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Amazon sells almost everything you can buy online, runs a huge cloud-computing business, and makes money from ads and subscriptions too.
Amazon is two big businesses wearing one name. The one you know is the store: you search, click, and a box shows up at your door, sometimes the same day. The one you may not see is Amazon Web Services, or AWS, which rents out computer power and storage over the internet to companies, governments, and app makers. Amazon also sells advertising space on its own site and runs Prime, a paid membership that bundles fast shipping with video and music.
The retail side works on thin margins. Amazon buys products, stores them in vast warehouses, and ships them, often losing money on the item itself. Some of that is offset by fees from independent sellers who list on Amazon's marketplace, by ads that merchants buy to appear higher in search results, and by Prime subscriptions that keep shoppers coming back. AWS is the profit engine: it costs a lot to build data centers, but once they run, each extra customer is cheap to serve, so the segment throws off strong cash flow. That cash has funded the warehouses, the robots, the custom chips for AWS, and the company's push into groceries, health care, and satellite internet through Project Kuiper. Amazon is brutally direct about one thing: it competes on price and convenience, and it is willing to run at low profits to win. That strategy built a giant customer base but also drew regulators. The U.S. Federal Trade Commission sued Amazon in 2023, alleging it illegally maintained monopoly power, and the company has faced scrutiny in Europe over marketplace rules. Amazon denies the claims and is contesting them.
Jeff Bezos had a good job on Wall Street, but he saw the internet growing and worried about the regret of not trying. So he quit, and in the summer of 1994 he started a company called Cadabra out of his garage in Bellevue, Washington. He picked books as the first product because people everywhere wanted them, they were cheap to ship, and there were millions of titles in print — far too many for any physical store to hold. That gap between what a store can stock and what exists was his opening.
A lawyer misheard the name Cadabra as 'cadaver,' which is not what you want in a brand. So Bezos renamed the company Amazon, after the world's biggest river, and because a name starting with 'A' sits at the top of alphabetized lists. The ambition was baked into the name: the biggest bookstore in the world.
When the site opened as an online bookseller, it offered the largest collection of books anywhere. In the first two months, orders came from all fifty US states and more than forty countries — proof that a garage in Washington could sell to the world.
The company listed its shares on Nasdaq, raising money to fund rapid expansion, especially the warehouses it needed to store and ship all those books. Going public gave Amazon capital and public scrutiny in the same move.
When the dot-com bubble burst, Amazon's stock collapsed from a peak near $113 to about $6, and investors lost faith. Bezos kept going because the numbers he cared about — customers, gross profits and repeat purchases — kept improving every month. Amazon survived the crash.
In the fourth quarter, Amazon reported its first profit: a single cent per share on more than a billion dollars in revenue. It was tiny, but it proved to skeptics that Bezos' strange, loss-heavy business model could actually work.
Amazon started AWS by offering data on internet traffic and website popularity to developers. A few years later it began renting out cloud computing on a pay-as-you-go basis — selling computing power the way a utility sells electricity. That rental business grew into Amazon's most lucrative segment.
Prime offered faster shipping for selected items, and it changed how people shopped: once you pay for membership, you buy more to get your money's worth. Prime grew past a hundred million paying members, making it the world's second-largest paid membership programme, and it later added video and music streaming.
Amazon launched the Kindle, its first consumer product, and became the global leader in ebooks. Its smart-devices arm later launched the Echo speaker with its Alexa AI, making Amazon the first company to launch a smart device.
Amazon launched the Fire Phone to deliver media streaming, but the venture failed and caused a $170 million loss. Production stopped the following year — a rare public stumble for a company used to winning.
Amazon announced it would acquire Whole Foods, a high-end supermarket chain with over 400 stores, for $13.4 billion. The deal gave Amazon a large network of physical stores for the first time and was seen as a direct challenge to Walmart's brick-and-mortar supremacy.
Founder Jeff Bezos stepped down as CEO. Andy Jassy, who had built AWS, became his successor — fitting, given how central the cloud business had become to the company.
Amazon and AI startup Anthropic announced a strategic partnership in which Amazon would invest up to $4 billion. Anthropic would use AWS as its primary cloud provider and make its AI models available to AWS customers — a way to keep the cloud business at the center of the AI boom.
The FCC approved Amazon's $11.5 billion acquisition of Globalstar, strengthening its satellite communications business under Amazon Leo. Amazon Leo had launched nearly 400 satellites since the previous year and plans thousands more by 2029, positioning it to challenge SpaceX's Starlink in broadband and direct-to-device connectivity.
Founder Jeff Bezos started Amazon in 1994 as an online bookstore and stepped down as CEO in 2021, handing the job to Andy Jassy, who had built AWS. Today Amazon is one of the world's most valuable companies, with annual revenue above $600 billion, and it uses its cash to keep expanding warehouses, data centers, and new bets rather than paying a dividend.
Saved answer · last researched 20 Oct 2026