• Amazon plans to launch a new AI model with advanced reasoning capabilities.
• The model aims to offer hybrid reasoning, a mix of quick answers and more complex thinking.
• Amazon is prioritizing cost efficiency and external benchmark performance.

Amazon is building its own AI model that incorporates advanced "reasoning" capabilities, Business Insider has learned.

The offering is tentatively scheduled to launch by June under the Nova brand, a group of generative AI models Amazon unveiled late last year, according to a person directly involved in the project. This person asked not to be identified because they were not authorized to speak with the media.

Amazon wants the new model to take a "hybrid reasoning" approach that provides quick answers and more complex extended thinking within a single system, this person added. An Amazon spokesperson didn't respond to a request for comment.

Reasoning models have recently become the next frontier in AI. They often work more slowly but can also tackle tougher problems by trying multiple solutions and backtracking via chain-of-thought techniques. Companies including Google, OpenAI, and Anthropic have released their own reasoning models recently, while DeepSeek drew a lot of attention for building a similar offering more efficiently.

One of Amazon's priorities is to make its Nova reasoning model more price-efficient than competitors, which include OpenAI's o1, Anthropic's Claude 3.7 Sonnet, and Google's Gemini 2.0 Flash Thinking, according to the person involved in the project.

Amazon previously said that its existing in-house Nova models are at least 75% cheaper than third-party models available via its Bedrock AI development platform.

Another goal is to get it Amazon's upcoming reasoning model ranked in the top 5 for performance, based on external benchmarks that evaluate software development and math skills, such as the SWE, Berkeley Function Calling Leaderboard, and AIME, among others, this person added.

The move reflects Amazon's commitment to invest in its own family of AI models, even as it preaches the need to offer a variety of model choices through Bedrock. Amazon's AGI team, run by head scientist Rohit Prasad, has been working on this new model.

It also puts Amazon in more direct competition with Anthropic, the AI startup that just launched its newest model. Claude 3.7 Sonnet uses a similar hybrid approach, combining quick answers and longer chain-of-thought outputs.

Amazon has invested $8 billion in Anthropic so far, and the two companies have been close partners, collaborating in areas including AI chips and cloud computing.

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• Amazon invests billions of dollars in robots to boost e-commerce efficiency and profitability.
• Back in 2015, the Amazon Picking Challenge tried to spur more research into warehouse automation.
• The competition inspired some of the company's most advanced robots, including Sparrow and Robin.

Amazon is investing billions of dollars in robots to make its e-commerce business more efficient and profitable. This huge initiative started out a lot smaller.

A decade ago, the company launched a competition for university engineering teams called the Amazon Picking Challenge. It called on researchers to design robots for a common warehouse task: Grabbing products from a shelf and putting them in a box.

As a tech reporter, this quirky project intrigued me. At the time in early 2015, Google was testing self-driving cars, a technology that emerged from a similar academic competition known as the DARPA Grand Challenge. What if Amazon was trying to replicate this magic, but with robots rather than automobiles?

Then, a funny thing happened. The Amazon Picking Challenge faded away. It was renamed and only lasted a few years. I chalked this up to another bad call and moved on.

I only thought about this challenge again late last year. That's when Amazon unveiled a next-generation warehouse in Louisiana that has 10 times more robots moving products around and, yes, picking them up with dexterity. The facility processes orders 25% faster and 25% more efficiently, and it will likely be the future of the company's e-commerce operation.

Ten years after the Amazon Picking Challenge, the fruits of this nerdy competition have finally emerged. It follows an uncannily similar timeline to the DARPA Grand Challenge, which started in 2004 and resulted in Google's driverless cars hitting the road roughly a decade later.

So, with the help of Business Insider reporter Eugene Kim, I investigated how Amazon's huge new fleet of picking robots came to be, and how this competition laid the foundation for a new wave of automation that's about to crash over the warehouse and logistics industry.

From pallets to picking

It started with an acquisition. In 2012, Amazon paid $775 million for Kiva Systems, which designed flat robots that zip around warehouse floors. 

This helped move pallets of goods around, but humans still needed to pick items. Getting a robot to spot the correct product in a box, then grab it just hard enough to pick it up, but not damage it — that's incredibly difficult.

This is where the Amazon Picking Challenge came in. Instead of hacking away at this problem itself, the company wanted to focus the broader academic community on the task.

The risk was that any valuable inventions would be out in the public sphere, and Amazon might not directly benefit from them. But the potential gains were much bigger, according to executives and roboticists.

"Amazon doesn't compete with robotics companies," said former Amazon Robotics chief Brad Porter, who runs robotics startup Cobot now. "When facing an unsolved research problem in robotics AI like bin picking, Amazon benefits if anyone solves that problem as long as Amazon can get access to the technology to improve their operations."

"The challenge Amazon was trying to solve was how to motivate researchers to focus on this problem," Porter added. "The Picking Challenge very much succeeded in doing that."

Oreos, Sharpies, and dog toys

The first competition took place over two days in late May 2015 in Seattle, with more than 25 teams from colleges including MIT, Duke, Rutgers, and Georgia Tech.

The contestants had to design a robot that could pick products from a typical shelf found on a Kiva Systems warehouse pod, and then put those items into containers. The picker had to be fully autonomous, and each robot was given 20 minutes to pick 12 target items from the shelves. Contestants had to open-source their creations.

Companies, including ABB, Fanuc, and Rethink Robotics, founded by industry pioneer Rodney Brooks, provided hardware for contestants to repurpose and tinker with.

The products were a preselected set of 25 items commonly sold on Amazon.com, including packs of Oreo cookies, boxes of Sharpie pens, and dog toys.

Some were easier to pick. There were simple cuboids, like a box of coffee stirrers or a whiteboard eraser. Others were trickier. For instance, a box of Cheez-Its could not be removed from the bin without first tilting it, adding another complex step for the robots. Smaller items, such as an individual spark plug, were more difficult to detect and properly grasp.

Vacuum arms and 'catastrophic failure'

Among all 26 teams, a total of 36 correct items were picked, versus seven incorrect items. Another four products were dropped by robots in the competition.

About half of the teams scored zero points, and two teams couldn't get their robots working well enough to even attempt the challenge, according to a research paper analyzing the results.

Problems ranged from the highly technical to the mundane. Some of the same items came packed differently, which made them even more difficult to pick. One team's machine had a vacuum hose that got accidentally wound around the robotic arm.

With each system having hundreds of components, the failure of any one of these could lead to "catastrophic failure of the overall system — as witnessed during the competition," the researchers wrote. 

The main finding from this first Amazon Picking Challenge was that human warehouse workers were a lot better than machines at picking products.

"A human is capable of performing a more complex version of the same task at a rate of ∼400 sorts/hour with minimal errors," the researchers wrote. "While the best robot in the APC achieved a rate of ∼30 sorts/hour with a 16% failure rate."

But the conclusion was hopeful, too: The contest showed that robotics could substantially increase warehouse automation and order fulfillment in the near future.

The competition was renamed the following year as the Amazon Robotics Challenge, and the tasks evolved to be more complex.

Suction and other benefits

Tye Brady, chief technologist at Amazon Robotics, was involved in those later Amazon Robotics Challenges. 

In a recent interview with Business Insider, he said research on robotic manipulation exploded from 2016 through 2018, with many institutions publishing their results and insights. This helped spread valuable knowledge across the industry, speeding up progress. 

At least two professors started graduate-level classes related to Amazon's challenge, and these programs are still churning out experts with valuable practical applied knowledge in robotics, Brady explained. 

"When you get a whole bunch of smart people together in a room and think about focused problems, some great things are going to happen, and that's really what happened," he said. "It inspired a lot of the work that we have today that we see in, for example, our Sparrow and Robin manipulation systems that are real-world products delivering packages inside of our fulfillment centers."

In that first competition in 2015, some robotics teams used grippers that mimicked the way a human hand picks things up. Other teams tried suction instead, with some researchers even strapping off-the-shelf vacuum cleaners to their robots.

Gripping proved more problematic because the robots didn't receive enough information to know when to release or add pressure at the right times. This could result in squashed or crushed products or dropped items.

Sucking the items up so they stuck to the end of robot arms was a more successful approach.

"The idea of high flow suction was novel. Bring your favorite vacuum cleaner and start picking up objects. That was kind of clever," Brady said. "This idea, we used suction inside of our Robin and our Sparrow arms. It's very good."

