies to companies with yearly payroll expenses of $8.1 million or more. The tax applies to hundreds of entities, but roughly 80% of the proceeds come from fewer than a dozen of businesses, mostly in the tech sector — including Amazon.

Relations between the company and city leadership became so acrimonious that Jassy in 2021 said Amazon no longer saw Seattle as its headquarters, but rather viewed the broader region — including Bellevue — as home. While that rift seems largely on the mend, it was perhaps not a coincidence that the Eastside city was well represented at the event today.

In addition to Harrell and Robinson, other elected officials in attendance were Bellevue council members Jared Nieuwenhuis and Dave Hamilton, and acting Bellevue City Manager Diane Carlson. Also at the event were state lawmakers including Rep. Frank Chopp of Seattle, Rep. Nicole Macri of Seattle, Rep. Davina Duerr of Bothell, and Rep. Emily Alvarado of West Seattle.

Last fall, Amazon was among the supporters of the Seattle Housing Levy, donating $25,000 to the yes campaign. And Seattle voters approved the $970 million, seven-year measure that supports the construction of affordable family-size apartments and for-sale homes, helps fund housing nonprofits, and backs other community efforts around housing stability.

Both the payroll tax and the housing levy are major drivers for City of Seattle programs that provide low-income housing.

The efforts by Amazon and other companies, as well as government agencies and private nonprofit and for-profit developers have added to the housing inventory, but the crisis isn’t over. Seattle alone needs more than 70,000 new low- and middle-income housing units over the coming two decades, according to city estimates.

“We’re way behind in large part due to interest rates,” said Maritz. “The pipeline for housing has fallen off a cliff.”

While the housing strain continues in the Pacific Northwest and across the nation, the breakneck growth of the tech sector has slowed significantly.

Amazon, Microsoft and other area tech companies have implemented multiple rounds of layoffs in recent years. Last year Amazon announced layoffs totaling 27,000 corporate workers, with roughly 2,500 of those impacted coming from the Seattle area. Its most recent cuts included hundreds of tech jobs lost in April.

But both companies have benefited from a broader tech rebound driven by a surge of interest in artificial intelligence. Amazon’s stock is up nearly 50% over the past 12 months; Microsoft shares are up 30%.

Maritz would love for the big tech companies and others to leverage some of their AI expertise to help cut costs and gain efficiencies in developing new housing. That includes automating some of the more tedious steps in drafting architectural plans and developing strategies for modular, lower-waste construction.

Ours, he said, is a low-tech industry.

Amazon is closing a warehouse in Tukwila, Wash., just south of Seattle.

The company confirmed the closure after we spotted a new filing with the state Worker Adjustment and Retraining Notification (WARN) system, noting a layoff of 172 employees at the facility, known as UWA5.

Amazon spokesperson Sam Stephenson said employees will be offered opportunities to transfer to other facilities nearby, or “support if they choose not to stay with Amazon.”

“We’re always evaluating our network to make sure it fits our business needs and to improve the experience for our employees, customers, partners, and drivers,” Stephenson said in a statement. “As part of that effort, we may close older sites, enhance existing facilities, or open new sites, and we weigh a variety of factors when deciding where to develop future sites or maintain a presence.”

Amazon employs 75,000 people in the Seattle region, many of them corporate and tech workers, as part of its workforce of 1.52 million people around the world. Global headcount rose 4% year-over-year, as of March 31.

On a call with reporters last month following the company’s first quarter earnings release, Amazon CFO Brian Olsavsky said the year-over-year growth in headcount was mainly driven by its warehouse-related operations.

Amazon last month announced that it set new records for Prime delivery speeds in the first three months of this year, touting a shift to regional fulfilment centers.

“In short, we divided the country into smaller, easier-to-reach regions,” Amazon exec Doug Herrington wrote in a blog post last year. “Previously, we fulfilled orders from any of our operational sites across the country. Now we have eight interconnected regions serving smaller geographic areas.”

Herrington also said at the time that Amazon had plans to double the number of its smaller Same-Day Delivery facilities in the coming years.

Amazon laid off 27,000 corporate workers last year. Warehouse jobs were not affected as part of those cuts.

Three years after returning to Amazon Web Services to lead the cloud giant through one of the most challenging and prosperous periods in its history, Adam Selipsky fielded questions this week about his tenure as AWS CEO, the state of competition in the cloud, and what’s next for himself and the company.

In an interview with GeekWire at Amazon’s re:Invent building in Seattle, in his final days as the tech giant’s top cloud executive, Selipsky took issue with the popular narrative that AWS under his leadership was caught off-guard by the rapid rise of generative artificial intelligence.

“I think that story has much more sizzle and will likely generate more clicks than looking back at what actually happened in the history of generative AI,” Selipsky said, referring generally to what he characterized as the misperception that Amazon has been behind in the generative AI boom.

In one recent story about the AWS leadership transition, CNBC quoted D.A. Davidson analyst Gil Luria saying that AWS was “caught flat-footed” by generative AI, suggesting that Selipsky’s exit was part of “a price to pay.”

The Information reported last year on an earlier delay in the AWS Bedrock AI platform, and missed AI investments.

Demand for generative AI has emerged as one of the most promising areas of growth for major cloud providers, as businesses increasingly seek to train, deploy and run advanced AI models as part of their tech infrastructure.

But as Selipsky pointed out, Amazon and other companies have been deeply immersed in AI and machine learning for many years. That goes back to long before OpenAI released ChatGPT in late 2022, sparking the generative AI boom.

“I think our differentiated focus on security, on operational excellence, on taking the long-term view with customers, continues to set us apart,” Selipsky said this week. “And I think if we do our jobs, and we listen to customers carefully and innovate, that generative AI will be one of the biggest opportunities that AWS has ever seen.”

While cautioning that AWS still needs to earn its success in this new era of the cloud — it’s “not our birthright,” as he put it — Selipsky said the company’s work with customers over many years to bring their data into the cloud puts AWS in a position of unique strength. He said this “enables our customers to move really quickly and effectively with generative AI in a way that I don’t think any other competitor can easily duplicate.”

If the company keeps innovating and executing as it has been, he said, it has “a great chance to be just as much of a leader in generative AI as we’ve been in the cloud space for all of these years.”

AWS momentum and milestones

Throughout the interview, when pressed on issues related to AI, competition with rivals such as Microsoft and Google, and his impending departure, Selipsky offered a historical perspective befitting someone who was there in the early days.

“There are always new developments,” Selipsky said. “First, there was big data, and then there was IoT, and then mobile, and edge computing, and now there’s generative AI, which for sure is a transformative set of technologies that will have far-reaching consequences.”

Selipsky joined AWS in 2005, a year before it started generating revenue with the launch of its first production service, Amazon S3 (Simple Storage Service). He worked steps away from Andy Jassy — the longtime cloud chief who succeeded Jeff Bezos as Amazon CEO — for more than a decade before leaving to lead Tableau Software.

At that point, in 2016, the annual revenue run rate for AWS was $13 billion. When Selipsky rejoined AWS as its CEO in early 2021, in the midst of the pandemic, the run rate was $54 billion. As he ends his AWS career today, the run rate stands at $100 billion. In its most recent quarter, AWS revenue growth accelerated to 17% year-over-year, while generating more than 60% of Amazon’s total profits.

That momentum, he said, is one of the reasons it makes sense to leave now.

Amazon announced Selipsky’s departure on May 13, naming as his successor Matt Garman, the AWS senior vice president of sales and marketing.

In a memo to employees, Jassy said Selipsky had agreed from the start that he’d likely serve as AWS CEO for a few years, focusing in part on “helping prepare the next generation of leadership.”

In his own message at the time, Selipsky said he was leaving with “truly mixed emotions.” Asked to elaborate this week, he spoke with pride about the work AWS does for customers, and expressed excitement about what’s ahead for its business and technology. He said it will be difficult to leave the AWS team, particularly given the many friendships he has developed at the company.

‘Energized by all the possibilities’

Reflecting on his tenure as AWS CEO, Selipsky spoke about the company’s work to help customers optimize costs amid economic turmoil; its progress in shifting previously “immovable workloads” to the cloud; and its extraordinary efforts to help Ukraine preserve its data and technology infrastructure; among other highlights.

Selipsky, now 57, said rejoining AWS as its CEO three years ago was “an incredible opportunity, and one that I was really excited about, too excited to pass up, and really, it’s been amazing. It’s been a real privilege.”

However, he said, “I suspected that there would be one more meaningful leadership experience that I would want at some point outside of Amazon, just given the significant number of years that I’ve spent here and my natural curiosity about different experiences. And I’m really energized by all the possibilities of what lies out there ahead for me.”

Selipsky said he’s “looking forward to decompressing a little bit, having a chance to think in an unhurried and unconstrained way about what I want that next adventure to be. There will be one, so stay tuned, but I honestly and very intentionally have no plan at this point about what that might look like.”

Amazon continues to lead the cloud market with 31% market share, according to Synergy Research Group, but Microsoft and Google have been closing the gap, with 25% and 11% market share, respectively. 

Selipsky expressed confidence in Garman’s ability to lead AWS in its next phase.

“I feel really good that I’m handing AWS off in great shape. I’m really confident in Matt’s abilities, and Matt’s readiness to take over,” he said. “One of the most important jobs of a leader is to prepare the next set of leaders to lead, and that’s what we’ve done.”

Adam Selipsky spoke with GeekWire this week at Amazon Web Services headquarters in Seattle in an interview prior to his departure as AWS CEO. His final day in the role is today, before handing the reins to longtime AWS exec Matt Garman. Read our overview here, and continue reading for excerpts, edited for context and clarity.

Q: Reading back through your memo to the team about your departure, the phrase that you used was “truly mixed emotions.” Can you walk me through where you are, and your mindset about leaving?

Selipsky: Well, the mixed emotions come from the fact that AWS continues to do as amazing things for customers as it ever has, and that only continues to get more exciting. And also, we have such an amazing team, and of course it’s hard to leave so many folks who are not only world-class in what they do, but are also true and genuine friends. I formed great friendships here, and so that makes it hard.

Coming back to run AWS was an incredible opportunity, and one that I was really excited about, too excited to pass up, and really, it’s been amazing. It’s been a real privilege.

At the same time, I suspected that there would be one more meaningful leadership experience that I would want at some point outside of Amazon, just given the significant number of years that I’ve spent here and my natural curiosity about different experiences. And I’m really energized by all the possibilities of what lies out there ahead for me.

In addition, any good company has a strong succession plan, and AWS had an amazing group of leaders, but they were still going to benefit from some additional experience and mentoring. And part of my mission was to prepare the leadership team, including Matt, whom I hired in 2006 as the very first product manager for AWS, and to prepare them to be ready to take the reins. And that’s part of what Andy [Jassy, Amazon CEO] and I talked about early on.

And then finally, I wanted to ensure that when I did leave, it was at a time when the business was in strong shape, that it had good momentum. The revenue’s grown 85% over the past three years to now over a $100 billion revenue run rate, and that $100 billion would make AWS a Fortune 40 company if we were a standalone business. That’s pretty astounding growth, and I’m really proud of it. And that growth actually accelerated last quarter to 17% year-over-year with really strong profitability.

So if you take all of these things coming together, it made it a good time to activate that succession plan. So I feel really good that I’m handing AWS off in great shape, and I’m really confident in Matt’s abilities and Matt’s readiness to take over. One of the most important jobs of a leader is to prepare the next set of leaders to lead, and that’s what we’ve done.

Q: At the same time, the cloud market has only penetrated the overall IT market by 10 to 15%, and you’re only three steps into a 10K race in AI. [Referencing some of Selipsky’s favorite refrains.] So I can imagine, when you talk about mixed emotions, that’s part of it. There’s huge work ahead for AWS.

Selipsky: The opportunities and the challenges for AWS abound, and I think it is still Day One for the cloud, including AI in that. And I think that there’s going to be incredible innovation. There’s going to be incredible problem-solving for customers, and it’s going to continue to be an amazing time.

