What Is Amazon Web Services?

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What Is Amazon Web Services?

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Credit…Illustration by The New York Times

What, Exactly, Is Amazon Web Services?

Andy Jassy, the successor to Jeff Bezos, was already running the company’s most profitable business.

Credit…Illustration by The New York Times

  • Feb. 9, 2021, 12:53 p.m. ET

In the popular imagination, Amazon is a big huge store run by Jeff Bezos, a smiling man with a clean-shaven head who is, sometimes, the richest person in the world. You order and Amazon delivers.

Because it’s a big huge store that wants to be bigger and huger, you can also stream TV shows and buy Amazon-branded personal gadgets and Amazon-branded home-security devices. You can order groceries there too. This is a version of the story Amazon has been telling about itself, to customers, since the very beginning, and one that has made it enormously successful.

But behind Amazon’s success is also a guy named Andy Jassy, whom most of the company’s customers had never heard of before Wednesday, when Mr. Bezos announced that he would succeed him as C.E.O.

In a letter to employees, Mr. Bezos expressed his “full confidence” in his successor, leaving unsaid what Mr. Jassy has been up to for the last decade, because employees surely knew. He’s credited with creating and growing Amazon Web Services (A.W.S.), Amazon’s cloud computing division, into the largest such provider in the world. You, the Amazon customer, have little reason to know about this, because A.W.S. is not for you.

Mr. Jassy’s ascent suggests that the Amazon synonymous with Mr. Bezos — an online store that once sold books and now sells everything, where the customer is always right — could one day be reduced to a quaint origin story. After all, the future of Amazon isn’t just about more shopping, though the shoppers will still be there, and they will be shopping more. It’s about infrastructure.

Amazon What? Services

As Amazon grew, it built internal technology infrastructure to support its diverse and often unconventional needs. Out of necessity, that technology became very good at handling huge numbers of people doing complex, demanding, data-intensive things (not just shopping, but streaming video, running web applications and storing huge amounts of information).

Eventually, the company (under the guidance of Mr. Jassy) realized it could effectively rent these and similar capabilities to other organizations. It invested much more in them and began pitching other firms, even competitors, on the virtues of the Cloud.

Why build expensive, almost-instantly-out-of-date data centers for your large firm when you could just rent something better from Amazon? Or, if you’re just getting started, why not get access to the same underlying tech as a global conglomerate while paying, basically, à la carte? If you triple in size overnight, no problem. A.W.S. can handle that.

Amazon’s investment paid off: Last year, A.W.S. accounted for more than $13.5 billion, or 63 percent, of Amazon’s total operating profit for 2020.

Now, it’s not an overstatement to say that A.W.S. is ubiquitous online. If you watch Netflix, that’s A.W.S. If you have a meeting on Zoom, there’s a good chance that’s A.W.S., too. If you check Pinterest, that’s A.W.S. If you spend any time scrolling through Twitter, well, A.W.S. provides “global cloud infrastructure to deliver Twitter timelines.” These examples are just a few of the thousands of A.W.S. customers big and small (including The New York Times).

And it’s not just tech firms. Your bank, your health insurance company, your government, your online video games: There’s a good chance they use A.W.S. Or, to pick a recent example: the exchange on which you trade a stock, the no-fee trading app you use to buy it, the forum in which you gather with others to talk about taking its price “to the moon.” That, from top to bottom, depends in large and small ways on A.W.S.

Using A.W.S. is a choice made by Amazon’s client businesses, not its hundreds of millions of end users, or customers, or whatever, whom I suppose we may as well now just call “the public.”

This is a defining trait of some of Amazon’s most important new lines of business, including A.W.S., direct delivery and its third-party seller marketplace: They’re not talking to you, at least not primarily. Amazon has more than 100 million Prime subscribers in the United States and no close competitors in American e-commerce. The customer has been conquered. Next up: the rest of the commercial world.

Andy Jassy’s Inheritance

Here is a brief list of the other important conversations Amazon has been having lately.

Amazon is suing the Pentagon because it claims it was denied a $10 billion cloud contract with the U.S. government due in part to “unmistakable bias” against the company. Amazon is pushing back against to attempts by employees at its warehouse in Bessemer, Ala., to unionize — a first-of-its-kind action with high stakes for Amazon, its workers and American labor organizing as a whole. A majority of products sold through Amazon now come from its millions of third-party sellers — independent small business operators, mostly — many of whom rely on Amazon to store and ship products, some of whom have expressed concerns about Amazon itself moving into product categories where they’ve found success (a clear analog to tech firms that are entangled with A.W.S.). Last year, Mr. Bezos was grilled by the House antitrust subcommittee.

Also, Amazon has a pharmacy now. Amazon has a self-driving vehicle division and plans to provide internet access via low-earth-orbit satellites. With a combination of new employees and contractors, Amazon is in the process of building its own delivery service, which, to customers, has slowly revealed itself through branded Amazon trucks and civilian vehicles with Amazon logos affixed. (Most recently, the service drew scrutiny for the company’s plans to surveil drivers with video cameras.)

Amazon employs more than a million people, in relationships both traditional and nontraditional. (In early February, Amazon agreed to pay $62 million to the Federal Trade Commission to settle charges that it withheld tips from Amazon Flex delivery drivers — gig workers who often drive their own vehicles.)

An Amazon that doesn’t need as much from the post office or carriers like FedEx is an Amazon that may eventually compete with them more broadly, or even replace them. An Amazon that offers, by virtue of its size, an easier, cheaper way to handle your company’s hosting and computing needs may eventually become a company with which doing such business doesn’t seem like much of a choice at all.

The potential contained in A.W.S. — to embed itself in every major industry in the economy — is genuinely staggering, and its biggest competitors, including Microsoft and Google, have a lot of catching up to do. An unfettered A.W.S. would have no close precedent but perhaps a few instructive ones: railroads, energy, banking.

Life for the average Amazon customer will, of course, continue to change, as the company continues to expand its commerce and entertainment offerings. The old Amazon will remain front and center for the customer that is already there, and it will provide opportunities to opt in, or out, of new relationships with the company: for food; for medicine; for security; for play.

The Amazon Mr. Jassy helped build, the one he will soon inherit, doesn’t depend on that customer’s permission. It’s defined, instead, by what, and whom, they don’t see. It’s defined by conversations in which the loyal, Prime-subscribing public isn’t a participant, but rather a source of leverage: over partners, suppliers, workers and, most of all, newer types of customers.

Amazon spent its first decades fighting to be front of mind. Perhaps its next phase, to by overseen by Mr. Jassy, is to disappear into even greater power — ambient, diffuse, inescapable. Like an enveloping fog. Or a cloud.

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