The boss has noticed

Amazon unveiled Robin, its first robotic arm, in 2021. This machine picks up packages from conveyor belts and places them on other mobile robots called Pegasus.

Sparrow followed in 2023. This was Amazon's first robotic arm to handle individual items rather than packages. It uses computer vision and AI to pick more than 200 million different items from containers and place them into totes.

Amazon CEO Andy Jassy has taken notice. At the AWS re:Invent conference in December, he should have been talking about cloud computing. But he took time away from that subject to wax lyrical about Sparrow. 

"It has to discern which item is which. It has to know how to grasp that item, given the size of it and the materials and the flexibility of that material. And then it has to know where in the receiving bin it can put it," Jassy said. "These are all inventions that are critical to us changing the processing time and the cost to serve our customers."

Wall Street has noticed, too. Morgan Stanley recently estimated that Amazon's warehouse robots could save the company as much as $10 billion a year.

"The big story is we're just getting started," said Brady.

• Amazon is cracking down on the use of AI tools in job interviews.
• AI-assisted interviews pose ethical challenges and have sparked debate in Silicon Valley.
• Some Amazon employees consider AI tools beneficial, while others see them as dishonest.

Generative AI tools like coding assistants and "teleprompter" apps feed people live answers during job interviews, giving a leg up to candidates looking for an edge.

Amazon, one of the largest employers in the world, wants to curb this growing trend.

Recent Amazon guidelines shared with internal recruiters at the company say that job applicants can be disqualified from the hiring process if they are found to have used an AI tool during job interviews.

Amazon believes the use of AI tools in interviews gives candidates an "unfair advantage" and prevents the company from evaluating their "authentic" skills and experiences, the guidelines, which were obtained by Business Insider, say.

"To ensure a fair and transparent recruitment process, please do not use GenAl tools during your interview unless explicitly permitted," the guidelines say. "Failure to adhere to these guidelines may result in disqualification from the recruitment process."

The guidelines also tell Amazon recruiters to share these rules with job candidates.

The crackdown highlights one of the many ethical challenges that are bubbling up from the rise of generative artificial intelligence. Amazon has restricted employee use of AI tools such as ChatGPT, even as it encourages them to employ internal AI apps to boost productivity. "Hacking" job interviews with AI is a growing trend, prompting debate across Silicon Valley.

In a recent internal Slack conversation seen by BI, some Amazon employees debated the need to ban AI tools during job interviews when they can improve the quality of work.

"This is certainly an increasing trend, especially for tech/SDE roles," one of the Slack messages said, referring to software development engineers.

An Amazon spokesperson said the company's recruiting process "prioritizes ensuring that candidates hold a high bar."

When applicable, candidates must acknowledge that they won't use "unauthorized tools, like GenAI, to support them" during an interview, the spokesperson added in an email to BI.

Tips to identify the use of gen AI tools

The trend has become a big enough problem for Amazon that it has even shared internal tips on how to spot applicants using gen AI tools during interviews.

The indicators, the guidelines say, include:

The candidate can be seen typing whilst being asked questions. (Note, it is not uncommon for candidates to write down/type the question asked as they prepare to answer.)

The candidate appears to be reading their answers rather than responding naturally. This could include correcting themselves when they misread a word.

The candidate's eyes appear to be tracking text or looking elsewhere, rather than viewing their primary display or moving naturally during conversation.

The candidate delivers confident responses that do not clearly or directly address the question.

The candidate reacts to the outputs of the AI tool when they appear to be incorrect or irrelevant. This is often demonstrated by the candidate being distracted or confused as they are trying to make sense of the outputs.

While candidates are permitted to talk about how they have used generative AI applications to "achieve efficiencies" in their current or previous roles, they're strictly prohibited from using them during job interviews, the Amazon guidelines add.

A recent video produced by an AI company that claims to have received a job offer from Amazon after using its coding assistant during an interview raised alarms internally, one person familiar with the matter told BI. This person asked not to be identified because they were not authorized to speak with the media.

'Mainstream' problem

This is not just an Amazon problem. Job seekers are becoming increasingly bold in interviews, using different AI tools. A recent experiment found it was easy to cheat in job interviews using AI tools like ChatGPT.

In October, the xAI cofounder Greg Yang wrote on X that he'd caught a job candidate cheating with Anthropic's Claude AI service.

"The candidate tried to use claude during the interview but it was way too obvious," Yang wrote.

Matthew Bidwell, a business professor at the Wharton School, told BI that these AI tools "definitely penetrated the mainstream, and employers are worried about it," citing conversations with students in his executive-management program.

Bidwell said it's a problem when employers can't detect these tools and the job candidates are uncomfortable acknowledging their use.

"There's a strong risk of people using it to misrepresent their skills, and I think that is somewhat unethical," Bidwell said.

Bar raising?

Not everyone is opposed to it. Some Silicon Valley companies are open to allowing these apps in job interviews because they already use them at work. Others are making the technical interview an open-book test but adding questions for a deeper assessment.

Some Amazon employees appear less concerned about it, too.

One person wrote in a recent Slack conversation, seen by BI, at Amazon that their team was "studying" the possibility of providing a generative AI assistant to candidates and changing their hiring approach. Another person said that even if a candidate got hired after using these tools, Amazon had "other mechanisms" to address those who do not meet expectations for their roles.

A third person questioned whether Amazon could benefit from this. Using generative AI may be "dishonest or unprofessional," this person said, but on the other hand, it's "raising the bar" for Amazon by improving the quality of the interview.

"If judged solely by the outcome, it could be considered bar-raising," this person wrote.

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• The value of Amazon's investments in Anthropic have soared.
• Amazon has agreed to invest $8 billion in Anthropic so far.
• Anthropic and Amazon have a close partnership that includes an arrangement to use AWS's AI chips.

Amazon is seeing massive gains from its investment in Anthropic.

The cloud giant estimated the fair value of its stake in Anthropic at $14 billion at the end of December, according to a recent regulatory filing. That's up from $8 billion, the filing shows.

That means Amazon's investments have soared roughly 75% since it started backing the AI startup in 2023, for a cool $6 billion gain on paper.

Amazon first invested $1.25 billion in Anthropic in September 2023 and another $2.75 billion in the first quarter of 2024. Late last year, Amazon put in another $1.3 billion, and also agreed to invest an additional $2.7 billion by the end of 2025, the filing stated.

Amazon's spokesperson declined to comment.

In the filing, Amazon said it used convertible notes to invest in Anthropic. These are classified as "available-for-sale," an accounting term generally denoting securities expected to be held for more than a year. Convertible notes can be exchanged for equity in the future, depending on how they are structured and certain thresholds.

There are a lot of assumptions baked into Amazon's fair value estimates. This is common for investments in startups, which are often young businesses that could either succeed or fail over the long term. Amazon's filing classified the convertible notes as "Level 3" assets, which use "valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants."

"These valuations require significant judgment," the company added.

Anthropic is one of the leading AI startups, best known for its Claude family of models and related services. The OpenAI rival is currently raising money at a $60 billion valuation, a significant jump from the $18 billion value it saw last year, according to the Wall Street Journal.

Amazon has built a close relationship with Anthropic in recent years. In addition to the funding, Anthropic agreed to use Amazon's cloud computing services and AI chips. Last year, Anthropic said it plans to use a new AI supercomputer made up of Amazon-made chip clusters.

Amazon's total investment value in public and private companies was $22.1 billion as of the end of December, the filing said. Publicly traded companies, such as Rivian, accounted for just $4.6 billion. Among the private companies Amazon invested in are Scale AI, Hugging Face, and X-energy, according to Pitchbook.

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• Amazon is adopting Zoom as its official meeting app, replacing its own Chime.
• Chime, launched in 2017, was Amazon's main meeting app and had limited external use.
• Amazon has also started rolling out Microsoft's 365 tools.

Amazon is making Zoom its official meeting application across the company, according to an internal memo obtained by Business Insider.

Zoom replaces Chime, Amazon's homegrown meeting application that can run video and audio calls, the memo said. Chime, which launched in 2017, had been the de facto official meeting app for Amazon's corporate employees.

"Zoom is replacing Amazon Chime as the standard meeting application for Amazon internal meetings," the memo said.

Amazon's companywide use of Zoom, which hasn't been previously reported, is a major win for the videoconferencing app maker, which lost most of the pandemic-driven stock price gains in recent years.