For me personally, all those things coming together make this the right time for me to hand over the reins to a group of leaders that I’ve helped prepare, and who I’m confident are ready, while the business is in good shape, and giving me the opportunity to take a step back and give some thought to what I want my next adventure to be.

Q: One of the Amazon leadership principles is to be vocally self-critical. I know you’re a strong adherent to the leadership principles. So if you were to step back objectively and assess your tenure, where do you think you fell short as AWS CEO?

Selipsky: There’s so many facets to this business. I think the pandemic was an incredibly challenging time, on so many dimensions, for so many people. I came into this role during the pandemic, and obviously everybody was working remotely, people in many different working situations. And at the same time, AWS was growing the size of the team at a high rate.

So you had a large number of new people coming in in the middle of this dislocation. Culture is very important at Amazon, our leadership principles are very important, and we take pride in being a little bit peculiar in our culture, and we worked really hard at maintaining that culture during the pandemic, but it was difficult with everybody remote and with so many new people coming in. How do you teach new people Amazon culture remotely?

And I think we did a lot of things to do that, whether it was online coffee breaks, whether it was bringing people together physically where and when we could. I and other leaders actually recorded short video snippets talking about individual leadership principles for people to watch and hopefully think about.

At the same time, I wish we could have done more. I think it was hard for the people hired during that time to quickly and deeply ramp up into the Amazon culture.

Now that we’re back together again much more, it’s a lot easier, but I feel like we’re still working to deal with the effects of having so many new people come in during that pivotal time. And I think no matter how much we did, there’s always more that we could have done, and I wish we had found even more and even other creative ways to do so.

Q: What about the business side? Anything there that you would’ve done differently?

Selipsky: Of course you make a thousand decisions and there’s going to be some that you always could have done better, but overall, I feel really good about the set of decisions and the trajectory that this leadership team has set AWS on.

Q: There’s a perception that Amazon was not ready for the rise of generative AI. One analyst said the company was caught flat-footed by AI. Is that a fair assessment?

Selipsky: Well, I think that story has much more sizzle and will likely generate more clicks than looking back at what actually happened in the history of generative AI.

Amazon and a lot of other companies have been working on generative AI for years, and I was actually still at Tableau when Amazon really started investing, when other companies both large and small were building the first set of generative AI capabilities, and when a lot of companies started to make their first big investments in startups.

And it was really just a couple of years ago when the first popular consumer applications burst on the scene, and that was really exciting. And that’s so much of what captured popular attention and captured a lot of the PR and I think drives some of the headlines that you’re talking about. And I do believe that Amazon is going to have really exciting things to talk about on the consumer side, but I’m going to leave that for other people to talk about.

If you look at what AWS does, and that’s serving enterprises and startups and developers, I think anybody who’s been watching will see that we’ve developed an incredibly exciting set of capabilities that really are leading edge and are being rapidly adopted by a very broad and diverse set of customers.

This generative AI stack spans from the bottom of the stack, from chips, on up through Amazon Bedrock in the middle of the stack, providing secure and managed access to many of the world’s leading models, to applications that we’ve built on top of those models, like Amazon Q.

And if you just take Bedrock, for example, we have tens of thousands of customers who have adopted Bedrock, customers like Adidas, Booking.com, Pfizer, Thomson Reuters, Zillow, I’ll stop there, but I could keep going for a long time. Many of the world’s most-respected, leading companies are quickly and deeply adopting AWS’s generative AI capabilities.

And I think that if we continue to innovate the way that we have been, and if we continue to really execute effectively as we’ve proven we can do, that we have a great chance to be just as much of a leader in generative AI as we’ve been in the cloud space for all of these years.

Q: It feels like the rise of generative AI has reset the cloud competition to some extent. When you look at the landscape, obviously AWS is the clear leader based on its heritage, in terms of market share, and for many years, technology. It feels like that’s been reset with AI. Is that an accurate perception?

Selipsky: Not really. I think there’s been this odd misperception that this market segment hasn’t been competitive.

I’ll tell you a story. Literally the week I started at AWS in 2005, a full year before we launched our first production service, S3, Simple Storage Service … I walked out of my office in the old Pac Med building on Beacon Hill, and some developer whom I did not know basically tackled me in the hallway and said, “You’re the new business guy. Microsoft and Google are going to be all over this space. What are we going to do about it?” In 2005. So I think back then, folks realized that there was going to be competition in this space.

Now, of course it turned out that the entire old guard of technology companies didn’t respond for a good five to seven years. I think mainly because our business model, which was so good for customers, was so threatening to them. And so AWS got out to a very, very early lead and then moved faster than anybody else and has been able to maintain that lead.

And in fact, if you look at last quarter, we believe we added more dollars of absolute growth in AWS than any major cloud competitor did. So I think we remain the clear leader. If you look at the breadth and the depth of our customer base in enterprise, in startups, in the government sector, critical areas like national security and intelligence communities and defense, we remain the very clear leader.

Anytime you look to your left and you look to your right and you don’t see competitors next to you, you may have dramatically overestimated the attractiveness of your market segment. And so it’s completely appropriate that there be strong competition. I think as other companies have had years to build an initial set of capabilities, that the competitive landscape has definitely intensified. That’s been going on for years.

There are always new developments. First, there was big data, and then there was IoT, and then mobile, and edge computing, and now there’s generative AI, which for sure is a transformative set of technologies that will have far-reaching consequences. But through it all, I think our differentiated focus on security, on operational excellence, on taking the long-term view with customers continues to set us apart. And I think if we do our jobs and we listen to customers carefully and innovate, that generative AI will be one of the biggest opportunities that AWS has ever seen.

If we continue to innovate and to deliver at a rapid clip, I don’t think that there needs to be any reset, but it’s also not our birthright. And if we take our eye off the ball and other folks deliver better for customers, then I would absolutely expect there to be resets, because customers will vote on who the leaders are.

Q: Has Amazon Q [the company’s generative AI assistant] lived up to your expectations?

Selipsky: Well, it’s very early for Amazon Q. We just released it into general availability a few weeks ago. So it’s very early. So I think that it’s certainly lived up to our expectations in terms of being really proud that we’ve delivered a great set of capabilities. It’s lived up to our expectations in terms of the excitement we see from customers, and it lives up to our expectations in terms of the really eye-popping results that early customers have seen. …

If you look at early implementations of Amazon Q Developer, BT, British Telecom, has been using Q to write code. They had a 37% code acceptance rate, and that’s without altering the code at all … 100,000 lines of code. National Australia Bank had 50% acceptance rates, which is really industry-leading.

So as you would expect, we have a lot of work to do to continue building, and to help customers adopt, but we think it’s going to be really meaningful and it’s going to be deeply adopted by customers.

Q: AWS was Andy Jassy’s baby for many years. That couldn’t have been an easy role to step into, both succeeding and reporting to him. How did you manage that, and how did that work out?

Selipsky: That transition was actually pretty seamless. I think that Andy and I knew each other well. Our offices were about 25 feet apart from each other for 11 years, when I was here helping to start up and build AWS. I came to AWS about a year pre-revenue, and when I left in 2016, we were at about a $13 billion-a-year run rate. And so I think that we understood each other very well, and that’s made it very easy to continue to work together. We knew what to expect from each other, and we both knew what we were getting into.

Q: What can you say about what’s next for you?

Selipsky: I’m really looking forward to taking some time off this summer, traveling. My wife and I are going to go back to Greece where, 30 years ago, we went for our honeymoon. I’m looking forward to that. And I’m looking forward to spending time with family. I’m also looking forward to decompressing a little bit, having a chance to think in an unhurried and unconstrained way about what I want that next adventure to be. There will be one, so stay tuned, but honestly and very intentionally have no plan at this point about what that might look like.

Q: What would be your message to AWS customers, partners and employees as you leave?

Selipsky: I want them to know that the things that were most important to me when we founded AWS are still the most important things today, and are still going to be the most important things in the future. That starts with security. And while I’m never arrogant about security, people would have you believe that all cloud providers are the same, and I’m telling you, they’re not all the same. And while never perfect, I am really proud of AWS’s track record in security, and it’s not an accident that we’ve had such a strong track record when some of our competitors have been very much in the news over the past months and past couple of years regarding security, and not for positive reasons.

Operational excellence and reliability, we are the most reliable cloud. Again, that is not by accident. It is due to the hard work by such smart people that we put in every day.

I think third is the unusually long-term perspective that all of Amazon, including AWS, brings to everything we do. That relates not only to building products, building a business, but also to our customer relationships. And we’re going to keep really thinking about, what does it take to have long-term trusted relationships for three years, five years, 10 years from now with customers, and doing the things that are required to build those relationships.

And then innovation. We have always been the most innovative in the cloud space, and we intend to continue to do that in the future. So those things always have been and always will be constants for us.

Then I would say that, on a personal note, I would hope that our customers and our partners and our employees feel that I always had their best interests at heart and I always worked from the outside in, trying to figure out what to build and how to deliver the things that would solve complex customer problems, and then figuring out how to make a great business on top of that. And I think that’s what we’ve done.

At the same time, I’ve cared very much about making sure that, as we do that, that we create an incredible place for people to work, a place for innovators and builders to thrive, and a place where people can be inspired by what they do. And that inspiration looks different for every person. I want people to be be inspired by whatever is inspiring to them, whether that’s the mission of what AWS is doing to change how IT is consumed, and change the experience of people interacting with the internet around the world. For other people, it’s working on an amazing team with amazing colleagues. For others, it is just the sheer creative act of innovating.

I’ve come to believe that so many people want to be inspired, and yet what that looks like is different for every person. And so what I want to do, and I hope what I’ve done, is to help create the conditions where tens and tens of thousands of AWS employees can find inspiration in whatever inspires them.

RELATED: Amazon’s departing cloud chief: Gen AI can be ‘one of the biggest opportunities AWS has ever seen’

Amazon says it will expand the range of its drone deliveries and the footprint of its drone network across the United States after the Federal Aviation Administration granted the tech giant permission to operate its delivery drones beyond the visual line of sight of drone operators.

It’s a key milestone in the company’s longstanding effort to deliver packages via drone, an initiative unveiled more than a decade ago by Amazon founder Jeff Bezos in a segment on “60 Minutes.”

Amazon says the approval was granted after it demonstrated its onboard detect-and-avoid technology, ensuring drones can safely navigate around obstacles, as validated through testing and real-world flights.

“We then conducted flight demonstrations in the presence of FAA inspectors to show our system works in real-world scenarios—we flew in the presence of real planes, helicopters, and a hot air balloon to demonstrate how the drone safely navigated away from each of them,” the company said in a post Thursday morning.

Even without eyes directly on the drone in the sky, a remote operator still uses technology “to monitor and control the drone at all times,” the company said.

With the new FAA approval, the company says it will start by expanding its existing operations in College Station, Texas, to reach more densely populated areas.

Later this year, Amazon plans to start integrating drone deliveries into its delivery network by placing drone facilities next to its same-day delivery sites, which combine elements of fulfillment centers and delivery sites. Amazon in April announced plans for the first of these co-located drone sites in Arizona.

Amazon’s stated goal is to deliver 500 million packages per year via drone by the end of the decade.

Amazon is using natural language technology to give Fire TV users a new way to search for shows and movies.

A new search experience rolling out in the coming weeks lets users search with spoken phrases to find what they’re looking for, based on topic, genre, plot, character, actor, or even a quote.

For example, users can ask Alexa, “show me movies about dog and human friendships,” or, “show me psychological thrillers with surprise endings.” It can also respond to a question like “what movie has the line, ‘you’re killing me Smalls’?”

The search results will only include content that’s available to the specific user.

The new experience will be available in the U.S. in English. It works with Fire TV devices running Fire TV OS 6 and later.

Companies are rapidly integrating AI into their search experiences. Google has been testing AI-generated search results. Amazon recently introduced its new AI shopping assistant Rufus. Other companies from outside the tech industry such as Alaska Airlines are also testing new ways to help customers find information, with the help of AI.

Amazon is getting its grub on permanently.

Extending a food delivery perk that was originally good for a year, Amazon and Grubhub announced Wednesday that Prime members in the U.S. can access a free Grubhub+ membership on an ongoing basis.

