Amazon

Background

Founded by Jeff Bezos in 1994 as a simple online bookseller, Amazon has since transformed into a global e-commerce and technology powerhouse—dominating retail, streaming, cloud computing, and more.

One of the most highly valued companies in the world, Amazon reported roughly $575B in revenue in 2023—more than the GDP of countries like Norway ($486B) and Portugal ($287B). The company employed over 1.5 million people worldwide as of 2024—more than the entire US active duty military force.

Beginnings

More than a decade before the first iPhone came out, Bezos launched Amazon as a web-based bookstore. Books were just the start, as Bezos’ ultimate goal was to create an “everything store,” using the internet to transcend the physical limitations of brick-and-mortar retail.

The Seattle-based Amazon gradually added CDs and consumer electronics, becoming a dominant e-commerce player in the late 1990s. Amazon went public in 1997, but because of its focus on growth and lack of profit, critics were convinced Amazon would fail. A Barron’s cover from 1999 described the company as “Amazon.bomb.”

Nevertheless, Amazon’s significant, risky investments helped shape Bezos’ vision for a disruptive online marketplace. The company’s long-term strategy of reinvesting earnings back into its business paved the way for rapid expansion.

Operations

Central to Amazon’s strategy is the concept of a flywheel. Bezos envisioned a self-reinforcing cycle that drives growth by attracting customers via the retail business. Scale enables Amazon to strike better deals with suppliers and reduce costs—savings which Amazon, in turn, invests into things like faster shipping.

Such investments make customers happy, and attract new ones. As each piece of the flywheel spins, it accelerates the others.

The 2000s saw Amazon launch its ever-growing subscription service Amazon Prime, leap into streaming with Prime Video, launch its Kindle reading device, and begin selling its own cloud computing infrastructure via its Amazon Web Services. AWS is Amazon’s most profitable segment, generating over $90B in 2023 and providing cloud computing services to enterprises like Airbnb, Netflix, and Samsung.

With more than 200 million subscribers worldwide, Amazon’s Prime subscription program offers benefits, including free shipping on orders from Amazon’s retail business as well as access to the company’s streaming services.

In 2017, Amazon made a significant move into physical retail by acquiring natural foods supermarket chain Whole Foods, allowing its Prime subscribers to receive discounts at the franchise’s more than 500 stores.

Other Amazon acquisitions include security camera maker Ring and the Twitch video game streaming platform. In 2021, Amazon acquired Hollywood studio MGM for more than $8B, expanding its content library to include hit films like the “James Bond” and “The Hobbit” franchises.

Impact

Amazon has had a profound impact on the global economy, including training customers to expect a near-infinite selection of goods online and to adopt one-click purchasing. Some argue that Amazon has also contributed to the decline of physical stores by changing customer expectations around delivery speed and low prices.

Its innovations in cloud computing revolutionized the industry by bringing serverless computing to tech companies at a much lower cost than running private servers.

Separately, critics have also accused the company of opposing organized labor efforts.

Amazon has also attracted antitrust scrutiny from regulators in the US and Europe, who have accused the company of anticompetitive practices, including favoritism toward its own Amazon-branded products in its online marketplace and using third-party sales data to extract unfair advantages.