Amazon will deprecate the Chime application, partly because of its "limited" external use, the company's spokesperson said in an email to BI.

"When we decide to retire a service or feature, it is typically because we've introduced something better or our partners offer a solution that is a good fit for our customers as well as our own employees. In Chime's case, its use outside of Amazon was limited, and our partners offer great collaboration solutions, so we will lean into those," the spokesperson said.

Zoom's spokesperson didn't respond to a request for comment.

Amazon has also started rolling out Microsoft's 365 productivity tools internally, the memo said. Amazon has committed to spending $1 billion over five years to use M365, BI previously reported.

Amazon employees will migrate to Microsoft's cloud applications on a "rolling basis," the memo said, and they will gain access to services such as Outlook, Word, Excel, and PowerPoint.

The internal memo added that Microsoft Teams would be available for meetings where "full integration with M365 is needed," while Cisco Webex would work for meetings with customers who use Cisco's product.

In a separate blog post, Amazon wrote that Wednesday's change wouldn't impact Chime's software development kit, which lets customers build their communication applications.

Chime is the second product shutdown Amazon has announced this week. On Tuesday, the company said it was scrapping Inspire, a TikTok-style video and photo feed.

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• Amazon's retail CEO, Doug Herrington, said the company must cut costs to invest in new growth.
• The cost reductions focus on delivery inefficiencies to improve the cost of shipping a package.
• Amazon invests in AI data centers, warehouses, and fast shipping for future growth.

Amazon has to continue cutting costs if it wants to invest in new growth opportunities.

That's according to Amazon's retail CEO, Doug Herrington, who stressed the need to cut costs and invest in new ideas simultaneously during last month's internal all-hands meeting, which Business Insider obtained a recording of.

"We have to keep reducing costs so that we can afford the big investments in big new businesses," Herrington said.

Herrington was referring to Amazon's cost-to-serve of each shipment, a metric that measures the cost of fulfilling the shipment and moving it through the supply chain, and how the company could improve it by eliminating inefficiencies. Herrington said Amazon reduced the average cost-to-serve per unit because of its investments in delivery and customer service.

Herrington's remarks signal that Amazon's yearslong cost-cutting effort is likely to continue this year, even as it makes huge investments across the business.

Since late 2022, Amazon has laid off at least 27,000 people and shuttered several less profitable services and internal projects. Last month, Amazon let go of about 200 employees in its fashion and fitness group.

Those moves have resulted in record profits and cash balances for Amazon, a change that Wall Street has welcomed in recent years. At the same time, Amazon has made huge investments in data centers for AI and warehouses to make deliveries more efficient. In 2025, Amazon is expected to spend a record $105 billion in capital expenditures.

Amazon's spokesperson declined to comment on this story.

'Every single penny matters'

During the meeting, Herrington said cost reductions and new investments shouldn't be exclusive but complementary. He said they'd need to be "balanced" because the goal is to drive more efficiency.

"My suggestion would be for all the teams that if you find yourself only doing cost reduction with no invention and innovation, or if you find yourself only working on innovation and not thinking at all about how to become more efficient, then you probably don't have the right balance, and that it's up to all of us to make sure that within our team and within our portfolio of work that we're working on, we're doing both at the same time," Herrington said.

Herrington also said Amazon would continue to invest in fast shipping, such as same-day and drone delivery services, and keep expanding its product selection through the low-price service Haul and Fresh Grocery while adding brands to its marketplace. He added that Amazon was improving shopper convenience through personalized AI services such as Rufus.

Gail Carpenter, Amazon's retail chief financial officer, echoed the message during the meeting. She said the cost cuts helped Amazon invest in better shopping experiences, like faster delivery and lower prices. She said Amazon's recent investments in warehouses to serve smaller regions had saved transportation costs because packages travel shorter distances.

"As a reminder, this work isn't just about cost reduction — it enables us to invest in a better customer experience," Carpenter said. "When we reduce waste and inefficiency, we can offer faster delivery, better prices, and expand selection in a profitable way."

She added that Amazon had improved the average cost-to-serve on a per-unit basis for two straight years and was continuing the momentum in 2025 while encouraging employees to share more cost-saving ideas.

"We're in a game of pennies," Carpenter added. "Every single penny matters, so keep bringing your ideas forward."

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• Amazon invests billions in warehouse robotics, deploying more than 750,000 robots globally.
• Tye Brady, Amazon Robotics's chief technologist, believes robots help people work more efficiently.
• AI significantly boosts the potential of robotics in warehouses, he told BI in a recent interview.

Amazon has long been a leader in warehouse robotics, investing billions of dollars to automate some of the picking and sorting jobs at its fulfillment centers.

But its work in robotics is just getting started, Amazon Robotics Chief Technologist Tye Brady told Business Insider in a recent wide-ranging interview.

Amazon now has at least 750,000 robots roaming around its sprawling network of warehouses. It has been deploying robotic arm systems called Sparrow and Robin that can quickly lift and move millions of products and boxes.

This wave of automation is helping Amazon deliver packages faster, and it could make the company more profitable. Morgan Stanley recently estimated this robotics push could save Amazon up to $10 billion a year by 2030.

According to Brady, the goal is to help Amazon's frontline workers do their jobs more safely and efficiently.

"We do technology with a purpose. And if that purpose makes sense in e-commerce and our material handling fulfillment systems, then we will do that as long as it improves the safety of our employees and their performance," he said.

Brady, who has been at Amazon for almost a decade, saw the potential for robots in the logistics industry early on. He was part of a group that formalized the Amazon Picking Challenge, a grassroots competition that helped bring together a community of robotics experts. Before that, he worked at MIT and Draper Laboratory.

Brady said breakthroughs in artificial intelligence give Amazon more reason to invest in this space. In 2022, the company launched a $1 billion Industrial Innovation Fund focused on supply chains and logistics. In August, Amazon hired the founders of startup Covariant, a robotics AI startup last valued at $625 million.

"The physical AI part is hugely important," Brady said. "AI has really revolutionized and transformed robotics because it allows us to have the mind and body as one."

Brady doesn't dispute these advancements will change jobs in the future. But he argues that it will benefit the workforce, creating more skilled jobs and giving people more time to focus on things that "really matter."

"Our future is in people and technology working together," Brady said. "If we have technology that allows us to be more capable in our jobs, that's a win."

This Q&A has been edited for clarity and length.

BI: Amazon has more than 750,000 warehouse robots? Will all these be Amazon's own designs or a mixture of internal and external machines and systems that you get from other places?

"What's really awesome is that 750,000 is for our drive units alone. And I'm very proud that those have not only been designed inside Amazon but also manufactured by Amazon. So we manufacture every one of those drive units in Massachusetts in one of our two facilities.

We have our own manufacturing lines where we actually build those locally, and we ship those globally. And we've created a lot of jobs because of that manufacturing capability. We have a great talent pool around here. We actually source a lot of material even locally as well, proving that you can do this cost efficiently and very performantly here in the United States, which is great. And that's the world's largest fleet of industrial mobile robots out there."

BI: Any sense of where that number's going in the future?

"I would imagine it's only going north. I can't share the number yet.

If you went into a large fulfillment building, you'd see 3,000 to 4,000 different drive units working in coordination with each other. You would see 10, 20, 30 Sparrow arms working in coordination, picking up things. You'd see tens of Robin work cells picking up boxes. You'd see a couple hundred Proteus drives moving what we call go-karts around. They're everywhere. And you're also going to see a lot of people as well. So it's the idea of people and machines working together because when we do our robotics, we're extending and augmenting human capability."

BI: Why name your robots after birds?

"The designers get to pick whatever names they want, but it started with the first bird, which was Robin, which stands for 'robotic induct.' So our team said, hey, we're going to call this Robin. And then a whole bunch of birds started to come on."

BI: How much resources and money is Amazon putting into automating warehousing and logistics? Is it all focused on the kind of e-commerce operation, by which I mean warehousing and logistics, or also delivery and other parts of Amazon that we haven't thought of?

"To put a figure on it, would be nearly impossible for me to do. You could see the scale is if we're going to open an industrial fund of $1 billion, then we're serious about this. And we're seeing the real-world benefits for our employees today.

AI has changed the game of what products need to go where. We start even before the customer makes their order on Amazon.com. And then we offer a delivery promise that's backed by our amazing people and our robotic systems. And that delivery promise is a function of what we call 'first mile,' where we store our goods, our 'middle mile,' where we help sort those goods to get them to the right locations. And then our 'last mile' deliveries. And robotics is affecting all three of those phases significantly. And AI has changed the game for us and the robotic systems that we have continue to introduce more and more efficiencies in that process."