The deal is worth $120 a year, and Grubhub+ includes no added delivery fees on eligible orders over $12, 5% credit back on pick-up orders and more.

Prime members can also now order directly from Grubhub on Amazon.com and in the Amazon shopping app, in an experience that is identical to the one on Grubhub’s website and app.

The partnership was first announced in July 2022 as a one-year trial for Prime members that would convert to a paid Grubhub+ membership. But Prime members, who pay $139 per year, will now maintain the free Grubhub+ access as long as they remain with Prime.

Grubhub competes against DoorDash, Uber Eats and others in restaurant food delivery — a space that Amazon vacated in 2019 when it shut down Amazon Restaurants.

Just Eat Takeaway (JET) acquired Grubhub in a deal first announced in 2020, when the food delivery business was peaking during the height of the pandemic.

Amazon shareholder resolutions related to warehouse working conditions and the company’s response to labor unions garnered the most support among the 14 proposals at this year’s annual shareholders meeting, according to detailed results released Friday afternoon.

The company announced Wednesday that none of the resolutions had passed, but detailed results were not previously available.

The resolutions requesting additional reporting on warehouse working conditions and Amazon’s handling of collective bargaining rights garnered around 30% of shareholders votes for approval, well short of the majority required for passage.

Both issues also led shareholder votes at last year’s meeting.

Other proposals this year that received nearly 30% of votes related to requests for additional reporting on gender/racial pay; packaging materials; and lobbying.

Nine of the 14 proposals are repeat proposals that failed in prior years. Some of the proposals “contain assertions that we believe are incorrect or that reflect fundamental lack of understanding of how our business operates,” Amazon said in a proxy statement.

Amazon’s 12-member board, which was re-elected as part of the meeting, had recommended that shareholders vote against all 14 outside proposals.

One proposal requested that Amazon create an additional board committee to address human rights risks associated with the development and deployment of AI systems.

Other proposals focused on the company’s climate impact, including one requesting that Amazon disclose “Scope 3” greenhouse gas emissions.

Investors representing a majority of Amazon’s shares voted against all 14 outside proposals submitted for the annual meeting of shareholders Wednesday morning, according to the company.

The announcement of the preliminary results at the virtual meeting followed more than 30 minutes of comments by proponents including Amazon employees, activists, and others on issues such as climate, workers’ rights, racial and gender pay gaps, corporate governance, facial recognition technology, working conditions, and artificial intelligence.

Detailed results are typically released a few days after the meeting.

Amazon’s 12-member board, which was re-elected as part of the meeting, had recommended that shareholders vote against all 14 outside proposals.

One proposal requested that Amazon create an additional board committee to address human rights risks associated with the development and deployment of AI systems.

Other proposals focused on the company’s climate impact, requesting that Amazon disclose “Scope 3” greenhouse gas emissions and report how it could reduce its plastics footprint.

Nine of the 14 proposals are repeat proposals that failed in prior years. Some of the proposals “contain assertions that we believe are incorrect or that reflect fundamental lack of understanding of how our business operates,” Amazon said in a proxy statement.

The annual meeting, which previously drew protesters to Seattle’s Fremont neighborhood, has been held virtually since the onset of the pandemic.

During the Q&A portion of the meeting, Amazon CEO Andy Jassy answered questions submitted by shareholders. Selected questions focused on topics including warehouse injuries; the future of Alexa; generative AI; government regulation; Amazon’s advertising business; dividends; and more. Here are a few excerpts from Jassy’s answers, edited for brevity and clarity.

On plans for Alexa: “If you look at what’s been happening in generative AI over the last couple years, and you don’t believe there is going to be a really broad personal assistant, you have your head in the sand. If you look at Alexa, we have over a half billion devices in people’s homes with over 200 million active endpoints across entertainment, smart home and shopping. We have a very significant chance to be the leader here. We have a pretty significant large language model that runs underneath Alexa. But we’re in the process of building a much more expansive one that we think will meaningfully improve the experience for our Alexa users. I’m very optimistic that we’ll be a leader here and I think our future is bright.”

On the advertising business: “I think we’re still very early in figuring out how to thoughtfully place advertising in video and sports and audio and grocery products. We recently launched Prime Video ads, which is off to a really good start. Brands are really excited about being able to reach over 200 million monthly viewers. I think we have still a quite a bit of opportunity in advertising. It’s still early days for us there.”

On issuing dividends: “We always look at all the different ways to best leverage and invest cash that we have. We are very convicted that the best use of this cash for customers and the business and shareholders right now is investing in businesses in which we’re pursuing. If you look at our existing large businesses — Stores and AWS as examples — they still require very significant capital to pursue the very large opportunities we have. It’s important to keep remembering that in our Stores business, we’re still only about 1% of the worldwide market segment share in retail and about 85% of it still lives in physical stores. Similar story in AWS. It’s a $100 billion annual revenue run rate but about 85% to 90% of the global IT spend is still on premises. If you believe those equations are going to flip, which we do, we have a lot of growth in front of us. You layer on for AWS, the fact that generative AI is this very transformative substantial opportunity, almost all of which will be built from the get go in the cloud — there are real good uses of capital to keep growing those businesses. And we have a lot of passion for the newer businesses and investments we’re making in areas like Prime Video and healthcare and Kuiper and Zoox and grocery and some of the logistics and fulfillment businesses that we’re pursuing. We will always look at alternative ways to invest cash and if we find better ways than what we’re investing in we’ll do it.”

Three executives from Amazon Web Services were meeting with a top CIA tech leader, trying to come up with a creative solution to an issue that was facing the U.S. intelligence agency in the cloud, when Matt Garman picked up the marker.

“Matt is the one that took the whiteboard and started problem-solving immediately,” getting into the nitty-gritty details of how Amazon could accomplish what the CIA needed at that moment, recalled Teresa Carlson, who led the company’s expansion into the public sector industry from 2010 to 2021. “He got to it. He solved it.”

The choice of Garman as the next CEO of Amazon Web Services puts a longtime product leader at the helm of the market-leading public cloud platform at a key juncture in its history, and a pivotal moment in the broader industry.

You wouldn’t know his product pedigree from his most recent job. An 18-year Amazon veteran, Garman has spent the past four years as AWS senior vice president of sales and marketing, responsible for keeping the business growing.

But he is an industrial engineer by training, with undergrad and graduate degrees in the field from Stanford. After getting his MBA from Northwestern, Garman started at Amazon Web Services as a product manager before leading the company’s Elastic Cloud Compute (EC2) business.

That whiteboard diagram for the CIA was not his first.

“His personality is inquisitive,” said Karthik Narain, the group CEO for technology at Accenture, who has worked closely with Garman on major cloud initiatives. “He tries to learn and understand what the opportunity is on one end of the spectrum, or what the issue is at the other end of the spectrum.”

AI and the cloud

Garman will need his full range of experience in the new role.

As the third CEO in the 18-year history of AWS, he’ll be responsible for continuing to grow a $100 billion business that would, on its own, rank in the top 75 of publicly traded companies in the world. Simultaneously, he’ll be leading AWS in a high-stakes technical race with Microsoft, Google, OpenAI, and others in the fast-moving world of artificial intelligence.

In some ways, he will be taking over with a head of steam. Amazon Web Services’ revenue in the first quarter was up 17% to $25 billion. Operating profit rose 84% to $9.4 billion. That was more than 60% of Amazon’s companywide operating profits, illustrating the significance of AWS to the broader company.

Amazon continues to lead the cloud market with 31% market share, according to Synergy Research Group.

However, Microsoft and Google have been closing the gap, with 25% and 11% market share, respectively. Both are investing heavily in the infrastructure required to support further growth in the AI market.

Microsoft Copilot and Google Gemini give Amazon’s biggest cloud rivals the ability to leverage their own AI apps and services to tie companies further into their cloud infrastructure.

Amazon Web Services has made headway with Bedrock, its managed service that provides access to foundation models for developing AI applications. Amazon Q, the company’s AI platform for developers and businesses, unveiled last fall, hasn’t yet shown the same type of traction.

“It’s harder for them, because they’re not a consumer company,” said Patrick Moorhead, CEO and chief analyst at Moor Insights & Strategy, referring to the Amazon cloud division.

Of course, as Moorhead noted, Amazon more broadly is very much a consumer company. One question will be the extent to which AWS, under Garman’s leadership, will be able to look to the rest of the company to help prove its potential as a platform for breakthrough AI applications.

One possible example: Amazon’s Devices & Services division, now led by former Microsoft executive Panos Panay, has been developing new conversational AI features for its Alexa voice assistant, and CNBC reported Wednesday morning that the company is planning a monthly subscription fee to help offset the cost.

Changing of the guard

Adam Selipsky‘s departure as AWS CEO, announced last week, three years after he returned to Amazon, caught some people in the company and in the industry by surprise, at least based on the timing.

Despite what Amazon CEO Andy Jassy says now about Selipsky agreeing from the start that he’d “likely do it for a few years,” the former Tableau CEO seemed to many like someone with longer-term aspirations in the role.

But the selection of Garman as Selipsky’s successor was little surprise, given his tenure at AWS and his breadth of experience. He was widely reported to be in the running for the CEO role in 2021, when Selipsky got the job.

Garman shares a number of traits with Jassy, according to people who know both.

“He’s very similar. They’re both very good listeners. They ask very good questions,” said Sanjay Poonen, the CEO of data security and management company Cohesity, who went to Harvard Business School with Jassy, partnered with AWS as SAP’s president, and worked closely with Garman on major projects in his subsequent role as VMWare COO.

Garman is “probably a little bit closer, technically, to the product,” Poonen said. “He’s more of an engineer and product person than Andy. But I think he’s grown in many of the sales and marketing tasks that Andy had,” giving him first-hand experience with many of the customers whose problems AWS is trying to solve.

Their similar approaches make sense, in part, because Garman rose up through the ranks when Jassy was AWS CEO.

Garman “has been a leader on both the product side and the go-to-market side of AWS,” and he’s a trusted advisor to other Amazon executives, said Matt McIlwain, managing director at Madrona Venture Group in Seattle, who has interviewed Garman at Madrona’s IA40 conference the past two years.

Speaking at the Madrona event last fall, Garman offered a window into his mindset as he described Amazon Web Services’ approach to developing and rolling out AI technologies. Rather than initially building AI for use in its own applications, he said, Amazon first investigated the needs of its customers.

“Looking out at our broad set of customers, how do we think they’re going to want to apply generative AI?” he said, explaining the process. “And what are the problems that they’re going to want to solve?”

Discussions with those customers, he said, were what led the company to focus heavily on security and data protection in its AI technology rollout, in addition to price and performance.

Garman will officially take over as AWS CEO in early June.

Amazon Web Services CEO Adam Selipsky is stepping down from the role, three years after returning to the company to lead the cloud giant, according to an internal memo from Amazon CEO Andy Jassy to employees Tuesday morning.

Selipsky will be succeeded by Matt Garman, the AWS senior vice president of sales and marketing, effective June 3.

The news comes as a surprise to the outside world, but Jassy’s memo described Selipsky’s departure as part of an informal plan that they agreed upon when he returned to Amazon in March 2021 from his prior role as Tableau CEO.

“In those conversations, we agreed that if he accepted the role, he’d likely do it for a few years, and that one of the things he’d focus on during that time was helping prepare the next generation of leadership,” Jassy wrote Tuesday.

Selipsky’s tenure as AWS CEO was defined by the latter half of the pandemic and the rise of generative artificial intelligence, which fueled demand for cloud services and put AWS in the unusual position of scrambling to catch up with rivals such as Microsoft Azure and Google Cloud.

“In the back of my head I thought there might be another chapter down the road at some point, but I never wanted to distract myself from what we are all working so hard to achieve,” Selipsky wrote in his own memo to employees.

He added, “Given the state of the business and the leadership team, now is an appropriate moment for me to make this transition, and to take the opportunity to spend more time with family for a while, recharge a bit, and create some mental free space to reflect and consider the possibilities.”

AWS has grown to a $100 billion annual revenue run rate, and continues to lead the cloud market with 31% market share, according to Synergy Research Group. The business accounted for more than 60% of Amazon’s companywide operating income in the first quarter.

