Amazon’s empire: How the tech giant makes its money

Amazon is cutting hundreds of jobs from its AWS division

4/5/24 2:58PM

Amazon announced on Wednesday that it's cutting several hundred roles in its cloud computing division, Amazon Web Services (AWS).

If you’ve ever streamed a movie on Netflix, attended a meeting on Zoom, or scrolled through your Facebook feed, you've indirectly used AWS, which provides computing power, storage, databases, servers, and more to millions of businesses — helping it to become the profit center of Amazon’s increasingly sprawling empire. Indeed, although it accounted for just 16% of revenue last year, AWS alone contributed 67% of the company’s ~$37 billion in operating profit.‍

Efficiency: From A to Z‍

The layoffs came just a day after Amazon ditched the “Just Walk Out” cashier-less technology used at its grocery stores — which turned out to be heavily reliant on a review team team in India — and at an interesting time for Amazon generally.

Although it overlaps with its peers Alphabet, Meta, Apple, and Nvidia in many ways, Amazon is a much more complicated entity: for example, no other tech company owns grocery stores. It’s the nation’s second-largest private employer, with 22x more people on its payroll than Meta, and the company’s core expertise is in less buzzy niches: deliveries, servers, supply chain logistics, e-commerce seller services, and, increasingly, ads.

Those businesses are wildly different, but Amazon’s ruthless drive for efficiency is universally applied to them all. The layoffs in the AWS division follow cuts in the subscription services business — home to Prime, Audible, and Twitch — earlier this year, and all told Amazon has shed more than 27,000 roles since the end of 2022 across almost every area of the company.‍

FOMO: Amazon isn’t completely ignoring the shiny new sectors, recently completing a $4 billion investment into AI startup Anthropic.

Millie Giles

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Demis Hassabis, Google DeepMind’s CEO and founder, was also an early Anthropic investor

A chess prodigy and an actual a knight of the realm in the UK, it’s perhaps no surprise that Demis Hassabis has made some strategic moves about his exposure to AI upside. According to people familiar with the matter, the influential AI architect became an angel investor in Anthropic, currently behind many of the leading AI models, per Arena AI leaderboards.

The Nobel Prize winner’s position in the Claude creator was previously undisclosed and, per the Financial Times, highlights Hassabis’ “growing influence across the AI industry.”

Google, which bought DeepMind, the company that Hassabis cofounded and heads to this day, for a reported ~$400 million in 2014, is also a key Anthropic investor. The tech giant reportedly plans to invest up to $40 billion in the AI company as part of the mutually beneficial relationship the pair have forged, with reports that Anthropic has committed to spending $200 billion in the other direction on Google’s cloud services over the next five years.

I’m playing all sides, so I always come out on top

In addition to his financial support for Anthropic, Hassabis has also invested in a range of AI startups launched by colleagues, such as Inflection AI, a company set up by DeepMind cofounder Mustafa Suleyman (who is now CEO of Microsoft AI), as well as efforts from other collaborators, like David Silver’s Ineffable Intelligence.

Hassabis also emerged as a recurring figure on the fringes of the recent Elon Musk v. Sam Altman trial, cropping up repeatedly in testimonies and court documents and appearing to live, as The Verge put it, “rent-free” in Musk’s head.

Founded in 2021, Anthropic has recently raised funding at a reported $900 billion valuation, sending it soaring ahead of competitor OpenAI.

Google DeepMind’s Demis Hassabis emerges as early Anthropic investor

The Nobel Prize winner’s position in the Claude creator was previously undisclosed and, per the Financial Times, highlights Hassabis’ “growing influence across the AI industry.”

I’m playing all sides, so I always come out on top

Founded in 2021, Anthropic has recently raised funding at a reported $900 billion valuation, sending it soaring ahead of competitor OpenAI.

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Musk had alleged that OpenAI abandoned its founding mission as a nonprofit dedicated to developing AI for humanity and instead became a profit-driven company closely tied to Microsoft.

The verdict caps off a three-week blockbuster tech trial that could have seen Altman and Brockman removed from OpenAI leadership.

Jury tosses Elon Musk’s lawsuit against OpenAI and Sam Altman

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