BI: Is there any task inside the warehouse and logistics process that will never be automated because they are too complex or something?

"Just plain old, simple common sense will never be automated. Humans have an amazing ability to adapt and understand what's going on and an amazing ability to use tools as long as they're available. As long as they're intuitive and natural and actually provide value, we'll use tools to do the job better and more efficiently. And for our case, it's safer.

I'm a systems engineer, and what we want to do is we want to leverage what people are good at. We're good at problem-solving, using common sense and reasoning, generalization, and creative thinking. We're amazing at that. I don't want to throw that away. Machines are really good at crunching numbers, assessing databases, and moving with precision. Let's bring those together in order to do the task at hand. And for us, that's moving our packages for our customers."

BI: Any thoughts on the resurgence of investment in robotics lately?

"The 'physical AI' part is hugely important. I think we've done a pretty good job of building the body in robotics. But let's think about the mind and the body, and AI has really revolutionized and transformed robotics because it allows us to have the mind and body as one.

We're doing things not in the digital world. We're doing real-world things applied in the analog world, the world that we live in. And there's no better example of that than what we're doing in Shreveport, Louisiana. We have 10 times the amount of robotics under that roof. The processing time is 25% faster. We can reduce what we call the cost to serve by 25% as well. We can pass those cost savings along to our customers and we're creating brand new jobs. That's a win all the way around because it's great for customers first and foremost, and it helps people do their jobs better. So, it's not a replacement strategy; it's an augmentation strategy.

We do technology with a purpose. And if that purpose makes sense in e-commerce and our material-handling fulfillment systems, then we will do that as long as it improves the safety of our employees and their performance.

That's what we want to do, and we've done that. I can give you lots of examples, whether it's in our Sequoia system, our Proteus system, our Sparrow system, or our Robin system. All those systems allow for safer employees and more efficiency in our fulfillment processes."

BI: What's the next challenge? What's the next frontier specifically in your e-commerce logistics world?

"First of all, physical AI is here and proving very useful, but we're just getting started. And I am really excited about the scale at which we operate, which is mind-boggling. And that scale allows us to advance the technologies of physical AI. That's really exciting. When we ship billions and billions of packages every year, that makes you have to do it right because you can't be 99% good because a 1% exception rate over billions of items is quite a lot of things that you would then have to specially handle."

BI: Would Amazon ever consider providing a lot of this physical AI robotic technology as a service to other companies? Or are you already doing that?

"We are doing that in a sense through AWS. Our physical AI systems have the same toolkits that hundreds of thousands of our customers have available to them, and they're using them, so we're seeing a lot of growth there. So it's an incredible system, how AWS has structured it and made it available to all [through Bedrock].

We're always finding ways to evolve retail. That's what we do. That innovation mindset, that experimentalist mindset, allows us to achieve what we have. Whether it's helping our productivity, this idea of mind and body being unified inside our robotic systems is really exciting. These advancements that we're seeing, especially with Covariant, helping drive the mind, that is really exciting. How automation is empowering people. Our mission continues to be, I want to eliminate the menial, the mundane, and the repetitive. I want to eliminate those tasks and allow people to focus more on what matters."

BI: Tell us more about Covariant.

"It's a really broad brush approach to foundation models and how they should be applied, but with specific needs. Whether it's path planning or perception systems for robots to understand their world, we're seeing some significant advancements in those areas.

Generative AI is fueled by data and we have lots and lots of data from our objects. We offer the world's largest selection of goods to our customers out there and are the generative AI models that really changed the game when it comes to efficient planning. The movement of robots when it comes to understanding the scenes that the robots are in. And systems like Proteus, for example, these are 'in the wild.' They are around people, they're not behind fences, they're moving in concert with people, and understanding the environment is really important in a quick manner. And their generative AI systems are changing the game for us."

BI: And that example for Proteus, that's in a warehouse, not following a preordained path, it's just out there?

"That's right. It's out there around people. People move around it. It moves around people. It's really, really cool to see, and I can show you just one example of how state-of-the-art it is. Typically a robot, when it sees maybe three, four, or five people gathered together, it'll just stop and wait for the folks to kind of disband. Or if you're at a cocktail party, when you're trying to navigate from one side of the room to the other, you know how hard that can be. The Proteus system actually is capable of that. So it doesn't just stop. What it does is it kind of nudges its way, never run into anything, but it has its way of signaling to people 'I would like to get through,' and then it can kind of navigate its way through that cocktail party in a very safe manner. That's really hard to do.

It's all about intent. We need to build in our models ways for people to understand the intent of the robot. I want to take a left turn, I want to move. So we have eyes and lights that allow a person to understand the robot's intent. But we also program the robotics to understand the person's intent. If they're walking, are they going to take a left turn, so we want to make sure that we keep the right buffer around them? Maybe they're going to stop really quickly. We have to be mindful of that as well. And our physical AI systems that are doing that today have really changed the game. When it comes to understanding and perceiving those scenes that are immediately around it."

BI: And Covariant helps with all these things?

"Absolutely. So it's a balance between what we call edge computing. So that's the software that we run directly on the machine itself, and then also our cloud computing that we have through AWS where we have these foundation models that are helping us extract what's a door and what's a fence and what's the dock look like and what's a truck, and all that knowledge we are assembling.

They're great. I mean, they're a leading robotics company for sure. Really excited about it. The way that they have done their models is kind of unique and we think that they can really help assist people. So that's a great partnership."

BI: Do you think robotics will at least slow down the massive growth of this human warehouse workforce from the past 10, 15 years or not?

"Inside our Shreveport building, we have 35% more skilled jobs. So the labor force is changing. We have also committed more than $1.2 billion in our upskilling pledge. We offer things like career choices. We offer things like apprenticeships and prepaid tuition programs for our employees inside our fulfillment centers for upskilling. That's really important.

It is really important for us to do this because we know jobs will change, and we want to keep those skills local in the community where we're creating those jobs. Our future is in people and technology working together.

And the perception of technology really matters. It really matters to people because if you are more willing to adopt technology and use it, then you get the benefits of technology.

And people, when they have technology, can do really amazing things. When you're in India, if technology allows you to have cleaner water, that's a win. That's a loss for nobody. That is a win. If you have technology that makes you healthier and safer, that is a win. Let's embrace that. If we have technology that allows us to be more capable in our jobs, that's a win.

It's exactly the way I feel about robotics. But instead of being in the digital world, it's in the physical world. Let's allow people to do great things to be more efficient. It's why I got into robotics. When you do robotics right, it allows us to be more human. And I mean physical AI, I mean smart, capable technology systems that allow us to be more human, more capable. If I can have a robot do my dishes for me, which I do, it's called a dishwasher, and that's great. It's such a good robot that we don't really talk about the robot, but what it does is very simple. It allows me more time to connect with my loved ones. The menial and mundane, go ahead and do it. Mow my lawn, do my pool, whatever it is, give me more time to be more human.

I'm not going to run out of things to do on the weekend. I can guarantee you that. There's no replacing me over the weekend. But if I can have machinery and physical AI systems doing these tasks for me that allow me to focus more on what matters at home, that's my loved ones, that's a total win.

I definitely believe that what we're doing inside Amazon, applying robotics and physical AI in many, many systems, is helping master the fundamentals of robotics, whether it's a movement system, a manipulation system, a sortation system, a storage system, an identification system, or a packaging system.

That's what we're focusing on. When we achieve those things, what's going to happen is that the world will see in this particular industry that robotics can really help people do their jobs, and that will start to transform other industries. You're going to see the healthcare industry pick up on physical AI. You're going to see agriculture pick up on physical AI.

And we are pioneering that field, which is as simple as storing goods, picking goods, moving goods, and bringing them to customers. But that context allows us to accelerate the development of robotics."

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• Amazon Web Services growth hindered by capacity constraints in data centers, says CEO.
• Constraints stem from AI chip shortages, server components, and energy supply issues.
• Amazon plans $105 billion in 2025 capital expenditures, largely led by AI.

Amazon CEO Andy Jassy said on Thursday that the Amazon Web Services cloud business could grow faster if not for "capacity constraints" across its data centers.

He said the shortage has been caused by difficulty procuring AI chips, server components like motherboards, and the energy to power data centers.