Garman has worked at Amazon for nearly 18 years, most recently as senior vice president of AWS sales, marketing and global services.

Here are emails to employees from Jassy, Selipsky, and Garman, as published on Amazon’s website.

A little over three years ago when Jeff announced my new role, one of my first jobs was to identify who’d take over and lead AWS. It was important to me that we had somebody who understood AWS, valued our culture, would provide strong continuity, and could keep growing the business. We had strong leaders in AWS, several of whom could lead the overall business in the long-term, but who’d benefit from a few more years gaining experience and learning under a more seasoned CEO.

Adam Selipsky was one of the first VPs we hired in AWS back in 2005, and spent 11 years excellently leading AWS Sales, Marketing, and Support, before leaving to become the CEO of Tableau. I’ve always had a lot of respect for Adam, and we met several times to discuss the possibility of coming back to lead AWS. In those conversations, we agreed that if he accepted the role, he’d likely do it for a few years, and that one of the things he’d focus on during that time was helping prepare the next generation of leadership.

We were fortunate that Adam agreed to step in and lead AWS, and has deftly led the business, while also developing his leadership team. Adam is now going to move onto his next challenge (after taking a well-deserved respite), and Matt Garman will become CEO of AWS, effective June 3rd.

I’d like to thank Adam for everything he’s done to lead AWS over the past three years. He took over in the middle of the pandemic, which presented a wide array of leadership and business challenges. Under his direction, the team made the right long-term decision to help customers become more efficient in their spend, even if it meant less short-term revenue for AWS. Throughout, the team continued to invent and release new services at a rapid clip, including several impactful Generative AI services, such as Amazon Bedrock and Amazon Q. Adam leaves AWS in a strong position, having reached a $100 billion annual revenue run rate this past quarter, with YoY revenue accelerating again. And perhaps most importantly, AWS continues to lead on operational performance, security, reliability, and the overall breadth and depth of our services. I’m deeply appreciative of Adam’s leadership during this time, and for the entire team’s dedication to deliver for customers and the business.

As some of you may know, Matt started at Amazon as a MBA intern during the summer of 2005, and joined the company full-time in 2006 as one of the first AWS product managers. Initially working across all of AWS, Matt helped create our first service level agreements, define new features, and create new pricing plans. He then became our first product manager for EC2, and led EC2 product management in its early, formative years. During that time, he also led the team that defined, launched, and operated EBS. Matt eventually became the general manager of all AWS Compute services in 2016, which he did for about four years. In 2020, after having been deeply involved in our product organization for 14 years, I asked Matt to move to the demand generation side of AWS to lead WW Sales, Marketing, Support, and Professional Services.

Matt has an unusually strong set of skills and experiences for his new role. He’s very customer focused, a terrific product leader, inventive, a clever problem-solver, right a lot, has high standards and meaningful bias for action, and in the 18 years he’s been in AWS, he’s been one of the better learners I’ve encountered. Matt knows our customers and business as well as anybody in the world, and has senior leadership experience on both the product and demand generation sides. I’m excited to see Matt and his outstanding AWS leadership team continue to invent our future—it’s still such early days in AWS.

Thank you again to Adam for his leadership, and please join me in congratulating Matt.

Andy
 

Team,

Thank you Andy, I appreciate the kind words and your leadership during all these years together. I take this next step with truly mixed emotions; I have spent almost 15 combined years in AWS, and it has been a real privilege.

I am so grateful for all that I’ve learned about technology, leadership, organization, and culture at Amazon. Helping all of our customers and partners to build has been an amazing experience. Above all, I am grateful for my many friendships here, and for such talented colleagues who have taught me so much, while providing such good cheer.

Leading this amazing team and the AWS business is a big job, and I’m proud of all we’ve accomplished going from a start-up to where we are today. In the back of my head I thought there might be another chapter down the road at some point, but I never wanted to distract myself from what we are all working so hard to achieve. Given the state of the business and the leadership team, now is an appropriate moment for me to make this transition, and to take the opportunity to spend more time with family for a while, recharge a bit, and create some mental free space to reflect and consider the possibilities.

Matt and the AWS leadership team are ready for this next big opportunity. I’m excited to see what they and you do next, because I know it will be impressive. The future is bright for AWS (and for Amazon). I wish you all the very best of luck on this adventure.

Onward always,
Adam

Thanks Andy and Adam. Adam, I want to personally thank you for everything you have done for the company, for our customers, and for me. I have learned a ton from you over the years, and I know that the AWS business would not be where it is today without your contributions and leadership.

Over the last 18 years I have been fortunate enough to get to work on many different aspects of the AWS business, but one constant has been the world class talent and the unwavering customer obsession of the people I have gotten to work with. I am more optimistic than I have ever been for the potential for innovation and growth ahead of us, and I look forward helping us move faster, invent more, and operate as one team to help our customers.

For me, AWS is much more than just a business. We are a team of missionaries working passionately to help make our customers’ lives and businesses better every day. It has been a privilege to work alongside all of you for the past 18 years, and I am humbled for the opportunity to continue to do so in this new broader role. I’m excited to get started!

There will naturally be some organizational adjustments that we will make as part of this transition, so look for details on those in the coming weeks. Also, I will be hosting a number of AWS Town Halls over the next month, and I look forward to connecting with more of you directly during those.

Thanks,
Matt

The Verge reported on the news earlier this morning.

Amazon says it’s establishing a logistics facility in Everett, Wash., and partnering with a technical college in Kirkland, Wash., to boost the supply chain and workforce pipeline for its Project Kuiper satellite broadband network.

Project Kuiper is Amazon’s $10 billion effort to build and launch more than 3,000 satellites that will offer high-speed internet access to tens of millions of people around the world. The project already employs more than 2,000 people at Puget Sound locations, including a 172,000-square-foot satellite factory in Kirkland and a 219,000-square-foot research and development facility in Redmond, Wash.

Amazon’s partnership with Lake Washington Institute of Technology in Kirkland — which is less than a 10-minute drive from the satellite factory — takes the form of a satellite technician certificate program that will prepare students for careers in aerospace assembly and manufacturing.

Brian Huseman, Amazon’s vice president of public policy and community engagement, said in a news release that the partnership “will help create a pipeline of future satellite technicians to meet the evolving needs of this area’s thriving space and satellite sectors, and give more people the opportunity to take part in Project Kuiper’s important mission.”

Some of those technicians may find themselves working at the newly announced 184,000-square-foot receiving and logistics facility in Everett, which is a half-hour drive north of Kirkland. Amazon said the hub is due to come fully online by next month, and will bring about 200 skilled technician jobs to the Everett area.

“Our new Everett facility will be the single point of delivery for all externally procured materials and goods for Project Kuiper, and the entry point into the internal Kuiper supply chain,” an Amazon spokesperson told GeekWire via email. “It will enable the Kuiper team to support full-rate satellite production.”

Everett Mayor Cassie Franklin said she was “thrilled to welcome Amazon’s new Project Kuiper facility to Everett.”

“This investment not only strengthens our region’s reputation as a hub for aerospace innovation, but also creates valuable job opportunities for our residents,” Franklin said.

Project Kuiper is far behind SpaceX’s Starlink network when it comes to providing high-speed internet access from low Earth orbit. Over the past five years, more than 5,000 Starlink satellites have been built at SpaceX’s facilities in Redmond and launched into space to serve an estimated 2.7 million subscribers in more than 70 countries.

Amazon’s plans call for setting up a 3,232-satellite Project Kuiper constellation. Under the terms of Project Kuiper’s license from the Federal Communications Commission, at least half of those satellites have to be launched by mid-2026, with the remainder reaching orbit by 2029.

Two prototype satellites were launched and tested last year, but Amazon hasn’t yet announced the precise timing and detailed plans for launching the first production-grade satellites. Once the Kirkland production line ramps up to full capacity, Amazon expects to build up to five satellites per day.

“We’re making good progress, and expect to launch our first production satellites in the coming months,” a spokesperson said via email. “We expect to have enough satellites deployed by the end of 2024 to begin offering demonstrations to our earliest enterprise customers.”

Ramping up Lake Washington’s technician training program will also take a while. The program offers two 16-credit certification tracks — for Aerospace Assembly Specialist and Aerospace Manufacturing — that can be completed in two semesters total. Classes start in July.

The coursework will focus on safety protocols, aerospace assembly skills, materials handling, electrical systems, emerging technologies and industry-standard practices.

Amazon said members of the Project Kuiper team helped develop the program and coursework. Project Kuiper also donated 150 tools for use in the classroom and will provide regular guest lecturers for classes. The program will be run at least twice a year, with each program’s cohort capped at 25 students, Amazon said.

Amazon said it will include the two satellite certification tracks in its Career Choice program, which offers prepaid education and skills training programs for hourly warehouse employees.

“Industry partnerships like this collaboration with Amazon’s Project Kuiper are what makes our students so successful,” said Amy Morrison, president of Lake Washington Institute of Technology. “Together, we are providing real-world training for satellite technicians to work in the rapidly growing space industry.”

In other satellite broadband news:

• Amazon is asking the FCC to authorize an extension of Project Kuiper service to mobile vehicles, including cars, ships and airplanes. SpaceX won similar FCC clearance for mobile Starlink services in 2022.
• PCMag.com reports that SpaceX will raise the monthly service price for some residential Starlink users from $90 to $120 after reclassifying their service areas as having “limited capacity” instead of “excess capacity.”

Amazon is bulking up its fleet of electric vehicles beyond the delivery vans that many customers are accustomed to seeing in their neighborhoods.

The company announced Tuesday that it has begun rolling out nearly 50 heavy-duty all-electric trucks in Southern California — its largest such fleet — to handle first- and middle-mile operations to help further decarbonize the tech giant’s delivery operations.

The trucks will haul cargo containers and customer packages, and are expected to travel more than 1 million miles each year with zero tailpipe emissions, Amazon said.

First-mile operations, or global logistics, is where goods move from where they are manufactured, through customs, across oceans, into ports, and then into Amazon’s fulfillment network. Amazon has electric trucks on the road at the ports of Los Angeles and Long Beach, for use in transporting containers to an Amazon facility in Santa Fe Springs, Calif. The company expects to be using a dozen of the vehicles by the end of the year.

Middle-mile trucks move Amazon orders between fulfillment centers, sort centers, air facilities, and delivery stations, where packages are finally loaded into last-mile vans to be delivered to customers. Amazon has deployed 35 electric heavy-duty vehicles for such transportation in Southern California and installed more than 45 direct current fast chargers across 11 sites to power the trucks.

The battery-electric Class 8 Volvo VNR Electric trucks have a range of up to 275 miles and a gross combination weight of 82,000 pounds.

“Heavy-duty trucking is a particularly difficult area to decarbonize, which makes us all the more excited to have these vehicles on the road today,” said Udit Madan, vice president of Worldwide Amazon Operations, in a statement. “We’ll use what we learn from deploying these vehicles as we continue to identify and invest in solutions to reduce emissions in our transportation network, and to impact sustainability in the trucking industry more broadly.” 

Amazon launched its custom electric delivery vans from Rivian in 2022, and has since scaled the use of those vehicles to more than 13,500 across the U.S.

The company has vowed to reach carbon neutrality by 2040 and urged others to do the same through the Climate Pledge. Beyond electric vehicles, Amazon is paying for wind and solar energy to help power its operations and is investing in climate tech startups. Amazon’s carbon emissions increased between 2019 and 2021, before dropping for the first time in 2022.

Related:

• Inside Amazon’s Rivian electric van: A greener, quieter ride — and a sliding door fit for Star Trek
• In it for the long haul: These clean energy trucks are driving toward zero emissions

This week on the GeekWire Podcast, we discuss Amazon’s efforts to compete with Trader Joe’s, and the related tactics revealed in “The Everything War,” the new book by Dana Mattioli of the Wall Street Journal. We also revisit last week’s episode with Mattioli and share some of the reactions to the discussion.

