The company announced changing roles as it reported that revenue in the fourth quarter soared 44% to US$125.56 billion.
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Jeff Bezos is stepping down as chief executive of Amazon.com Inc. to become executive chairman, marking the biggest change in leadership of the tech giant since he started it in a Washington state garage more than 26 years ago.
Amazon said on Tuesday that he will be succeeded as CEO in the third quarter by Andy Jassy, Mr Bezos’s closest lieutenant and the longtime head of the company’s booming cloud-computing business.
Mr Bezos, 57 years old, is handing over the day-to-day reins, as Amazon’s core businesses of online retail and business-computing services are booming during the Covid-19 pandemic, which has shifted work and life to the internet more than ever. The company announced his changing role as it reported that revenue in the fourth quarter soared 44% to US$125.56 billion—surpassing US$100 billion for the first time in a three-month span—and profit more than doubled.
But Amazon also faces the biggest regulatory challenges in its history, with multiple federal investigations into its competitive practices and lawmakers drafting legislation that could force Amazon to restructure its business. Tension with regulators and lawmakers has directly embroiled Mr Bezos, who was called to testify in front of Congress last summer for the first time.
Mr Bezos’s leadership of Amazon has made him one of the most respected, and feared, leaders in business, as well as fantastically wealthy. He is currently neck-and-neck with his rival rocket entrepreneur, Tesla Inc. CEO Elon Musk, as the world’s wealthiest person. Forbes lists Mr Bezos’s wealth at more than $196 billion.
In an email to employees made public Tuesday, Mr Bezos said he plans to focus his energy now on new products and early initiatives as well as his outside interests. “Being the CEO of Amazon is a deep responsibility, and it’s consuming,” Mr Bezos wrote. “When you have a responsibility like that, it’s hard to put attention on anything else.”
Mr Bezos’s move makes Amazon the latest of today’s tech giants to transition leadership away from the people who started them. The co-founders of Google stepped back from their management roles at its parent Alphabet Inc. in 2019, and both Apple Inc. and Microsoft Corp. have long been run by successors to their founders.
Mr Bezos left a career on Wall Street to start Amazon.com in 1994 as a scrappy online bookseller during a time when most Americans didn’t own computers. Amazon became an against-all-odds success story that would go on to completely disrupt the bookselling industry along with nearly every other industry in its path, from logistics to advertising. The company today is America’s largest online retailer, the leading provider of cloud-computing services, a significant player in Hollywood, a competitor in bricks-and-mortar groceries through its Whole Foods subsidiary, and a growing rival to United Parcel Service Inc. and FedEx Corp. in logistics. Amazon employs nearly 1.3 million people.
The executive imbued the Seattle-based company with a “Day 1” philosophy of always maintaining an underdog startup ethos. However, in recent years, Mr Bezos has stepped back from day-to-day management of the tech giant—with a brief pause when he became more actively involved in the early days of the pandemic. Many in his inner circle describe Mr Bezos’s role over the past few years as akin to that of an executive chairman. The executive famously tries to not schedule meetings before 10 a.m. and to make all of his tough decisions before 5 p.m. Amazon employees say the billionaire is elusive, with many saying they have never spotted him on the company’s sprawling downtown Seattle campus.
In 2016, he appointed two of his top deputies to oversee management of daily operations. Jeff Wilke was named CEO of world-wide consumer at Amazon, overseeing everything from Amazon’s retail arm and warehouses to its advertising and devices business. Mr Jassy was CEO of the cloud business, called Amazon Web Services.
The appointments freed up Mr Bezos to devote time to innovations and moonshots. He took on pet projects such as Amazon’s voice assistant product, the Echo, and spent time with Amazon’s studio executives on what movies and television programs it had in the pipeline.
Mr Bezos’s tightknit group of top lieutenants at Amazon has seen its ranks thin out in the past few years. In addition to Mr Wilke’s departure at the beginning of the year, Jeff Blackburn, a 20-year veteran and member of Mr Bezos’s team of top executives, took a sabbatical in 2020. Steve Kessel, another member of Mr. Bezos’s top executives, retired from the company last year.
Beyond Amazon, Mr Bezos bought the Washington Post in 2013 and has spent a sizable chunk of his time at Blue Origin LLC, the space company he founded. While the coronavirus pandemic re-engaged Mr Bezos, as the company had to deal with unprecedented demand, he remained involved with Blue Origin’s mission. Just last week Mr Bezos posted a photo on Instagram of a “hotfire test” of a Blue Origin engine.
Mr Bezos, a father of four children, also has experienced a major transition in his personal life recently. In 2019, Mr Bezos and his wife divorced and the National Enquirer tabloid reported his affair with a former television reporter who was the wife of a Hollywood executive.
The leadership transition at Amazon will take place as it grapples with unprecedented scrutiny.
The company is currently the subject of probes from the Justice Department, the Federal Trade Commission, the European Union and other governing agencies about whether it participates in anticompetitive practices.
In October, the House Judiciary Committee’s Antitrust Subcommittee—before which Mr Bezos testified in July—concluded its 16-month investigation into the biggest U.S. tech companies. Its report accused Amazon of exerting “monopoly power” over sellers on its website and suggested legislation that could cause Amazon to exit business lines—like its private-label or devices businesses—that compete with sellers on its platform.
In response to the Congressional report, Amazon said: “All large organisations attract the attention of regulators, and we welcome that scrutiny. But large companies are not dominant by definition, and the presumption that success can only be the result of anticompetitive behaviour is simply wrong.”