"It is true that we could be growing faster, if not for some of the constraints on capacity," Jassy said during Thursday's call with analysts.

On Thursday, AWS reported a 19% increase in sales for the fourth quarter at $28.8 billion, which was slightly below street estimates. Amazon's stock dropped roughly 4% in after-hours as the company gave lower-than-anticipated first-quarter guidance.

Jassy's remarks echo recent statements made by cloud rivals Microsoft and Google. Microsoft's CFO Amy Hood said last week that the company is in "a pretty constrained capacity place" when it comes to meeting demand, while Google's leadership said on Tuesday that it ended 2024 with "more (AI) demand than capacity."

Jassy said on Thursday that he expects the constraints to "relax" in the second half of 2025, adding it is "hard to complain" when AWS's AI business is on pace to generate "multi-billion" dollars in annual sales.

Amazon expects AI demand to continue growing. For 2025, the company forecast roughly $105 billion in capital expenditures, mostly in data centers, after spending a record $26.3 billion during the fourth-quarter.

Jassy said AWS doesn't make that kind of financial commitment unless there are "significant signals of demand."

"When AWS is expanding its capex, particularly what we think is one of these once-in-a-lifetime type of business opportunities like AI represents, I think it's actually quite a good sign, medium to long term for the AWS business," Jassy said.

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• Amazon recently changed some of its DEI websites and halted some programs.
• An AWS VP clarified Amazon's continued commitment to DEI in a meeting in late January.
• Other firms such as Meta and Target recently pulled back on DEI efforts.

An Amazon executive told employees the company remains committed to diversity, equity, and inclusion, during a recent internal meeting.

The tech giant has changed some of its websites about DEI and halted some programs. That prompted some employees to ask about this ahead of the meeting in late January with Mai-Lan Tomsen Bukovec, VP of technology at Amazon Web Services.

The question about DEI received the highest interest among employees, Tomsen Bukovec noted, according to a meeting transcript obtained by Business Insider.

The AWS executive said she wasn't aware of the changes to Amazon's DEI websites. She said she asked internally to ensure that Amazon was still committed to its DEI programs. The feedback she received was "no change," she said.

"We are not pulling back on DEI initiatives. I looked at all the changes. We are not making any changes to any of the benefits," Tomsen Bukovec added. "There's no change to the commitment, but we didn't roll it out that well."

Tomsen Bukovec, who's been at AWS for almost 15 years, is a senior, high-profile executive at the cloud division. She often speaks on behalf of the company at public events and was one of the speakers at last year's re:Invent conference. In 2023, Tomsen Bukovec was included in BI's AI 100 list.

Other companies, including Meta, Target, and McDonald's, have pulled back or ended DEI programs in recent months as pressure from conservative activists and Donald Trump's administration increased. At the same time, other companies, such as JPMorgan and Costco, are continuing support for DEI.

Media reports in recent months have suggested that Amazon's approach to DEI may be changing.

In December, Candi Castleberry, Amazon's VP of inclusive experiences and technology, said the company was shutting down several "outdated" DEI programs to focus on those with "proven outcomes," according to Bloomberg. Amazon also recently removed or changed some words about its DEI benefits on some of its websites, The Information previously reported.

During the late January staff meeting, Tomsen Bukovec said Amazon consolidated some words and dropped some paragraphs from its DEI websites and blogs. But the company "didn't change the underlying capabilities that people can do, and we did not change any of the commitment that we have to the programs," she said.

She specifically addressed a transgender benefit that Amazon offers and said "we are not making any changes to that."

"We just made some changes to the words, and then I think we deprioritized one or two programs that were not making much of a difference anyway," she added.

Amazon's spokesperson declined to comment on the specifics of this story but shared a link to the company's policy positions that show its commitment "to creating a diverse and inclusive" culture.

The spokesperson also shared a copy of Castleberry's December email that said, "We remain dedicated to delivering inclusive experiences for customers, employees, and communities around the world."

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• Amazon could face a significant impact from Donald Trump's new tariffs on Chinese imports.
• Morgan Stanley estimates Amazon to be the most-exposed among e-commerce companies the bank covers.
• A large chunk of Amazon's third-party sellers are also China-based.

Amazon could be one of the hardest-hit e-commerce retailers by new tariffs on imports from China.

Morgan Stanley wrote in a note on Monday that roughly 25% of the cost of products directly sold by Amazon come from China, exposing them to the new tariffs. Those items sold by Amazon, called first-party merchandise, account for a little less than half of all products sold on Amazon. Third-party merchants sell the rest through Amazon's marketplace.

Amazon's exposure to the tariffs is higher than other e-commerce companies covered by Morgan Stanley. The note estimates that the average exposure to China among those e-commerce companies is a little over 10%. Fashion retailer Revolve had the second-highest exposure among these companies at 22%. Peloton, Etsy, and Figs are estimated to have less than 3% of their products from China.

"AMZN's 1P business & RVLV have the highest exposure while PTON, ETSY & FIGS are at the low end," Morgan Stanley wrote in the note.

US President Donald Trump announced new tariffs on imports from some countries including China over the weekend. That included a 10% tariff on goods from China. He also took aim at a loophole in US customs law, known as the de minimis exemption, that let importers avoid duty and tax on direct shipments from China worth less than $800.

Almost half of Amazon's 10,000 largest third-party sellers are China-based, according to Marketplace Pulse. That means the new tariffs could affect an even bigger share of products sold on Amazon.

Amazon's spokesperson declined to comment.

Morgan Stanley's note on Monday also shared the methodology it used to estimate the China exposure rate. In Amazon's case, it estimates roughly two-thirds of all first-party inventory costs are for non-grocery and consumer products, of which 40% originate from China.

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• Amazon wants fewer managers.
• Internal guidelines for a big sales team at AWS give a glimpse into its plans.
• Amazon's reorg reflects a broader trend in corporate America to trim middle managers.

Amazon's effort to whittle down middle-management is taking shape.

The company recently told some managers to increase their direct reports, make fewer senior hires, and down-level or cut pay for some employees, according to people familiar with the matter and internal guidelines shared with a large sales team at Amazon Web Services.

In September, Amazon CEO Andy Jassy announced a plan to increase the ratio of individual contributors to managers by 15% by the end of March. By reducing management layers, the company hopes to "decrease bureaucracy" and "move fast," Jassy said at the time.

The internal guidelines give an early glimpse into how Amazon intends to complete a management shake-up that could impact thousands of corporate employees. Amazon hasn't shared anything publicly since unveiling plans to have fewer managers last year.

In an email to BI, Amazon's spokesperson said the internal guidance document might be true for a specific team but not for the whole company. Individual units communicate directly with employees as they make changes to their structures under the broad mandate of creating "customer-centric, agile organizations that empower fast decision-making," the spokesperson added.

Minimum 8 direct reports

One key point in the AWS team guidelines document obtained by BI is to put at least 8 direct reports under each manager. The new "span of control" directive is an increase from a minimum of 6 direct reports each manager had in the past, according to the guidelines said.

It's not the first time Amazon has made changes like this. In 2017, Amazon founder and former CEO Jeff Bezos asked every manager to have at least 6 direct reports as part of a plan to "de-layer" the company.

The latest mandate has made some employees concerned enough to ask questions about it. At an internal all-hands meeting in November, Jassy addressed the issue, saying Amazon went on a massive hiring spree during the pandemic, which "stretched" the company and led to slower decision-making, BI previously reported.

"I hate bureaucracy," Jassy said during the meeting.

Amazon's spokesperson told BI that the ideal team size will vary, and no companywide mandate requires all managers to have a certain number of direct reports. The spokesperson added that a full-time employee with one or more direct reports is considered a manager "in title," regardless of the number of direct reports they have.

Pause hiring new managers

The guidelines for the AWS sales team also require pausing new manager hires. This is temporary until the team understands the full ramifications of the organizational change, the guidelines said.

This particular AWS team has discussed hiring fewer middle managers since at least April of last year, according to another internal document obtained by BI. The team found that the hiring pace of middle managers had outpaced entry-level employees in recent years, resulting in increased costs. The document recommended hiring more early-career professionals to shift the team's structure from a "diamond"-shaped organization to a "pyramid" shape where more than half the team is concentrated in lower-level positions.

This trend is happening in other parts of corporate America. Besides Amazon, companies including Meta, Citi, and UPS have made changes to trim supervisory roles. Data from last year showed that companies are cutting middle managers and not backfilling those positions.