Plus, the FTC probes Amazon’s internal use of Signal’s disappearing messages feature, a newly disclosed email shows how Microsoft scrambled to catch up in artificial intelligence, and a new report says that Bill Gates is still a highly influential figure inside Microsoft, especially when it comes to the company’s AI strategy.

Finally, we go inside the Seattle courtroom where a prominent figure from the cryptocurrency world, Binance founder Changpeng “CZ” Zhao, received a controversial prison sentence this week.

Subscribe to GeekWire in Apple Podcasts, Spotify, or wherever you listen.

Other stories discussed on the show:

• Amazon stock rises as Q1 earnings top estimates with $143.3B in revenue; AWS sales up 17%
• DoorDash rips Seattle over minimum wage law; reports record quarterly revenue of $2.5B
• Prudential to shut down Assurance, the insurance tech startup it acquired for $2.35B in 2019
• KING5: Binance founder Changpeng Zhao sentenced to 4 months for allowing money laundering
• Business Insider: Bill Gates is still pulling strings at Microsoft, overseeing AI ideas
• Internet Archive: Full text: An epic Bill Gates rant

Driving home from the Technology Alliance annual lunch in Seattle today, we were momentarily distracted by the big orange billboard for Anthropic’s Claude AI chatbot, overlooking Highway 99 / Aurora Avenue.

Sure, tech billboards are commonplace in the Bay Area, but they’re a little more unusual in our neck of the woods. And the location was also interesting: a short distance from Facebook parent Meta’s cluster of Seattle office buildings.

As reported by GeekWire in March, Anthropic is hiring in the Seattle area, and by the looks of their jobs page, the number of open positions with the potential to be based here now exceeds 50 jobs, in a variety of roles.

Amazon has invested $4 billion into the San Francisco-based AI company as part of their partnership, and recently made Anthopic’s Claude 3 Opus model available through its AWS Bedrock platform.

It was legal for Amazon CEO Andy Jassy to say that unionization would make it tougher for employees to have direct connections with their managers, according to National Labor Relations Board administrative law judge.

However, Jassy violated labor law when he said, in multiple public interviews, that unionization would make employees less empowered, and would make it harder to get things done quickly, Judge Brian D. Gee ruled Wednesday.

“[E]mployees could have reasonably understood Jassy to be saying that, without a union, they would be more empowered and could achieve improvements at work faster and with less bureaucracy—two assertions unsupported by objective fact—and thus be better off,” Gee wrote. “I thus conclude that Jassy’s words relied on coercion to dissuade employees from supporting unions.”

The ruling illustrates the fine line that corporate leaders sometimes walk in their public comments on nuanced legal issues like unionization. However, Amazon says the judge’s decision goes too far in restricting speech.

“We strongly disagree that any part of these comments were inappropriate and intend to appeal,” said Mary Kate Paradis, an Amazon spokesperson. “The decision reflects poorly on the state of free speech rights today, and we remain optimistic that we will be able to continue to engage in a reasonable discussion on these issues where all perspectives have an opportunity to be heard.”

Jassy made the comments in 2022 on CNBC Squawk Box,” at the Bloomberg Technology Summit, and at the New York Times DealBook Summit, as outlined in the charges filed by the Amazon Labor Union, which prevailed in a landmark union vote at the company’s Staten Island, New York, warehouse that year.

His comments were similar in all of the interviews. Here’s what he said on CNBC.

You know, first of all, of course, it’s employees’ choice whether or not they want to join a union. We happen to think they’re better off not doing so for a couple of reasons at least. You know, first, at a place like Amazon [that] empowers employees, if they see something they can do better for customers or for themselves, they can go meet in a room, decide how [to] change it and change it. That type of empowerment doesn’t happen when you have unions. It’s much more bureaucratic, it’s much slower. I also think people are better off having direct connections with their managers. You know, you think about work differently. You have relationships that are different. We get to hear from a lot of people as opposed to it all being filtered through one voice.

The ruling, if upheld, would require Amazon to cease and desist from the comments that were determined unlawful, and post a notice at its facilities nationwide.

That notice would read, in part, that the company “WILL NOT threaten you by saying that you would be less empowered if you unionized, that you would find it harder to get things done quickly since unions are slower and more bureaucratic, and that you would be better off without a union.”

Read the full ruling here or below.

NLRB Administrative Law Judge Ruling on Amazon CEO Andy Jassy's union comments by GeekWire on Scribd

Amazon wants to keep corporate headcount growth flat but is still hiring selectively in some areas of the company, including generative AI.

That’s the word from Amazon CFO Brian Olsavsky, who spoke with reporters following Amazon’s first quarter earnings report.

Amazon now employs 1.52 million people as of March 31, up 4% year-over-year.

The tech giant went on a hiring spree during the pandemic to help meet demand, but then laid off 27,000 corporate workers last year and continues to cut from its workforce.

Olsavsky said the year-over-year growth in headcount is mainly driven by its warehouse-related operations.

“If you look into more of the office environment, headcount is still moderating,” he said.

Olsavsky pointed to generative AI as one area of the company that is hiring. “There’s a lot of new activity and excitement,” he said.

Olsavsky said generative AI is now a “multi-billion dollar revenue run rate business” for Amazon.

Many tech companies are looking to hire workers to build out their generative AI teams.

The broader tech downturn that began in 2022 forced employers to trim headcount across the industry. Many are still making cuts; nearly 80,000 tech employees have been laid off this year, according to Layoffs.fyi.

Amazon topped estimates for its first quarter earnings, reporting $143.3 billion in revenue, up 13% year-over-year, and earnings per share of $0.98.

Analysts expected Q1 revenue of $142.7 billion and earnings per share of $0.83.

Amazon’s two big profit drivers, Amazon Web Services and advertising, posted year-over-year revenue growth of 17% and 24%, respectively.

Overall operating income reached $15.3 billion in the first quarter, compared to $4.8 billion a year ago, and well ahead of estimates.

Shares were up 5% in after-hours trading on Tuesday. Amazon stock is up more than 70% in the past 12 months.

Here’s a breakdown of Amazon’s financials for the first quarter.

Online stores: Revenue was up 7% year-over-year at $54.6 billion.

Amazon Web Services: Amazon’s cloud business was up 17% at $25 billion, with $9.4 billion in operating income, up 84% from the year-ago period. AWS is now officially a $100 billion annual revenue run rate business.

• AWS reported 16% growth in the year-ago quarter. It reported $24.2 billion in revenue in Q4, which was up 13% year-over-year.
• Demand for generative AI tools and services is boosting business for cloud providers. Microsoft and Google posted reported cloud revenue growth of 23% and 28%, respectively, last week.
• Amazon is making an effort to appeal to AI application developers by offering access to a variety of AI models through its Bedrock managed services. On Tuesday it announced general availability of its AI assistant for developers called Amazon Q.

Advertising: The company’s ad business brought in $11.8 billion in revenue in the quarter, up 24% over a year ago. That compares to 21% revenue growth in the year-ago quarter, and a 27% growth rate in Q4.

• Results from Meta, Alphabet, and Snap last week indicate that the digital ad market is bouncing back after a rough 2022.
• Growth in retail media advertising spend is a tailwind for Amazon, which sells advertising space to sellers on its marketplace.
• Amazon recently launched new advertisements within its Prime Video platform.

Third-party seller services: Revenue from third-party seller services was up 16% to $34.6 billion.

• Analysts have pointed to recent changes in U.S. third-party seller fees which could help Amazon drive substantial revenue.
• Amazon has been expanding services and products for third-party merchants in recent years; independent businesses now account for a majority of total retail sales.

Shipping costs: Amazon spent $21.8 billion on shipping in Q1, up 10%.

• Amazon on Monday announced that it set new records for Prime delivery speeds in the first three months of this year, touting a shift to regional fulfilment centers.

Physical stores: The category, which includes Whole Foods and Amazon Go stores, posted revenue of $5.2 billion, up 6%. 

• Amazon closed two clothing-focused stores in November but said it will continue to invest in physical grocery stores.
• The company is shifting away from “Just Walk Out” in its large grocery stores, which uses cameras and sensors to detect what people put in their carts, letting them avoid the checkout line.

Headcount: Amazon now employs 1.52 million people, up 4% year-over-year. That figure does not include seasonal and contract workers.

• After going on a hiring spree as the pandemic drove demand, Amazon laid off 27,000 employees last year and continues to cut from its corporate workforce.
• Related: Amazon keeping corporate headcount ‘flat’ but hiring in select areas including generative AI

Prime: Subscription services revenue, which includes Prime memberships, came in at $10.7 billion, up 11%. 

Guidance: The company forecasts Q2 sales of $144 to $149 billion, slightly below estimates. Operating income for the second quarter is expected to range between $10 billion and $14 billion.

Analysts, investors, and the media are suddenly focused intensely on capital expenditures by tech giants including Microsoft, Meta, Google, and others to size up the industry’s bet on the cloud and artificial intelligence.

Charles Fitzgerald is wondering where everyone has been.

The Seattle angel investor and tech veteran has made a tradition of tracking capital expenditures on his blog, Platformonomics, to “separate the clouds from the clowns,” as he puts it. He has watched with amusement as the rest of the world, seemingly, has caught on to the importance of CapEx in tech over the past week.

It makes sense, though, because the numbers are starting to get big.

• Microsoft’s capital expenditures rose 79% to a record $14 billion in the March quarter. Amy Hood, Microsoft’s chief financial officer, told analysts that CapEx will keep growing in the 2025 fiscal year, which starts in July.
• Google parent Alphabet reported capital expenditures of $12 billion, up 90%, “driven overwhelmingly by investment in our technical infrastructure,” CFO Ruth Porat told analysts. The increase “reflects our confidence in the opportunities offered by AI across our business,” she said.
• Facebook parent Meta reported $6.7 billion in quarterly capital expenditures, down from more than $7 billion a year earlier, but raised its CapEx guidance for the year to a range of $35-40 billion, up from $30-37 billion before.

CapEx for cloud and AI includes upgrading and building new data centers; developing and procuring GPUs and specialized chips to train and run AI foundation models; laying transoceanic cables; and other infrastructure to expand what amounts to a “globe-spanning mega-computer,” as Fitzgerald puts it.

“There’s a huge build-out going on,” he said.

The big question, long-term, is whether demand for AI services will be worth the investment for each company. For example, Meta’s shares plunged on its capital expenditure forecast, indicating that investors aren’t as confident in its ability to turn its AI investments into meaningful revenue over the long term.

On the Microsoft call last week, Hood emphasized the company’s focus on controlling costs to avoid capital expenditures cutting significantly into its profit margins, which analysts seemed willing to accept. Microsoft’s tight partnership with ChatGPT maker OpenAI is a key driver of AI demand and revenue for the company.

“We continue to bring capacity online as we scale our AI investments with growing demand,” Hood told analysts. “Currently, near-term AI demand is a bit higher than our available capacity.”

Some AI startups, meanwhile, are facing the daunting challenge of staying competitive and finding a niche in the face of these outsized investments by the major tech platforms.

So why has Fitzgerald been paying attention to these numbers for so long? In short, when it comes to assessing the cloud platforms, capital expenditures serve as table stakes and a barometer. “It’s a prerequisite to play in this space, but it’s also confirmation that you’re playing,” he said.

This explains why Fitzgerald skewered IBM last week for a 21% decrease in CapEx. But for other tech giants, the outsized investments in cloud and AI infrastructure are redefining their businesses, taking them well beyond the software and online services that have fueled much of their growth.

For example, Microsoft’s capital expenditures went from 5% of revenue a decade ago to 15% in its 2023 fiscal year. In the most recent quarter, it surpassed 22%, with $14 billion in capital expenditures and $61.9 billion in revenue.

“They’ve become hardware companies,” Fitzgerald said.

What about Amazon? It’s a different beast, in part because its overall capital expenditures include not only its Amazon Web Services data centers but also fulfillment centers and other e-commerce facilities.

However, a line in the company’s annual 10K filing with the SEC breaks out the “total net additions to property and equipment” for AWS, which declined from $27.8 billion in 2022 to $24.8 billion in 2023, in contrast with the capital spending increases by Microsoft and Google, Amazon’s biggest rivals in the cloud.

