The Economist - USA (2021-02-06)

The EconomistFebruary 6th 2021 Business 51

2

1

comes across as detail-oriented and more

than a little nerdy—much like Mr Bezos in

his first couple of decades in charge.

That does not mean that nothing will

change. Although Bernstein expects Ama-

zon’s retail-related revenues to remain at

roughly two-thirds of the total in the next

few years, by 2024 digital adverts may be its

biggest source of profits, overtaking cloud

computing; retail may actually add materi-

ally to the bottom line (see chart). Last year

Jeff Wilke, who ran the mammoth retail

arm, said he would leave the company, de-

priving Mr Jassy of an able lieutenant.

Customers in America are beginning to

grumble that Amazon is becoming a flea

market, with ever shoddier products juiced

with faked reviews. This has yet to stop

them shopping there, as the latest results

attest. But it could turn into a problem.

Abroad, where sales grew briskly last year,

the incoming boss will have to decide

whether to pursue expansion in places like

South America and India, where Amazon

faces stiff local competition.

At least one investor worries that Mr Jas-

sy’s background in cloud-computing may

leave him struggling to direct the firm’s re-

tail arm. Meanwhile, those who would

prefer to see the money-spinning aws

hived off into a separate company may

wonder if the man who created it has any

more appetite for such a radical move than

Mr Bezos did.

Those aren’t the only dilemmas in Mr

Jassy’s in-tray. Amazon’s demands on

workers in its warehouses and at times in-

trusive surveillance have come under scru-

tiny. The firm has spent heavily on im-

proved working conditions and pays a $15

minimum wage in America. But it contin-

ues to attract criticism, especially as it re-

sists unionisation among logistics work-

ers. Many of aws’s well-paid programmers

empathise with their colleagues on the

warehouse floor. In May Tim Bray, an aws

executive, quit in disgust over what he de-

scribed as Amazon’s “chickenshit” sacking

of workers who had complained about

poor safety during the pandemic.

Amid a general souring on the Utopian

promises of big tech, Amazon’s success has

also attracted attention from American

trustbusters. They worry it may be using

sales data from the third-party sellers on its

platform to inform the development of in-

house products which then drive those

sellers out of business. A congressional re-

port in 2020 cited claims that Amazon used

the rich profits from awsto subsidise its

unlucrative retail operations—but said

that the firm had not provided the data nec-

essary to decide one way or another. Some

politicians have talked of barring Amazon

from competing with its third-party sell-

ers, or even of splitting it up. Amazon de-

nies doing anything wrong.

Some speculate that such looming po-

litical awkwardness may have influenced

the timing of Mr Bezos’s decision to stand

back. Perhaps. Mr Bezos, for his part, gives

every indication of being a man with a

higher calling. When Bill Gates stepped

down as the boss of Microsoft in 2000, he

threw himself wholeheartedly into the

Gates Foundation, which, as the world’s

biggest private charity, funds everything

from malaria-prevention to aidsresearch.

Mr Bezos, whose near-$200bn fortune

is even larger than Mr Gates’s, may be plan-

ning a similar change of focus. He is sym-

pathetic to at least some environmental

concerns: he has said before that growing

resource consumption is not compatible

with a finite planet. Of his many other busi-

nesses, Blue Origin, his rocketry firm, is

widely reckoned to be his favourite. Like

Elon Musk, who this year overtook him as

the world’s richest man, Mr Bezos is a fully

paid-up space cadet. Blue Origin is already

involved in America’s plans to return astro-

nauts to the moon.

In 2019 Mr Bezos sketched out a vision

of the future in which a trillion humans

live in gigantic, artificial space-going habi-

tats, relieving the pressure on a crowded

Earth. It is an apocalyptic idea—and, to put

it mildly, a bold one. To Mr Bezos it may

seem more fun than running an online de-

partment store with a sideline in server

farms and virtual billboards—even one as

era-defining as Amazon. 7

Welcome to the Jassy age

Amazon

Sources:Bloomberg;BernsteinResearch

2.0

1.5

1.0

0.5

0

20001997 151005 21

$trn

Revenues

Market capitalisation

Initial public offering

Marketplace launch

Amazon Web

Services launch

Buys Whole Foods

60

40

20

0

-20

2423222120192018

Operatingprofitbysegment,$bn

Retail& other

AmazonWeb

Services

Advertising

FORECAST

G

ottlieb daimlerand Carl Benz built

the world’s first motor cars at the same

time in 1886, not far apart in Germany.

Their names have been tied together since

a merger of their firms in 1926. Daimler is

the parent company of Mercedes-Benz. Yet

the two men never met. So perhaps they

would not have minded that on February

3rd it was announced that their names

would go their separate ways.

A majority stake in Daimler Truck, the

group’s lorry-and-bus business, will be

spun off to existing shareholders and listed

in Frankfurt later this year. The luxury-car

arm, to be renamed Mercedes-Benz, will

retain a minority stake. The manoeuvre has

set pulses racing in the staid lorry busi-

ness. Ola Kallenius, the group’s boss, called

it an “emotional and exciting day”.

The split is an acknowledgement that

making cars and lorries are not the same

business. Mr Kallenius noted the different

“customer groups, technology paths and

capital needs”. Car buyers care about

brands, styling and plush interiors. Busi-

nesses with wares to ferry are concerned

with the total cost of ownership, not what

the badge says about them as a person.

Electric lorries will probably run on hydro-

gen, not batteries, which are too expensive.

Splitting also has the advantage of giv-

ing investors a clear choice between which

business they favour. It could unlock hid-

Daimler Truck and Mercedes-Benz

part ways

Carmaking

Driving apart

No truck with cars