Another Amazon internal guideline from September, previously obtained by BI, said the manager reduction plan could result in role eliminations as "organizations may identify roles that are no longer required." In a note published last week, Bank of America analysts estimated that Amazon could save roughly $1.5 billion in annual costs from the manager cuts.

Amazon's spokesperson said the company adjusts hiring based on business needs, and it continues to have open manager roles available. The spokesperson added that there are many ways to reduce the number of managers without terminating them, such as by reconfiguring teams or reassigning employees.

Down leveling

Another aspect of the plan is to down-level some of the managers to individual contributor roles, according to the recent guidelines for the AWS sales team. Two current AWS employees told BI that several managers have been pushed down a level due to the new approach. That meant being moved to a smaller pay band, one of the people said.

One former employee who left recently said the promotion criteria are changing. This person said some AWS teams now require managers to have more people under them to qualify for a promotion.

Amazon's spokesperson told BI that moving from an individual contributor to a manager role, or vice versa, can happen without changing levels. There's no companywide requirement for team size to get promoted as the promotion criteria involve many factors, the spokesperson added.

For several Amazon employees who spoke to BI, the reorganization is creating a bigger problem: a culture of fear. They said managers seem to shy away from taking risks or making hard decisions because they don't want to be held accountable for failures, which could make them a target of the cuts.

"No one wants to be the one that failed," one of the people said.

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• DeepSeek's AI models have taken the tech industry by storm in recent days.
• More than 20 big AWS customers have asked Amazon for access to DeepSeek models: internal document.
• AWS's strategy focuses on offering diverse AI models, unlike competitors that prioritize their own.

Big Amazon cloud customers have been pressing the tech giant to give them access to DeepSeek's AI models, the latest sign of the Chinese startup taking the tech world by storm.

More than 20 key clients of Amazon Web Services asked the company to make DeepSeek models available through Amazon's Bedrock AI development tool this weekend, according to an internal document obtained by Business Insider.

Toyota, Stripe, Cisco, Yelp, and Workday were among AWS customers asking for this access, with many wanting to test and evaluate DeepSeek's AI capabilities internally. Other companies that made similar requests include Mercado Libre and Kellogg, the document showed.

An Amazon spokesperson told BI that Bedrock customers use multiple models to meet their unique needs and the company remains focused on "providing our customers with choice."

"We are always listening to customers to bring the latest emerging and popular models to AWS," the spokesperson said.

Spokespeople for Stripe, Cisco, Yelp, Workday, Toyota, Mercado Libre, and Kellogg didn't respond to requests for comment.

DeepSeek recently rolled out AI models that are on par with, or better than, some of Silicon Valley's top offerings — at a fraction of the cost. Its cheap pricing, strong performance, and compute-efficiency have raised questions about US tech companies' massive spending on competing products.

Tech stocks, including Nvidia, Broadcom, and TSMC, plunged on Monday as investors tried to assess the long-term implications of DeepSeek's initial success.

Amazon shares dropped early on Monday trading, but rallied during the day to end up 0.2%.

The moves highlight Amazon's strategic advantage in the generative AI race. From early on, AWS focused on providing customers with as many AI models as possible through Bedrock, believing that no one model would dominate the market.

That's a contrast to other tech companies, such as OpenAI and Google, which have spent heavily on building their own frontier AI models.

AWS still has an internal AGI team developing its own AI models, and the company unveiled the latest version, Nova, in December. However, Amazon has mostly prioritized offering a range of other AI models through the cloud.

Amazon often makes decisions based on customer feedback, and the company is likely considering making DeepSeek's models available through Bedrock after such a flood of client requests, according to a person familiar with the matter.

One AWS employee told BI that the company is not in "panic" mode over DeepSeek like some other tech companies. If DeepSeek's models are good, "we'll just host it on Bedrock," this person said. They asked not to be identified discussing private matters.

"We expect to see many more models like this — both large and small, proprietary and open-source — excel at different tasks," the Amazon spokesperson told BI, while noting that customers can access some DeepSeek-related products on AWS through tools such as Bedrock.

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• Amazon has restarted the green card application process for foreign workers.
• Amazon paused PERM filings in 2023-2024 due to "labor market conditions."
• The change may signal an improving job market, analysts say.

Amazon has resumed the green card application process for foreign workers, a sign of an improving job market.

In an internal note from late 2024, obtained by Business Insider, Amazon told employees that it planned to reopen PERM processing on January 6, 2025. Amazon had suspended all new PERM filings in 2023 and throughout 2024, BI previously reported.

PERM is part of the US Labor Department's permanent labor certification process and is typically the first step towards getting a green card for a foreign worker. The goal is to prove hiring foreign workers won't impact US job seekers's opportunities, wages, or working conditions.

The note didn't explain why Amazon is resuming the PERM process. But, the change potentially reflects Amazon's outlook for a more competitive job market. It also follows Trump's campaign vow to give green cards to every foreign graduate of US colleges.

"We evaluate our PERM program based on market analysis and have been planning to reopen it for the last 9 months," Amazon's spokesperson said in an email to BI.

'Rebound' from the layoffs

Amazon has been making major job cuts since late 2022, laying off at least 27,000 employees. Just last week, Amazon let go about 200 people from its Fashion and Fitness group, BI reported.

Resuming PERM filings indicate Amazon sees a possible "rebound" in the job market, according to Richard Herman, a Cleveland-based immigration lawyer and founder of the Herman Legal Group.

Herman said some companies previously suspended green card filings due to widespread layoffs and the high cost and time of processing PERMs with the Labor Department.

With PERM, companies have to demonstrate that laid-off employees are not qualified for the jobs intended for foreign workers while also notifying US workers laid off within the past 6 months about the anticipated PERM filing. That costs a lot of money and time.

"If employers are reconsidering getting back into the PERM game, it's because their cost/benefit analysis suggests labor market changes favor a more competitive market in some occupations, justifying the costs/time invested in PERM," Herman said.

Tech companies are still laying off employees and applying more stringent performance reviews. But the hiring trend may improve.

HR software maker Karat said in a 2024 report that average hiring targets for software engineer roles among US tech companies were up 12% year-over-year. Stripe laid off 300 employees earlier this week but said it plans to grow its total head count by roughly 1,000 this year, BI previously reported.

"Tech in the Bay Area is definitely hiring more, and so they have a positive view of what's ahead," Bill Hing, an immigration law professor at the University of San Francisco told BI.

Trump effect

President Donald Trump may be another factor.

During his presidential campaign, Trump mentioned that he would like to give green cards to every foreign graduate of US colleges as part of a plan to attract more skilled immigrants.

That has led to a clash between the Elon Musk-led pro-Trump tech leaders and the hardcore MAGA base over the legal immigration of skilled workers.

While it's possible Trump will commit to his proposal, he hasn't publicly addressed it since then, and some believe he could change his mind. Trump's campaign, in fact, clarified last year that his proposal would only apply to the "most thoroughly" vetted foreign students.

Jennifer Gordon, a labor and immigration law professor at Fordham University, told BI that companies may be trying to anticipate Trump's unpredictable behavior in advance.

Given Trump's past hard-line stance against immigration, Gordon said it's possible the new administration could issue a policy pausing skilled labor immigration applications in the future.

"If I was a tech company, I wouldn't be fully confident that he will follow through," Gordon said.

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• Most Amazon corporate employees started working in the office five days a week in January 2025.
• Some employees reported issues such as lack of desks, full parking lots, and office theft.
• Others are keen to re-connect with colleagues. "You just can't recreate these connections online."

Amazon's five-day return-to-office mandate is off to a bumpy start.

Employees who spoke to Business Insider said the new office policy, which kicked off at the beginning of the year, has resulted in full parking lots, a lack of desks and meeting rooms, and items being stolen from desks.

While some employees praised the new policy as more face-to-face interactions have at times resulted in better collaboration, others say they still spend much of their time on video chats and in other virtual meetings.

BI spoke to seven current Amazon employees about the new office mandate. The employees also shared screenshots of group Slack messages and other private communications.

"Please go back to RTO3," one Amazon employee wrote on Slack, referring to Amazon's previous policy that allowed staff to work two days a week from home. "Or allow employees the option to WFH if they have the proper set up and they are high performers."

That Slack post garnered at least 22 supportive emojis from other Amazon colleagues.