Amazon on Tuesday announced general availability of Amazon Q, its AI assistant for software development, cloud optimization, and business intelligence.

Amazon has spent much of the past year seeking to convince Wall Street and the tech world that it’s positioning itself to succeed in artificial intelligence. Given that, it’s not a stretch to imagine Amazon offering up some juicy new details about its capital expenditures when it reports earnings Tuesday afternoon.

Fitzgerald will be paying close attention — along with everyone else.

Amazon says it will give non-developers the ability to create apps using natural language as part of a new feature for Amazon Q, the AI assistant unveiled by Amazon Web Services last fall.

Amazon Q Apps “allows employees to easily and quickly create generative AI-powered apps based on their company data, without requiring any prior coding experience,” Amazon said in a news release Tuesday morning.

The company is introducing Q Apps as a preview as it made Amazon Q generally available as an assistant for software development, cloud optimization, and business intelligence. Amazon is charging $20/user per month for Amazon Q Business, and $19/user per month for Amazon Q Developer.

Amazon is competing against rivals including Microsoft, OpenAI, Google, and others to introduce new artificial intelligence capabilities for businesses and software developers.

The announcement is part of a recent trend of the company announcing new AI features just prior to its quarterly earnings report. The company unveiled a new AI shopping assistant, Rufus, before its fourth-quarter earnings release in February. The company is slated to announce earnings for the March quarter Tuesday afternoon.

Editor’s note: Pricing for Amazon Q corrected since original post.

Amazon reports its first quarter earnings on Tuesday. Analysts will be watching for continued growth in the company’s key profit drivers: advertising and cloud computing.

After dropping in price throughout 2022, Amazon’s stock bounced back last year and has continued to climb, trading at nearly $180/share.

The company is coming off better-than-expected results in its holiday quarter.

Generative AI boosting cloud

Analysts are expecting around 15% year-over-year in Amazon Web Services. Microsoft and Google reported cloud revenue growth of 23% and 28%, respectively, last week.

Demand for generative AI tools and services is boosting business for cloud providers.

Amazon is making an effort to appeal to AI application developers by offering access to a variety of AI models through its Bedrock managed services.

“Amazon believes generative AI cloud services will generate tens of billions of revenues in the next several years,” Wedbush analysts wrote in a recent report. “AWS remains a primary beneficiary of generative AI and the company is well positioned with solutions for all layers of the genAI stack.”

After experiencing a decline in profitability from mid-2022 to mid-2023, AWS rebounded with 29% and 38% increases in year-over-year operating profits in the third and fourth quarters of 2023, respectively.

AWS reported profits of $7.2 billion on revenue of $24.2 billion in the fourth quarter, contributing significantly to Amazon’s overall business growth.

Enterprise spending on cloud infrastructure was up 20% in the fourth quarter of last year, according to Synergy Research Group.

Ad business keep growing

Analysts with Wedbush are bullish about Amazon’s advertising business, citing growth in retail media advertising spend (ads that appear on a company’s site or app) and the recent launch of Prime Video ads.

Results from Meta, Alphabet, and Snap last week indicate that the digital ad market is bouncing back after a rough 2022.

Advertising brought in $14.6 billion in revenue in Amazon’s fourth quarter, up 27%.

Amazon CFO Brian Olsavsky called advertising an “important part of the total business model,” on the company’s Q4 call with analysts.

Other notes

• Another area to watch: headcount. After going on a hiring spree as the pandemic drove demand, Amazon laid off 27,000 employees last year and continues to cut from its corporate workforce. Amazon employed 1.52 million people (including warehouse workers) as of Sept. 30, down 1% year-over-year.
• Wedbush analysts also pointed to recent changes in U.S. third-party seller fees which could help drive substantial revenue.
• Amazon on Monday announced that it set new records for Prime delivery speeds in the first three months of this year, touting a shift to regional fulfilment centers.

Amazon is expected to report Q1 revenue of $142.7 billion and earnings per share of $0.83. In the year-ago quarter, Amazon reported revenue of $127.4 billion and earnings per share of $0.31.

This week on the GeekWire Podcast: A conversation with Dana Mattioli, Wall Street Journal reporter and author of the new book, “The Everything War: Amazon’s Ruthless Quest to Own the World and Remake Corporate Power.”

Mattioli spoke with more than 600 people for the book, including current and former senior Amazon leaders who were interviewed without the company’s knowledge. The book examines Amazon’s approach to expanding its dominance, the culture established by Jeff Bezos and other senior leaders, and the practices that led to the Federal Trade Commission’s antitrust suit against the company.

Amazon disputes a number of the book’s assertions, as detailed in the episode.

This week brought a new twist in the FTC lawsuit, as the agency asked a federal judge to order Amazon to disclose details about internal use of Signal’s disappearing messages by Bezos, Amazon CEO Andy Jassy, and others. Amazon called the agency’s assertions baseless, saying it has been forthcoming on the issue.

Listen below, and continue reading for excerpts from Mattioli’s comments, edited for clarity and length, along with Amazon’s responses to GeekWire about specific issues raised by the book, after it was published this week.

The process of reporting the book: “I spent three years reporting it. We had hundreds of pages of internal documents. So many sources spoke to me, and I tried to get as many of them as I could on the record. It’s a damning look inside Amazon’s business practices. And I knew it needed to be bulletproof in terms of my sourcing.”

Amazon’s lax internal controls for confidential data: “I learned that Amazon, even though they’re one of the biggest, most sophisticated companies in the world, has very primitive firewalls in place to protect confidential data.

“That’s not limited to private-label. [Amazon teams have allegedly used third-party seller data to advantage the company’s own products.] I heard this in other areas of the company, as well, especially its venture capital arm.

“There’s an anecdote in the book where a founder who’s meeting with the Alexa Fund for an investment sets up a data room, and she puts all of her proprietary information in that data room. Amazon’s also her competitor, so it’s an uncomfortable situation. She learned almost immediately that there were people throughout the Amazon organization, not affiliated with the Alexa Fund team, looking at her proprietary documents.

“As one employee told me, ‘The company still had operated in this really startup-y way, meaning you often had access to data for your job that you didn’t need access to. When you’re moving fast, you’re not really thinking clearly about, “Well, how do we make sure that only the right people have access to this dataset?” The internal infrastructure of the company is basically popsicle sticks, and like duct tape.’ “

Amazon’s response: “We do not condone the misuse of proprietary confidential information, and thoroughly investigate any reports of employees doing so and take action, which may include termination. We have strict policies in place and keeping proprietary information secure is embedded into how the team operates.”

“We use publicly available data to inform our strategy in service of providing the best experience for our customers. But we draw a clear line against using non-public, seller-specific data to compete with sellers, and our policy goes further than any retailer we know of.

“We take this policy seriously — we thoroughly train on it, audit, and investigate any reports of violations. Public allegations of policy violations have been based on misunderstandings and not on credible evidence. Any suggestion that there was pressure from Amazon executives to violate this policy in developing our private brands is flat out incorrect.”

The role of Amazon’s culture: “I’ve covered companies for nearly 18 years at the Wall Street Journal. This culture is so different from any company I’ve ever covered. I think some of the senior leaders aren’t aware of how much pressure this environment creates for their employees.

“That’s why it reminded me of Wells Fargo. It wasn’t like the CEO of Wells Fargo was saying, ‘Open up all these accounts; don’t tell the clients.’

“Some people describe it a little bit like ‘The Hunger Games,’ where you have to perform, and you’re competing against equally brilliant employees every day, and none of you wants to be in that bottom 6%. None of you wants to risk getting cut before you get to your restricted stock units. It does incentivize some people to do things that they’re not supposed to do.

“Jeff Bezos is not directly telling them to do that, of course, but it happened.”

Amazon’s response on this issue, which was also raised in the book: “This is false, and not supported by any material the author has presented. Amazon’s culture centers on innovating for customers to make their lives better and easier.”

How social media posts by Amazon execs undermined the company’s public policy work: “The D.C. team is trying to mend bridges and make connections on the Hill and thwart litigation that could break Amazon up or hurt it.

“They had a process called ‘watering the flowers’ where they were trying to make friends and influence people on the Hill. And then Jeff and his team would often come in and just stomp all over those flowers, and send mean tweets to people that this team was trying to cozy up to, and it just undermined the efforts.”

Parallels to Standard Oil: “Standard Oil was also doing things like spying on their competitors. Even though this was not the digital age, they had near-perfect intel on the oil refining environment because of how big they were. And that’s a theme that comes up in my reporting on Amazon: Private label, Alexa Voice Services, the Alexa Fund.

“One of the tactics that Standard Oil was also criticized for was predatory pricing, and forcing competitors to sell to them under the threat that, if you don’t, then we’ll put you out of business.

“There’s a scene in the book where Amazon threatens predatory pricing toward Diapers.com, and says, if you sell to someone else, we’ll cut the price of our diapers to zero, which brings it to its knees. So there are some parallels.”

Amazon’s response: “Standard Oil Trust controlled roughly 90% of the refined oil in the United States. Amazon accounts for about 4% of U.S. retail. Any comparison of the two companies is not based in reality.”

[Editor’s Note: Amazon represents about 40% of US ecommerce sales.]

Amazon’s impact on prices: “The FTC is alleging that, because sellers know they need to be on Amazon — 40% of all ecommerce in the U.S. happens there — that Amazon is able to levy all sorts of fees on them. And that’s exploded in recent years. … As a result of that, sellers have had to raise their prices for consumers to offset all the fees.”

Amazon’s response: “The company fundamentally disagrees with the FTC’s allegations because they are wrong or misleading, and they would harm consumers and independent businesses.”

Mattioli’s motivation for writing the book: “What I hope this book does is that it lifts the veil on a purposefully secretive company, that it reveals to readers just how Amazon wins all the time, and shows instances of how Amazon has its fingers on the scale. And I think we achieved that.”

Amazon’s response: “Amazon’s success is the result of continually innovating for consumers and small businesses over three decades to make their lives better and easier every day. The facts show Amazon has made shopping easier and more convenient for customers, spurred lower prices, enabled millions of successful small businesses, and significantly increased competition in retail.”

“The Everything War: Amazon’s Ruthless Quest to Own the World and Remake Corporate Power,” by Dana Mattioli, was published by Little Brown on April 23.

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Amazon is making another big move into the sports world with a reported deal in place with the NBA to stream games for at least a decade.

The Athletic reported Friday that Amazon and the NBA have the “framework for a deal” that would begin in the 2025-26 season.

The deal would be a huge addition to Amazon’s growing sports streaming catalog, which already includes the NFL’s Thursday Night Football and live action from several other leagues and teams.

This week Amazon announced that Prime subscribers will get access to Seattle Kraken games as part of a new deal with the NHL franchise in its hometown of Seattle — where the NBA could be arriving soon as part of expansion plans.

It’s not yet known how much Amazon is paying for the NBA rights. The NBA is wrapping up nine-year deals worth about $2.6 billion with ESPN and TNT Sports that end after the 2024-25 season.

The NBA offers its own streaming services called League Pass.

As more people cut the cord, sports leagues are increasingly engaging with tech companies as their existing deals with traditional cable providers expire. Those companies are hungry for valuable content such as live sports — one of the most-watched telecasts — to draw more subscribers to their respective platforms.

Seattle Kraken fans will have a new place to root for the pro hockey team next season.

The franchise announced an innovative new broadcast deal Thursday that will bring games to Amazon Prime Video and Tegna stations KING 5 and KONG in the Seattle area.

The move is a departure from regional cable broadcaster ROOT Sports, where Kraken games have been televised for the past three seasons.

As part of the multi-year agreements, KING 5 and KONG will broadcast all non-nationally televised Kraken games — more than 70 in total — for free over the air.

Prime Video will stream all non-nationally televised games for Prime members in Washington, Oregon and Alaska, including pre-season, regular season and the first round of playoffs. The Kraken are the first NHL team to have Prime Video as a direct streaming partner. 

Amazon is already a major player in the franchise:

• The tech giant bought naming rights to Seattle’s Climate Pledge Arena back in 2020 when the old KeyArena was being redeveloped.
• Amazon CEO Andy Jassy is part of the team’s ownership group.
• The company’s name is on team helmets and its cashierless “Just Walk Out” technology is used throughout the arena.