On Tuesday, a member of the committee, Ken Buck (R., Colo.), tweeted Amazon’s announcement saying: “I have some questions for Mr Jassy,” indicating that the new CEO will inherit much of the regulatory scrutiny from his predecessor.
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Strong family financial planning can help reduce taxes and support younger generations. From intrafamily loans and asset gifts to inheritance disclaimers, strategic cooperation can create meaningful financial benefits—when families have the trust and structure to make it work.
4 min
Happy is the family whose members—parents, grandparents and grown children—trust each other enough to cooperate on shared goals, especially financial ones. When that is truly the case, Uncle Sam’s tax rules can help as well.
This matters especially now that mortgage rates are above 7%, and many families are looking for ways to help younger members. If the elders have resources and are confident younger ones can cooperate, a family loan could make homeownership possible while providing the elders with a useful income stream.
Other strategies can actually lower taxes, such as when funding 529 plans or Roth IRAs, or when someone inherits a traditional IRA with required withdrawals larger than they will need.
Here are three strategies useful for functional families.
It is perfectly legal for families to lend money to a relative for a down payment or even a private mortgage.
But it is important not to cut corners, says Ryan McKeown, a CPA with Modern Wealth Enhancement in Minnesota. If the loan is for a down payment, be honest with the mortgage provider and have a formal agreement. The lender owes tax on the interest payments received.
If the loan is for a private mortgage, both sides should have legal representation with a formal written agreement, including payment terms. The lender owes tax on the interest, and the borrower often can deduct it if he or she itemizes.
To avoid IRS trouble, the interest rate shouldn’t be lower than the agency’s Applicable Federal Rate at the time of the loan. Currently that is about 5% for loans longer than nine years; about 4.5% for loans three to nine years; and about 4% for loans three years or less. Currently, traditional mortgage rates are generally above 7%.
In addition, the lender could use the $19,000 annual gift-tax exemption (described below) to forgive some or all of the interest or principal annually. If both lenders and borrowers are married, that is up to $76,000 a year. There is no tax for the borrower on such forgiveness, because it is from a gift.
If you’re going this route, McKeown advises against having a fixed plan to forgive the debt. Instead, do it in one-off letters specifying the amount—and keep careful records. Otherwise the IRS might try to treat the loan as a taxable gift.
Powerful tax-saving moves for families often use gift-tax provisions. Under current law, anyone can give anyone else up to $19,000 of assets annually, free of gift tax. That means a married couple with three grandchildren could give them a total of $114,000 in 2026.
The gifts can be cash or other assets, like stock. For noncash gifts, the cost basis—which is the starting point for measuring taxable gain after a sale—“carries over” to the recipient. So if someone buys $1,000 of stock and gives it away when it is worth $5,000, the recipient’s cost basis is $1,000. If the recipient later sells the shares for $8,000, the taxable gain is $7,000.
Here’s an example showing how gifts could save a family taxes. Grandma is a widow of modest means, while her child and spouse have prospered. The couple has two children, and they want to contribute $5,000 to a 529 college-savings plan for each—but they need to sell stock to do it. Their tax rate on the sale would be 18.8%, and they would need to sell about $11,000 of stock.
However, Grandma’s federal tax rate on the stock sale is 0%. If the couple gives $10,000 of shares to Grandma, she could sell them, pay no tax, and fund the grandchildren’s 529 plans. This saves about $1,000 of tax.
These moves are legal, and they could be used in other ways, such as to help a young person fund a Roth IRA.
But trust among family members is essential: Under the law, givers can’t put conditions on a gift. Grandma could use her stock proceeds to take a cruise, but she makes 529 contributions instead.
Mark Sellner, a retired tax attorney and CPA living in Sarasota, Fla., uses this strategy. His children sell stock he gives them and fund 529 plans for his grandchildren.
The family’s tax savings aren’t huge, but he likes other benefits. The sales by his children don’t boost his adjusted gross income, which in turn could raise his Medicare Irmaa premiums or his 3.8% surtax on net investment income.
Sellner doesn’t worry about his children using the funds for another purpose.
“There can’t be any strings attached to gifts. Of course, it is up to us to decide whether to make them in the future,” he says.
Two caveats: The “kiddie tax” applies to most children under age 24, and it is levied at the parents’ rate on investment income above $2,700 in 2026. Consider this before making gifts to a young person.
Investors who give away stock also forgo the step-up, an important provision that exempts assets held at death from capital-gains tax.
Sellner knows he’s losing a step-up, but says, “The children could use a little more now. Why should they wait 20 years to get it?”
A disclaimer is a highly useful strategy in which one heir renounces an inheritance in favor of another heir. Assuming family members cooperate, this can save taxes.
Here’s one example. Dad died and had a large traditional IRA that he left to Mom. She has enough assets and income to cover her expenses, and she lives in a state with a stiff estate tax. The inherited IRA would put her estate over the threshold.
Also surviving are three young-adult children. If Mom disclaims all or part of Dad’s IRA within nine months of his death, that amount could go directly to the children. They will have 10 years to empty the account, and the family as a whole will likely save estate and income taxes.
Disclaimers have many key details, especially regarding beneficiary documents. Although heirs have great freedom in choosing what assets to disclaim, the rules about who gets disclaimed property are rigid. It is best if the original owner names tiers of heirs so that if one disclaims, the next recipient is clear.