Change is hard

Amazon has 1.5 million workers, of which roughly 350,000 are corporate staff. So those people who are openly complaining about the full RTO experience represent a tiny fraction of the company's workforce.

Some of the complaints may be a natural reaction to what is a drastic change of daily life for thousands of employees who slowly got used to working from home in the pandemic, and now must adjust again to a new reality.

Peter Cappelli, director of Wharton's Center for Human Resources, told BI that forcing employees to return to the office can stoke resentment. But even if management does a poor job with the transition, employees cannot do much because RTO is often "painful." And quitting isn't an option as fewer companies offer remote work these days, he noted.

"Employers have all the power here," Cappelli added.

Some Amazon employees are RTO-happy

Not all Amazon employees are grumpy about working in the office every day of the week.

BI asked Amazon for examples of employees who are positive about the full return to office. The company's press office shared thoughts from two employees.

Rena Palumbo, an Amazon Web Services employee, said re-establishing human connection with colleagues has been important, and she's now more excited about working with them.

Cash Ashley, another AWS employee, said face-to-face interactions have been crucial for building work relationships and creating mentorship opportunities. He said RTO also helps with work-life balance because there's a clear separation between work and home.

"You just can't recreate these connections online," Ashley said.

In an email to BI, Amazon's spokesperson said the company is focused on ensuring the transition is "as smooth as possible."

"While we've heard ideas for improvement from a relatively small number of employees and are working to address those, these anonymous anecdotes don't reflect the sentiment we're hearing from most of our teammates," the spokesperson said. "What we're seeing is great energy across our offices, and we're excited by the innovation, collaboration and connection that we've seen already with our teams working in person together."

CEO Andy Jassy said last year that the new policy is meant to improve team collaboration and "further strengthen" the company's culture. AWS CEO Matt Garman also told employees in October that 9 out of 10 people he spoke to were "excited" about the change.

Lack of desks and meeting rooms

Most of Amazon's corporate employees started following the five-day office return mandate in early January. There are some signs that the company wasn't fully prepared for the logistical challenges.

Some workers found there weren't enough desks and had to track down space in a cafeteria or a hallway, two employees told BI. Others said there weren't enough chairs in offices and meeting rooms.

There's also been a shortage of meeting rooms, one of the people said. Some people got used to speaking openly about private topics while working from home. Now they're surrounded by colleagues in the office, so they are unofficially slipping into meeting rooms and phone rooms to conduct these conversations, this person said. That's clogged up meeting spaces and left some managers having private chats in open areas for everyone in the office to hear.

Full parking and shuttles

Some Amazon employees complained on Slack that when they drove to the office they were turned away because company parking lots were full. Others said they just drove back home, while some staffers found street parking nearby, according to multiple Slack messages seen by BI.

One employee from Amazon's Nashville office said the wait time for a company parking pass is backed up for months, although another staffer there said the company was providing free commuter passes which they described as "incredibly generous."

Another Amazon worker said some colleagues are joining morning work meetings from the road because the flood of extra employees coming to the office is making commutes longer.

Other staffers said they were denied a spot on Amazon shuttle buses because the vehicles were full, according to one of the Slack messages viewed by BI.

Signs of strain

With so many Amazon employees spread out across well over 100 locations around the globe, getting everyone back into an office smoothly is going to take more than a few weeks.

Indeed, Amazon delayed full RTO at dozens of locations, with some postponed to as late as May, due to office capacity issues, BI previously reported. Amazon subsidiaries, such as One Medical and Twitch, have also delayed or received exemptions from the five-day office-return policy, BI reported.

"Our upper 'leadership' has botched this so hard along with so many other things. Makes one wonder what other poor decisions will impact the company in the coming year," an Amazon worker recently wrote on the company's Slack.

Amazon's spokesperson told BI that the company is ready for the vast majority of employees to be back in the office.

"As of early January, the overwhelming majority of our employees have dedicated workspaces and have returned to the office full time," the spokesperson said. "Of the hundreds of offices we have all around the world, there are only a relatively small number that are not quite ready to welcome everyone back a full five days a week."

Office thefts and daily shower reminders

In some cases, basic office etiquette seemed missing as staff returned in the first week or so of January.

Several employees at Amazon's Toronto office complained of their personal belongings being repeatedly stolen from desks, according to the Slack messages.

One person complained that a keyboard and mouse placed on their assigned desk had gone missing, while another urged employees to keep their possessions in a safe place.

"Despite being adults that are well-paid, it's shameful that we can't trust each other with leaving personal belongings unattended," one worker wrote on Slack. An Amazon spokesperson declined to comment when BI specifically asked about this issue.

An office "survival guide"

On Blind, which runs anonymous message boards for corporate employees, Amazon staffers posted an "essential survival guide," offering tips for colleagues coming back to the office.

"Operation: Don't Be The Office Menace" listed several dos and don'ts for working around other people.

"Deploy personal hygiene protocols BEFORE leaving your launch pad (home). Yes, that means actually using the shower you've been avoiding since WFH began," read one piece of advice for office life at Amazon.

Another urged colleagues to keep the toilets tidy. "The bathroom stall is not a 'serverless' environment. Flush after use — it's called 'garbage collection' for a reason."

A third tip focused on the types of shoes to wear in the office. "Footwear is not optional. This isn't a beach sprint retrospective — keep those toes contained in their proper containers (shoes)."

'Very little team discussion'

RTO has been one of Amazon's most contentious issues over the past couple of years. Tens of thousands of Amazon employees signed internal petitions opposing the mandate, while internal Slack channels blew up with questions about the change. Jassy has had to address the issue repeatedly during internal all-hands meetings.

This month, some employees were still questioning the logic behind the policy. They said being in the office has so far had little effect on their work routine and has not generated much of a productivity gain.

A considerable portion of their in-office work is still being done through video calls with customers who are located elsewhere, these employees told BI.

Many Amazon colleagues are based in other office locations, so face-to-face meetings still don't happen very often, they added.

"Very little team discussion while here," one employee wrote on Slack.

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• At Amazon, a shadow advisor is a quasi-chief of staff who joins almost every CEO meeting.
• The position is one of the top jobs at the company.
• Former shadow advisors have gone on to huge roles at Amazon, including Jassy himself.

Amazon CEO Andy Jassy has a new "shadow" advisor, according to an internal organizational chart obtained by Business Insider.

This role is a quasi-chief of staff position at Amazon. Formally called "technical advisor," it's one of the most desirable jobs at the company because this person joins the CEO in almost every meeting and call. It typically lasts about 18 to 24 months.

Shadow advisors often go on to hold top positions at Amazon once their tenure ends. Jassy, for example, was Jeff Bezos's shadow advisor early in his career. Others include Amit Agarwal, Amazon's India chief, and Jay Marine, who leads Prime Video's sports streaming business.

This time, Alex Dunlap has taken on this prized role, the org chart shows.

Dunlap is a 17-year veteran of Amazon Web Services who most recently served as VP of productivity apps. He started as Jassy's shadow advisor in late 2024, replacing Eric Rimling, a logistics VP who was Jassy's shadow since January 2023.

Dunlap's appointment coincides with Amazon's renewed focus on business applications, also known as software-as-a-service. AWS has market-leading cloud infrastructure services, like computing and storage, but has not yet built an equally strong presence in the lucrative SaaS market.

Last year, Amazon moved Colleen Aubrey, a longtime advertising executive, to oversee its business applications group. Dilip Kumar, another high-profile executive who launched Amazon Go stores, is now in charge of Amazon Q, an AI application for developers and other business customers.

AWS has built many business applications throughout the years with mixed results. Bedrock, an AI development tool, and Connect, a call center application, have shown early success. Meanwhile, the file storage app WorkDocs failed to gain much traction, and the app-building software service Honeycode was shut down.

An Amazon spokesperson declined to comment.

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• AWS plans to reduce spending on ZT Systems as it designs more data-center gear in-house.
• AWS has been designing more data-center components itself to improve efficiency.
• AWS remains the largest cloud provider, with significant capital expenditures planned for 2025.

Amazon Web Services plans to cut back on one key supplier as it designs more data-center components in-house.

AWS is scaling down its spending with ZT Systems, an AI-infrastructure company that AMD agreed this year to acquire, Business Insider has learned.

A confidential Amazon document from late last year obtained by BI estimated that AWS spent almost $2 billion last year on ZT Systems, which designs and manufactures server and networking products.