And Amazon is no stranger to going after the valuable streaming rights to sports broadcasts, most notably with its “Thursday Night Football” deal with the NFL, which runs through 2033. Last year, the company also announced a seven-year content deal with NASCAR to stream five NASCAR Cup Series races beginning in 2025.

Prime subscribers who pay $139 per year or $14.99 per month get access to the live sports streams, and those in the Pacific Northwest will now be able to watch Kraken games, as well. Amazon touted a boost in U.S. Prime signups during its first exclusive stream of an NFL game in 2022.

“Seattle Kraken hockey is synonymous with the Pacific Northwest, and we’re thrilled to bring Prime members in Washington, Oregon and Alaska access to Kraken games on Prime Video,” Charlie Neiman, head of sports partnerships for Prime Video, said in a news release. “Live Kraken games add to our growing selection of premium live sports and deliver additional value for Prime members throughout the Kraken home footprint.”

KING 5, an NBC affiliate, will be the official television partner for the Kraken. John Forslund, JT Brown, Eddie Olczyk, Alison Lukan and Nick Olczyk will continue broadcasting games next season.

All non-nationally televised games will be broadcast on Tegna’s KONG, with a number of games throughout the season simulcast on KING 5. In addition, games will be broadcast free over the air on Tegna stations KGW, the NBC affiliate in Portland, and KREM, the CBS affiliate in Spokane, Wash. Additional markets in the Pacific Northwest will be added.

The Arizona Coyotes and Las Vegas Golden Knights also broadcast games over the air. After a new TV deal last year, Coyotes President Xavier Gutierrez said it was necessary to reach more households, serve the fan base and capture new fans.

ROOT Sports continues to be home for Seattle Mariners baseball games.

Amazon Web Services is releasing new capabilities for its Bedrock artificial intelligence service, including the ability for customers to import their own custom AI models to run alongside models from major providers.

It’s part of a larger effort to appeal to AI application developers, expanding the capabilities of its cloud platform by offering access to a variety of AI models through the Bedrock managed service. Amazon is competing against other cloud giants such as Microsoft and Google, and newer AI platforms such as OpenAI and HuggingFace.

Custom Model Import “allows customers that have spent a bunch of time creating something outside of Bedrock to bring them inside and participate as a first-class model with the rest of the Bedrock workflows,” said Vasi Philomin, the AWS vice president of generative AI, in an interview this week.

The new capability will be available starting today in preview, the company said. Early users include Amazon’s internal Rufus team, which is making the model that powers its generative AI shopping chatbot available to other Amazon developers internally via Bedrock using the custom model feature.

More from AWS Bedrock this morning:

Updates to Amazon’s Titan foundation models: The company is launching its Titan Text Embeddings Model V2 next week, improving accuracy and efficiency; and making its Titan Image Generator generally available today, including built-in invisible watermarking for identifying AI-generated images.

More third-party models: Meta’s Llama 3 foundation models, for building and experimenting with generative AI apps, are now available on Bedrock. Cohere’s Command R and Command R+ models for enterprise AI applications will be available soon. This follows the recent release of Anthopic’s Claude 3 Opus on Bedrock.

Now generally available: The company is broadly releasing its previously announced Model Evaluation capability for Bedrock to help developers compare different models; and its Guardrails feature, which incorporates safeguards to remove or block personal and sensitive information, profanity, and harmful content.

Amazon Prime members in more than 3,500 U.S. cities can now get free unlimited grocery delivery for orders over $35 — if they pay $9.99 per month.

The service initially rolled out to select cities in December, and is now widely available.

Prime members — who already pay $139 per year — can order online from Whole Foods or Amazon Fresh and select a one-hour delivery window or pick up at the physical store.

The service also provides free delivery for orders over $35 from other retailers including Cardenas Markets; Save Mart; Bartell Drugs; Rite Aid; Pet Food Express; and Mission Wine & Spirits.

Customers with a registered EBT card can get the service for $4.99 per month.

Amazon first entered the grocery delivery market back in 2007. It has gone through numerous iterations of service levels at different price points.

• In 2021, Amazon added a $9.95 fee to Whole Foods delivery orders, which were previously free to Prime members who spent more than $35.
• In February 2023 Amazon started adding new fees for Amazon Fresh deliveries, and tweaked the fees again in October.
• Last year Amazon began offering grocery delivery service to customers who aren’t Prime members in select cities.

Analysts from Wedbush said that the new $9.99/month subscription offering is “significantly more affordable than the company’s existing fee structure.” Instacart shares were down more than 5% on Tuesday.

“We think Amazon’s subscription plan is competitively priced versus existing peers in the market and is potentially more affordable given the absence of per-order service fees, which peers including Instacart charge on each order,” Wedbush said in a report.

Amazon has struggled to dominate grocery like it has with online shopping and cloud computing, but continues to invest in the sector.

The tech giant bought Whole Foods for $13.7 billion in 2017 and has opened its own high-tech Amazon Go convenience stores and larger-scale Amazon Fresh locations.

The company recently announced it is shifting away from its “Just Walk Out” cashier-less technology in its large grocery stores. The system — which uses cameras and sensors to detect what people put in their carts, letting them avoid the checkout line — will still be developed for Amazon’s smaller stores and third-party venues.

Amazon continues to focus on Dash Carts, which also let shoppers skip the line but currently require scanning or manually entering items as they go. The company recently started rolling out the Dash Carts in Whole Foods locations.

In February 2023, Amazon CEO Andy Jassy said that the company was pausing the expansion of its Amazon Fresh grocery stores, amid broader cutbacks, “until we have that equation with differentiation and economic value that we like.”

In its report today, Wedbush said the new subscription offering is “an important step forward in the company’s broader strategy and should help Amazon capture incremental share, particularly in perishable categories where the company has struggled historically.”

Amazon says it’s gearing up to add a community in Arizona to its list of Prime Air drone delivery zones.

Later this year, customers in the West Valley region of the Phoenix metro area will be able to get their purchases via drones dispatched from Amazon’s Same-Day Delivery site in Tolleson, Ariz., the company said today.

The West Valley region joins College Station in Texas as an Amazon drone delivery site. Last year, Prime Air began free prescription deliveries in 60 minutes or less to customers in College Station, in partnership with Amazon Pharmacy.

For the past two years, Amazon has also been offering drone deliveries in Lockeford, Calif. — but today the company said it would be closing down that delivery site, citing the need to “prioritize our resources to continue growing the program.”

“We’ll offer all current employees opportunities at other sites, and will continue to serve customers in Lockeford with other delivery methods,” Amazon said.

Amazon said the Same-Day Delivery site in Tolleson is one of the company’s hybrid facilities — part fulfillment center, part delivery station. “They allow us to fulfill, sort and deliver products all from one site so we can get packages out to our customers even quicker,” the company said.

The Federal Aviation Administration and local officials in Tolleson still have to provide the final sign-off for Amazon’s drone delivery plan. Once Amazon gets the go-ahead, it’ll spread the word to West Valley residents. (You can sign up to get notified about availability of the service.)

Local officials had good things to say about Amazon’s plan.

“As Amazon embarks on the national expansion of its Amazon Drone Delivery Program, we’re proud to have their innovative presence in our community,” Tolleson Mayor Juan Rodriguez said. “By bringing this service to new communities, they’re not just delivering goods; they’re delivering opportunities and economic growth for all.”

Phoenix Mayor Kate Gallego said “the shift toward zero-emission package delivery will help us reduce local pollution and further cement our city as a hotbed for the innovative technology of tomorrow.”

Amazon has said new drone delivery zones will be established later this year elsewhere in the U.S., as well as in Italy and Britain.

The Prime Air team also provided an update on its next-generation MK30 drone, which will be quieter than the company’s current drones and should have twice the range. The MK30 incorporates safety features that will allow it to deliver packages to customers with smaller backyards. It can also operate in a wider range of weather conditions, including light rain.

“We’re flying the new MK30 drone and putting it through its paces at our indoor and outdoor test facilities,” Amazon said. “We’ll use the data from this process to demonstrate to regulators around the world the reliability of our system. The MK30 drone will make deliveries to customers later this year.”

The future is bright — and partially paid for — for 13 students from across the Seattle region after Amazon surprised them this week with college scholarships as part of its “Amazon Future Engineer” program.

The prizes were handed out during an event at Amazon’s Prime Air drone delivery facility in Seattle on Wednesday. The high school students were there under the guise of needing a final interview for their scholarship applications.

The winners represent the Bellevue School District, Lake Washington School District, Seattle Public Schools, Sumner-Bonney Lake School District, and University Place School District, and include:

• Alvin Sung, Newport High School, Bellevue School District
• Regina Lin, Newport High School, Bellevue School District
• Fenet Guyassa, Bonney Lake High School, Sumner-Bonney Lake School District
• Rane Peterson, Eastlake High School, Lake Washington School District
• Alaris Peterson, Eastlake High School, Lake Washington School District
• Elias Assalif, Chief Sealth High School, Seattle Public Schools
• Kevin Chen, Cleveland STEM High School, Seattle Public Schools
• Israr Rukun, Franklin High school, Seattle Public Schools
• Fardowza Jaama, Franklin High School, Seattle Public Schools
• Imara Wangia, Garfield High School, Seattle Public Schools
• Salsabila Abu, Garfield High School, Seattle Public Schools
• Cameron Fernandes, Lincoln High School, Seattle Public Schools
• Tre Simons, Curtis Senior High School, University Place School District

Students receive up to $40,000 to pursue computer science, engineering or related degrees at the college or university of their choice. Recipients were chosen based on a variety of criteria, including their academic achievement, demonstrated leadership, participation in school and community activities, work experience, future goals, and financial need.

The Seattle-area students were among 17 across Washington state and 400 nationwide that Amazon is awarding scholarships to this year. They will also receive a paid internship offer at Amazon after their freshman year of college.

“By investing in computer science education for students from historically underrepresented and underserved communities, we’re not only empowering them to pursue rewarding careers but also equipping them with skills to drive innovation that will shape a more equitable and sustainable future for generations to come,” Victor Reinoso, global director of education philanthropy at Amazon, said in a news release.

Amazon launched the Future Engineer scholarship program in 2019, and has committed $54 million in scholarships to 1,350 students across the U.S. since it’s inception.

Amazon’s grocery technology has been in the news a lot over the past couple of weeks, following layoffs in the Amazon Web Services group responsible for the company’s physical store checkout and identity services.

The company is shifting away from “Just Walk Out” in its large grocery stores, which uses cameras and sensors to detect what people put in their carts, letting them avoid the checkout line. Instead, it’s focusing on Dash Carts, which also let shoppers skip the line but currently require scanning or manually entering items as they go.

Dilip Kumar, vice president of AWS applications, spoke with GeekWire in an interview about Amazon’s grocery technology, seeking to clarify the company’s strategy and approach on multiple fronts. Specifically, he said:

• Amazon is developing a new generation of its Dash Carts that significantly improve the user experience, addressing some of the more cumbersome aspects of using the smart carts in its grocery stores.
• The company is still investing in and expanding the Just Walk Out cashier-less technology for its smaller stores and third-party venues, even as it phases the technology out at its larger Amazon Fresh grocery stores.
• Contrary to published reports, humans are annotating and training the AI that powers Just Walk Out, not watching through cameras to tally up every shopper’s bill. And the number of people required is diminishing.

“Our algorithms have actually increased to the level of accuracy … where the amount of human involvement progressively has gone down,” Kumar said. “We see this trend continuing. That’s the only reason that allows us to be able to open as many of these stores concurrently.”

In a blog post Wednesday morning, Kumar described media reports about human reviewers “erroneous,” saying that the idea that Just Walk Out technology “relies on human reviewers watching from afar is untrue.” He added:

“Most AI systems, including the underlying ML models behind these technologies, are continuously improved by annotating synthetic (AI generated) and real shopping data. Our associates are responsible for this labeling and annotation step. Associates don’t watch live video of shoppers to generate receipts—that’s taken care of automatically by the computer vision algorithms. This is no different than any other AI system that places a high value on accuracy, where human reviewers are common.”

