In the letter, Jassy laid out the company’s strategy on generative AI, describing how it is focused less on building consumer-facing applications to compete directly with popular tools like OpenAI’s ChatGPT than on building the underlying “foundational” AI models and selling them to enterprise customers, which Jassy said already include Delta Air Lines, Siemens and Pfizer.
When ChatGPT came out a year and a half ago, it kicked off an arms race between Big Tech companies and a wave of new start-ups to build the best AI technology and figure out ways to make money from it. Billions of dollars have been spent, and Google, OpenAI and others such as Anthropic AI have released increasingly capable AI bots. But companies are struggling to find the right way to integrate them into their existing products, and for now, most consumers have yet to begin spending real money on the AI tools that have already been made available.
Amazon, for its part, has spent billions on generative AI. It recently invested an additional $2.75 billion, bringing its total investment to $4 billion in start-up Anthropic, giving it a minority stake. As part of the deal, Anthropic will run on Amazon Web Services, and Amazon will be able to offer its enterprise customers access to Anthropic’s Claude, one of the leading generative AI models.
The company added AI expert Andrew Ng, a highly respected AI pioneer and the former chief scientist at Chinese internet company Baidu, to its board as of Thursday. It has also committed billions of dollars to development of the data centers needed to power the growth of artificial intelligence technology.
But while Amazon is clearly seeking a path toward dominating the AI space, it has struggled so far to create consumer-facing products that resonate with customers. Earlier this year, it launched Rufus, a shopping assistant that failed to meaningfully improve on the existing search-based shopping experience. It has also stalled on development of a “smarter and more conversational” Alexa assistant, which it announced in September but has yet to release to customers.
While Amazon’s stock price has risen 25 percent so far this year, the company has yet to fully recover from its pandemic overspending. After laying off more than 27,000 employees between 2022 and 2024, it continued to cut jobs last week, eliminating hundreds of positions in AWS that focused on the cashierless checkout program Just Walk Out that it nixed from Amazon Fresh grocery stores.
In his letter, Jassy said he expects the company will experience continued cost-cutting, specifically in its fulfillment and logistics division as it becomes more efficient. “We’ve challenged every closely held belief in our fulfillment network, and reevaluated every part of it, and found several areas where we believe we can lower costs even further while also delivering faster for customers,” he wrote.
(Amazon founder Jeff Bezos owns The Washington Post.)
