Andy Jassy Took Over For Jeff Bezos Today: Here are the Challenges Amazon’s New CEO Faces

Mandatory Credit: Photo by Isaac Brekken/AP/Shutterstock (10492946e)AWS CEO Andy Jassy, discusses a new initiative with the NFL that will transform player health and safety using cloud computing during AWS re:Invent 2019 on in Las VegasNFL AWS Announcement, Las Vegas, USA - 05 Dec 2019.
Isaac Brekken/AP/Shutterstock / Isaac Brekken/AP/Shutterstock

Today is the first official day on the job for new Amazon CEO Andy Jassy. He previously served as an executive under former CEO Jeff Bezos, working at Amazon web services since its inception 18 years ago.

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Jassy has been accredited for masterminding and growing Amazon’s lucrative cloud platform. He was with the business since it began, and was that department’s chief executive officer until overtaking the larger role of company-wide CEO this morning. Entrepreneur reports that Jassy grew a team that has delivered more than 90 cloud infrastructure and application services that are used by millions of startup, enterprise, and government customers around the world.

Now as he takes on the larger role, here are some of the challenges Jassy will inherit along with the coveted new position.

Regulatory Oversight

The Federal Trade Commission has been a thorn in the side of big tech for years, but particularly Amazon’s. In recent years, prominent senators, including Elizabeth Warren, have voiced their displeasure at Amazon Marketplace which allows the company to sell lower-priced, everyday items like paper towels, batteries and napkins in direct competition with its own sellers. Additionally, Amazon has also been accused of waiting to see which products perform well, then create their own branded version at lower prices and offer them through their site. The double-edged competitive advantage leaves Jassy a sizable conflict to deal with, as President Joe Biden recently appointed Lina Khan as FTC chair. Khan is an outspoken critic of big tech and monopolizing practices and is expected to put pressure on Amazon during her tenure.

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Amazon has also become notorious for tax avoidance. Despite a record profit-breaking year in 2020, it was reported that Amazon avoided $2.2 billion in taxes. The pressure will be on Jassy to navigate the hot-button issue, as Amazon has been at the center of the debate recently amongst international leaders during discussions for minimum global corporate taxes, as GOBankingRates previously reported.

Competitors

U.S. companies are coming for Amazon’s throne and starting to capitalize on their own reaches. Walmart is looking into creating its own delivery service and Microsoft has already signed deals in the cloud with top enterprises (including Walmart), Reuters reports. While Amazon’s breadth of delivery outpaces Walmart, Amazon’s business model involves something Walmart does not — third-party vendors. It is an all-too-common story where one orders something from Amazon and it arrives with little quality control and hardly resembles the picture which was provided. Sellers from all over the world can sell on Amazon — something that is not part of Walmart’s model. The advantage Walmart has is that the customer knows the product is coming from Walmart and can find out fairly quickly resolve returns, customer complaints or exchanges — something not as seamlessly available through Amazon’s solely-online operation. A customer can purchase from Walmart online, and return in-store if needed. Should they now add their own delivery club similar to Amazon’s, their physical presence and known brands could give them a competitive advantage Jassy will need to keep an eye on.

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Employee Discontent

Unfortunately, working conditions at Amazon warehouse facilities have garnered negative attention in recent months.  According to NBC News, Amazon has attempted to silence workers who wanted to organize and increased surveillance of its employees. The company is also facing at least 37 charges filed to the National Labor Relations Board, some dating back to February 2020 and come from 20 cities throughout the country, NBC added. This is triple the number of grievances filed against the retailer in 2019, and it is thought that the surge in demand during the pandemic led to Amazon putting pressure on its employees. Workers at warehouses in Chicago, New York and Minneapolis have apparently demanded improved working conditions by striking and protesting. Amazon responded by firing key organizers, increased its anti-union propaganda efforts and watched employees more closely. The entire country watched in April as workers at a warehouse in Alabama made the most progress thus far in an effort to unionize in what would have been the first Amazon union in its 27-year history. Amazon’s efforts were too great, as the employees voted to not unionize and were instead enticed by other benefits and perks Amazon offered at the time.

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Jassy will no doubt have future unionization efforts on his docket. The most recent push by employees in April was thought to be a historic moment in labor market history, as it was one of the first times laborers came as close as they did to unionize against such a large employer. Jassy will have to prepare for similar efforts to unionize in the future.

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About the Author

Georgina Tzanetos is a former financial advisor who studied post-industrial capitalist structures at New York University. She has eight years of experience with concentrations in asset management, portfolio management, private client banking, and investment research. Georgina has written for Investopedia and WallStreetMojo. 

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