He cited examples of increased transactions and sales at venues using Just Walk Out, including Lumen Field in Seattle and other U.S. and international markets.

“We have strong conviction that Just Walk Out technology will be the future in stores that have a curated selection where customers can pop in, grab the small number of items they need, and simply walk out,” Kumar wrote. There are more than 140 third-party venues using the tech in the U.S., UK, Australia, and Canada, he added.

So why is Amazon dropping Just Walk Out at its large grocery stores?

In the interview, Kumar acknowledged the significant cost of the Just Walk Out infrastructure in these settings, with a large number of cameras and sensors required throughout the store. Rather than requiring a fixed investment based on the size of the store, Dash Carts can scale with the number of customers.

The decision to focus on the Dash Carts also aligns with customer preferences in that retail format, he said. Many customers in grocery stores place more value on tracking their spending as they go, seeing item locations, and using coupons. These features are better supported by the smart cart experience.

In addition, for larger trips to the grocery store, many people aren’t as focused on shaving a few minutes off their time in the store, and they’re more interested in the other conveniences of the Dash Cart.

Amazon’s Dash Cart features built-in sensors and scanners that let shoppers register items as they place them in the cart. A built-in screen tracks and totals items.

Kumar wrote in the blog post that Amazon has “begun expanding Dash Cart to all Amazon Fresh stores as well as third-party grocers.” CNBC reported that Price Chopper and McKeever’s Market stores in Kansas and Missouri are testing the Dash Cart.

The smart cart debuted in 2020 at Amazon Fresh grocery stores, and has since expanded to some Whole Foods stores. Other companies including Instacart and Seattle startup Veeve have rolled out similar smart carts.

Amazon decided that the Dash Cart “is a better platform for continued investment,” but the decision doesn’t deter from its plans for Just Walk Out in other Amazon stores or third-party locations, Kumar said.

During the interview, we shared some of our frustrations with the current version of the Dash Cart, including the complicated and sometimes buggy process of scanning or entering items into the cart. Kumar said he appreciated the feedback, and made it clear that Amazon is aware of the issues as it develops the next version of the cart.

An Amazon spokesperson provided additional details in a statement.

“With our next generation of Amazon Dash Carts, once a customer signs in (or chooses to shop without signing in), they’ll shop with a smart cart that feels as familiar as a traditional shopping cart. Our next generation cart will be lighter and easier to maneuver, and have a bigger basket to fit all your purchases. Adding items to the cart will be even more intuitive, and for customers who don’t sign in with an app, the cart will feature an on-cart credit card reader.”

The company did not give a timeline for rolling out new versions of the cart.

“Our goal with this is to make this as effortless and seamless as it possibly can be,” Kumar told us. “We’ve seen some good signs. … And I hope to convert you.”

Early versions of generative AI were “like a dancing bear,” says Werner Vogels, the Amazon chief technology officer. “We’re all amazed that this bear can dance,” he explains. “We don’t really look at whether it dances well or not.”

In the past two years, with ample training, the bear has become a better dancer.

However, he says, “this is still technology that relies on you, as an individual, actually taking action based on what this technology tells you. It’s a tool. Artificial intelligence makes predictions. We as humans take actions based on that.”

That’s one of the highlights from our conversation with Vogels on this week’s GeekWire Podcast, recorded at Amazon in Seattle. We talk about the evolution of AI, its promise in healthcare and the environment, his broader tech predictions for the year, and one of his most iconic traditions at Amazon’s annual cloud conference.

Listen below, and keep reading for excerpts, edited for context and clarity.

The rapid evolution of technology, and the changing nature of education: Technology has been evolving exponentially fast. Let’s say you have a computer science degree. You probably weren’t exposed to large language models during your education. So there’s a lot of on-the-job training that still needs to happen. That’s a shift that is happening, where the university four-year education is much more about critical thinking, and learning how to learn, because technology will be a lifelong learning experience for anyone. … Individual companies like Amazon will be doing the education themselves, assisted by these large language models.

The rise of culturally aware AI models: It has triggered a number of very interesting things. For example, our Japan team, with a whole range of our customers, did a hackathon and built many of these culturally aware Japanese models. These models can compete with each other, and talk to each other, and agree on what the answer should be.

The potential of fine-grained sustainability reporting: I believe we as cloud providers, not just AWS, we need to get to the point where we not only report [to customers] on costs, but report on milligrams of CO2 used by your particular service, for this particular period of time. We’re not terribly far from there. That will definitely happen. At this moment, the amount of resources that you’ve used in general with a pay-as-you-go model means you pay more if you use more resources. So it’s already a pretty good proxy for sustainability. But we need to present it in a way to our customers that is true and accurate, in ways that they can also use it towards their regulatory agencies, for example.

His selection of t-shirts from different bands for his annual AWS re:Invent keynote: I’ve always been a t-shirt and jeans guy. I pick every year something that I think will be fun. … If there is a link between the different t-shirts, it is that I feel that those that I have promoted have been innovators in their type of music.

The broader social responsibility of the technology industry: We as technologists have the responsibility to make sure that our technology is used responsibly, that there are tools next to this technology where we can investigate whether it’s being used correctly. … We need to make sure that we have these large data sets available for everyone to use. Good AI requires good data. Good work requires good people. And we as technologists should be stepping in there to do the right thing for this planet.

Listen to the full conversation above, or subscribe to GeekWire in Apple Podcasts, Spotify, or wherever you listen.

Related links

• Werner Vogels – All Things Distributed
• Archive of Now Go Build episodes
• AWS re:Invent 2023 – Keynote with Dr. Werner Vogels
• Tech Predictions for 2024 and beyond
• @Werner on X.

Audio editing by Curt Milton.

In his annual letter to shareholders, Amazon CEO Andy Jassy says the company’s Project Kuiper satellite venture will be “a very large revenue opportunity” in the future — but he’s hedging his bets as to exactly when that future will be.

Eventually, Project Kuiper aims to provide satellite broadband service to hundreds of millions of people around the world who are currently underserved when it comes to connectivity. Such a service would compete with SpaceX’s Starlink satellite network, which already has more than 2.6 million customers.

Amazon is investing more than $10 billion to get Kuiper off the ground. The plan calls for sending 3,232 satellites (down slightly from the originally planned 3,236) into low Earth orbit by 2029. Under the terms of the Federal Communications Commission’s license, half of that total would have to be deployed by mid-2026.

When Project Kuiper’s first two prototype satellites were launched last October for testing, Amazon said that its first production-grade satellites were on track for launch in the first half of 2024, and that it expected broadband service to be in beta testing with selected customers by the end of the year.

Today, Jassy put a slightly different spin on that schedule. “We’re on track to launch our first production satellites in 2024,” he wrote in his letter. “We’ve still got a long way to go, but are encouraged by our progress.”

Jassy amplified on those remarks in an interview with CNBC. “The first big production pieces will be the second half of ’24, and we expect to have the service up in the next year or so,” he said.

Amazon has reserved dozens of launches with Blue Origin (Amazon founder Jeff Bezos’ privately funded space venture), plus United Launch Alliance (which sent up the prototype satellites on its Atlas V rocket) and the Europe-based Arianespace consortium (which is gearing up for the first launch of its Ariane 6 rocket). The company also struck a deal with SpaceX for three Falcon 9 launches.

Rajeev Badyal, vice president of technology at Project Kuiper, told GeekWire last November that his team had already identified the launch vehicles for the first production-grade satellites. “In the near future, we’ll start disclosing our launch plans — who we’re launching with, which rockets,” he said. “We have a couple of options to start off with, but we’ve narrowed it for our first year, what we want to do. And we’ll share that information in the days to come.”

Though it seems likely that United Launch Alliance will handle the next launch, no formal announcement has yet been made. An Amazon spokesperson told GeekWire today that there were no updates on the timing of the launch.

When Project Kuiper is up and running, the first users are likely to be the organizations with which Amazon is partnering on network development. Those organizations include telecommunications companies (Verizon, Vodafone and Vodacom, NTT and Sky Perfect JSAT) as well as NASA, DARPA and the Pentagon’s Defense Innovation Unit.

In his letter, Jassy noted that Project Kuiper’s applications wouldn’t be limited to at-home customers. He said broadband services would also be offered to “governments and enterprises seeking better connectivity and performance in more remote areas.”

Amazon plans to integrate satellite broadband into its other product lines, most likely starting with Amazon Web Services. Back in November, AWS CEO Adam Selipsky said “the possibilities for consumers are enormous, but so are the benefits to companies and governments.”

“With Project Kuiper’s enterprise-ready private connectivity services, you will be able to move data from virtually anywhere over private, secure connections, and use these connections to reach your data in the AWS cloud,” Selipsky said at the AWS re:Invent conference.

It’s not hard to imagine synergies with Prime Video as well. In his letter, Jassy said “we have increasing conviction that Prime Video can be a large and profitable business on its own.” Bundling Project Kuiper’s broadband service with Prime Video’s content could make both opportunities for profit loom even larger.

Amazon CEO Andy Jassy’s annual letters to shareholders haven’t yet reached the canonical business status of his predecessor’s essays, but they still offer an interesting glimpse into the company’s strategy, and hint at what’s next.

“At our best, we’re not just customer obsessed, but also inventive, thinking several years out, learning like crazy, scrappy, delivering quickly, and operating like the world’s biggest start-up,” Jassy wrote in this year’s letter, released Thursday morning, putting his own spin on former CEO Jeff Bezos’ “Day 1” mantra.

Jassy also pointed to specific areas of momentum in Amazon’s business — writing, for example, that the company has “increasing conviction that Prime Video can be a large and profitable business on its own,” and calling the company’s Project Kuiper satellite venture “a very large revenue opportunity.”

But the vast portion of Jassy’s letter focuses on “primitives,” the concept of creating basic building blocks for internal and external use, exemplified most successfully by the core Amazon Web Services of storage and compute that laid the foundation for the company to build a giant cloud business.

Jassy goes on to identify other areas where Amazon has built and released basic components and services for customers and partners in a way that lets them mix and match “primitives,” including different aspects of its fulfillment and delivery services. Here’s how he explains the overarching benefit of the approach.

“Building in primitives meaningfully expands your degrees of freedom. You can keep your primitives to yourself and build compelling features and capabilities on top of them to allow your customers and business to reap the benefits of rapid innovation. You can offer primitives to external customers as paid services (as we have with AWS and our more recent logistics offerings). Or, you can compose these primitives into external, paid applications. …. But, you’ve got options. You’re only constrained by the primitives you’ve built and your imagination.”

He makes it clear that Amazon is looking for more areas to apply this “primitives” strategy. One of the examples hints at something that Amazon must be considering (and probably already working on) in its grocery business:

“We’ve been working hard on building a mass, physical store offering (Amazon Fresh) that offers a great perishable experience; however, what if we used our same-day facilities to enable customers to easily add milk, eggs, or other perishable items to any Amazon order and get same day? It might change how people think of splitting up their weekly grocery shopping, and make perishable shopping as convenient as non-perishable shopping already is.”

Jassy writes that the biggest opportunity for primitives is in generative AI, but in this area he mostly reiterates what the company has announced, and its previously described three-layered strategy of enabling customers to create new AI foundation models, helping them use existing foundation models, and building AI applications.

Also notable is what’s not included in the letter. There’s no direct reference to regulation or the FTC’s antitrust lawsuit against Amazon.

However, Jassy does address the company’s resilience and the vast expanses of the global retail and enterprise tech markets that its consumer and cloud computing businesses have yet to reach.

Asked about regulation during an interview on CNBC, Jassy described the “sad story” of antitrust enforcers in Europe and the U.S. opposing and effectively forcing the company to drop its iRobot acquisition, saying the process left iRobot with a “real question of whether they’re going to be a going concern.”

Addressing regulators’ scrutiny of acquisitions in the interview, Jassy added perhaps his most pointed statement to date on the topic: “I think a lot of it is outside the bounds of the law right now.”

Read Andy Jassy’s full letter to shareholders here.