AWS CEO Andy Jassy On Channel Conflict, Competition And AI

'There's this folklore mythology around if Amazon launches a business in a certain area, it means that all the other businesses in those areas are not going to be as successful,' Jassy says at the Goldman Sachs Technology and Internet Conference in San Francisco. 'I just haven't seen it.'

Amazon Web Services CEO Andy Jassy doesn't buy into the premise that when Amazon moves into any new business areas, it always suppresses competition.

“There's this folklore mythology around if Amazon launches a business in a certain area, it means that all the other businesses in those areas are not going to be as successful,” Jassy said at the Goldman Sachs Technology and Internet Conference in San Francisco yesterday. “I just haven't seen it.”

There are only two significant industries that Amazon has “disrupted,” according to Jassy: retail with Amazon.com, and technology infrastructure with AWS. His remarks come as federal and state regulators are conducting antitrust probes to determine whether Amazon and other technology giants stifle competition and innovation.

“In both cases, they were models that were pretty antiquated, and customers weren't so happy with those models, and somebody was going to end up reinventing them,” Jassy said. “It turned out to be us.”

Jassy was responding to a question from Goldman Sachs CEO David Solomon, who asked about “channel conflict” with customers that may be competitors in new industries that Amazon enters.

“Does this work better as an ecosystem inside of Amazon?,” Solomon asked. “Would (AWS) work better as an ecosystem outside of Amazon?”

Companies that have listened to what customers care about, watched what they were reacting to and then adjusted have done quite well in this “new era,” according to Jassy.

“And the ones that pooh-poohed it, that wished it away, that dissed it but didn't spend resources on it are struggling,” he said. “If you have a great business with a great customer experience, definitely because somebody else enters that space doesn't mean you're going to have some kind of business decline if you're listening to your customers and doing right by them and adjusting and being inspired by whatever's new.”

Healthcare is an example of a new market that Amazon entered and in which other companies continue to have success, Jassy noted. Amazon bought PillPack, a pharmacy that delivers medications in pre-sorted dose packaging, for $750 million in 2018, and it started piloting Amazon Care, a virtual health clinic with in-home or -office visits and prescription delivery for its Seattle-area employees and their families.

“We launched something in the phone space, and it didn't seem to have much of an impact on the leaders in the phone space,” Jassy said, referring to Amazon’s failed 2014 release of its Fire smartphone, which it discontinued the next year. “We have some things in the payment space. PayPal seems to be doing quite well. It's because these segments are so large, they're not winner-take-all. There's room for several companies to be successful.”

The No. 1 thing, by far, that companies can do to be successful over the long term is having “good feedback loops from customers, so you know what they care about,” Jassy said, in addition to a technology platform that allows builders to keep evolving the business and customer experience as quickly as needed.

“There just isn't a platform that allows you to do that more easily by a longshot than AWS,” Jassy said. “So that's usually what we talk about, and when we talk those things through (with customers), people usually find some reason to that.”

AI And Machine Learning

Jassy also spoke about his vision for the future of artificial intelligence (AI) and the industry’s need for more AI and machine learning (ML) experts.

“Today, there just aren't that many machine learning and AI expert practitioners out there, and a lot of them that exist live (inside) of the big technology companies,” Jassy said. “Collectively, more and more are getting educated, but it's part of why in AWS, a lot of the services and capabilities we're building there are to enable more companies to take advantage of that promise.”

Amazon has been working with AI and ML for more than 20 years, and it can been seen everywhere in its business, Jassy said. Product recommendations on the Amazon.com retail website are fueled by AI/ML, as are the “pick paths” used in Amazon distribution centers to find products and fulfill customer orders. Other areas include the Amazon’s Alexa virtual assistant, Prime Air drone initiative and its Amazon Go convenience stores.

“It’s deeply embedded in all of our businesses and all of our capabilities, and yet we still have tons more ideas,” Jassy said. “We see it as kind of being three macro layers of stack.

The bottom layer is for expert machine learning practitioners – “of which there aren't that many in the world” -- who are comfortable building their own models and taking the algorithms and training, tuning and deploying the models.

“And you have to keep running those models over and over again, or they become stale,” Jassy said. “We provide lots of ways to use all the popular frameworks, and we build chips to make it faster to do training and to do inference and predictions.

The most important thing that Amazon has done to make AI/ML much more accessible to every enterprise is building middle layer of the stack, according to Jassy, noting Amazon SageMaker, AWS’ fully managed ML service, allows “everyday” developers and data scientists to much more easily build, train, tune and deploy ML algorithms in fractions of time than previously.

“Intuit now trains their fraud models in less than a week, when it used to take them six months,” Jassy said. “These are big differences in what you can do. “

The top layer of the stack is for customers that don't want build the models themselves and instead want to plug into an AWS model and get answers back through application programming interface calls.

“These are things like, here's some text, turn it to speech; here's some audio, transcribe it to text; take this text and translate it into lots of languages,” Jassy said. “Take this transcribed, translated text and tell me what's in it, so I don't have to read it. Let me do natural language processing. Help me do internal search. All those are those services at a top layer that companies are really hungry to just plug into models from companies that are doing it in scale and have that data.”

While most companies will operate at all three layers of that stack, Jassy said the middle layer may be the single most important, “just because most enterprises have so much data that they want to use predictive algorithms to get value added.”

Government Regulation

The relationship between technology companies and government is getting “increasingly complicate” with regulators targeting anti-trust probes at Amazon and other large technology platforms, said Solomon, who asked Jassy what government’s should be in regulating technology, as it continues to expand and broadly infiltrate business.

“We have to keep remembering that technology has and will continue to completely change our lives and what our customer experiences are and how we communicate with one another, and, really, almost everything we do,” Jassy said. “The vast majority is great for people, but there are ways that you can use technology that are irresponsible or that impact people's civil liberties or they're against the law. And when people use technology in an irresponsible or unlawful way, they have to be held accountable for it.”

Civil liberties advocates and others have criticized law enforcement’s use of Amazon Rekognition, Amazon facial-recognition tool, but Jassy said technology shouldn’t be outright banned.

“Look at all the evil things that have been done with computers and servers over the years,” he said. “Look at the Sony hack a few years ago. Imagine what our world would be like if we didn't allow people to use computers or servers.”

All technology providers have terms of service, and Amazon suspends people's right to use its technology if they're doing so unlawfully or in a way that impacts civil liberties.

“But there are a number of people who want it to go further, and they want more clarity, and they want more delineation and regimentation,” Jassy said. “They want the government to actually regulate the cases that the technology just cannot be used for. We're very supportive of that and eager to work with government agencies and want to do it. But I think it's important when governments do that, that they are really thoughtful and targeted about what they're trying to protect against and don't over-regulate, where you can't get any of the value from the technology.”