The document said some of AWS's "server and networking racks" were "transitioning" to a custom hardware approach where it designs this equipment itself. This change, the document said, has the "potential to impact spend" with ZT Systems.

Two current AWS employees familiar with the relationship also told BI recently that AWS was reducing spending on ZT Systems. One of the people said the cutback could happen in phases over a long period because ZT Systems is tightly integrated with AWS servers. They asked not to be identified because of confidential agreements.

An AWS spokesperson told BI that the company continued to have a business relationship with ZT Systems.

"Across AWS, we are relentless in our pursuit of lower costs and improved performance for customers, and our approach to our infrastructure is no different," the spokesperson said in an email. Spokespeople for AMD and ZT Systems didn't respond to requests for comment.

AWS has in recent years been using more homegrown data-center components, where it sees an opportunity to save costs and improve efficiency. This helps AWS because it doesn't have to buy as much from outside suppliers that mark up their offerings to make a profit. In turn, AWS can reduce prices for cloud customers. AWS now uses various custom data-center components, including routers and chips.

AWS is the world's largest cloud computing provider, so any change in its spending behavior is closely followed by the tech industry. AWS's spending on individual suppliers can fluctuate, and any one change doesn't mean AWS is pulling back on its data-center investments. In fact, Amazon is expected to spend $75 billion on capital expenditures this year, and even more in 2025, mostly on AWS data centers.

AMD agreed to acquire ZT Systems in August for $4.9 billion. The company is best known for designing and manufacturing server racks and other gear to help run data centers.

AWS could still send in-house designs to ZT to be manufactured. AMD has said it plans to sell ZT Systems' manufacturing business after the acquisition closes.

In recent months some AWS employees have discussed concerns about working too closely with ZT Systems since AWS and AMD offer similar AI-chip products, one of the people said.

AWS has for years been a close partner of AMD. The cloud giant sells cloud access to AMD CPUs but hasn't made AMD's new AI chips available on its cloud servers, partly because of low demand, an AWS executive who talked to BI recently said.

It's relatively common these days for big tech companies to design custom hardware. Nvidia, for example, acquired Mellanox for $6.9 billion in 2019 to offer its own data-center networking infrastructure. Other cloud giants, including Google, also design their own chips and networking gear.

AMD said in August that ZT Systems would help "deliver end-to-end data center AI infrastructure at scale."

"AWS and AMD work together closely, as we continue to make AWS the best place to run AMD silicon," AWS's spokesperson told BI.

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• Andrej Karpathy recently suggested AI could enhance e-book reading with interactive features.
• Amazon may already be thinking about this for its Kindle e-books.
• The company is looking for an applied scientist to improve the reading and publishing experience.

The AI pioneer and OpenAI cofounder Andrej Karpathy thinks AI can significantly improve how people read books. Amazon may already be thinking about how to do this for its Kindle e-books business.

In a series of posts on X this week, Karpathy proposed building an AI application that could read books together with humans, answering questions and generating discussion around the content. He said it would be a "huge hit" if Amazon or some other company built it.

A recent job post by Amazon suggests the tech giant may be doing just that.

Amazon is looking for a senior applied scientist for the "books content experience" team who can leverage "advances in AI to improve the reading experience for Kindle customers," the job post said.

The goal is "unlocking capabilities like analysis, enhancement, curation, moderation, translation, transformation and generation in Books based on Content structure, features, Intent, Synthesis and publisher details," it added.

The role will focus on not just the reading experience but also the broader publishing and distribution space. The Amazon team wants to "streamline the publishing lifecycle, improve digital reading, and empower book publishers through innovative AI tools and solutions to grow their business on Amazon," the job post said.

3 phases

Amazon identified three major phases of the book life cycle and thinks AI could improve each one.

• First up is the publishing part where books are created.
• Second is the reading experience where AI can help build new features and "representation" in books and drive higher reading "engagement."
• The third stage is "reporting" to help improve "sales & business growth," the job post said.

An Amazon spokesperson didn't immediately respond to a request for comment on Friday.

'I love this idea'

There seems to be huge demand for this type of service, based on the response to Karpathy's X post.

Stripe CEO Patrick Collison wrote under the post that it's "annoying" to have to build this AI feature on his own, adding that it would be "awesome when it's super streamlined."

Reddit's cofounder Alexis Ohanian wrote, "I love this idea."

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• Evercore says Amazon Pharmacy's revenue may hit $2 billion this year.
• Interest in Amazon's online pharmacy service rose to 45% in Evercore's survey from 34% last year.
• The US prescription market is worth about $435 billion.

Amazon's online pharmacy business is drawing significantly more customer interest, and it could generate roughly $2 billion in revenue this year, according to the financial firm Evercore.

In a note published last week, the Evercore analyst Mark Mahaney highlighted his firm's recent survey indicating rising interest in and usage of Amazon Pharmacy.

A record 45% of Amazon customers surveyed said they were "extremely interested" or "very interested" in buying online medications from the company, up from 34% last year and from 14% in 2020. The note said it was the largest year-over-year increase in purchase intent for pharmaceuticals among Amazon shoppers in eight years. Evercore ran the survey in June and included 1,100 respondents.

The survey also found that 13% of Amazon customers said they had purchased pharma products from Amazon, compared with 9% last year.

Evercore estimated, based on "several sources," that all this could result in roughly $2 billion in revenue for Amazon's pharmacy business. Business Insider previously reported that Amazon's internal forecast showed its pharmacy business generating $1.8 billion in sales after recording $1.25 billion last year.

Amazon's growth is squeezing retail pharmacy businesses too. On Tuesday, The Wall Street Journal reported that Walgreens was in talks to sell itself to a private-equity firm.

Evercore believes half of Prime membership households will eventually shop for online medications on Amazon, which could result in $33 billion in additional revenue and $1.6 billion in operating income over the next three to five years.

"This inflection in consumer intent to purchase prescriptions online, and on Amazon, may well be a sign of Amazon closing in on a potential Rx market unlock," Mahaney wrote in the note.

Mahaney also wrote that Amazon was aggressively expanding its same-day-delivery service for pharmaceutical products, noting a recent announcement that said it would cover nearly half of US consumers by the end of 2025. He also highlighted the sheer size of the US prescription market, about $435 billion, of which Amazon Pharmacy has penetrated less than 1%.

Amazon's spokesperson declined to comment.

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• Bank of America downgraded AMD on Monday, citing higher competitive risk in the AI market.
• AWS customers' low demand for AMD AI chips and Nvidia dominance impact AMD's growth potential.
• AMD could still succeed due to Nvidia supply issues and its server chip market position.

Bank of America downgraded AMD after a Business Insider report raised concerns about demand for the tech company's AI chips.

Analysts at BofA cut AMD shares to a "neutral," citing "higher competitive risk" in the AI market, according to an analyst note published on Monday.

BofA analysts also lowered their AMD GPU sales forecast for next year to $8 billion, from $8.9 billion, implying a roughly 4% market share.

AMD's stock dropped roughly 5.6% on Monday, after falling about 2% on Friday. Its shares are down about 5% so far this year.

The declines follow BI's report on Friday that said Amazon Web Services was "not yet" seeing strong enough customer demand to deploy AMD's AI chips through its cloud platform.

Bank of America cited this AWS customer-demand issue, alongside Nvidia's dominance and the growing preference for custom chips from Marvell and Broadcom, as factors limiting AMD's growth potential.

"Recently largest cloud customer Amazon strongly indicated its preference for alternative custom (Trainium/ MRVL) and NVDA products, but a lack of strong demand for AMD," the Bank of America note said, referring to AWS's in-house AI chip Trainium and its close partnerships with Marvell and Nvidia.

AWS's spokesperson said in an email to BI, "AWS and AMD work together closely, as we continue to make AWS the best place to run AMD silicon. Based on the success of AMD CPUs on AWS, we are actively looking at offering AMD's AI chips."

An AMD spokesperson didn't respond to a request for comment on Monday.

AMD recently increased its GPU sales forecast, just a year after launching its line of AI chips. But its GPU market share is still far behind Nvidia's.

Bank of America said AMD could still succeed in the AI chip market, in part due to Nvidia's supply constraints and premium pricing, making it a strong alternative, especially for internal cloud workloads. It also said AMD is well positioned in the server chip market, as rival Intel continues to struggle.

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• AWS has not committed to offering cloud access to AMD's AI chips in part due to low customer demand.
• AWS said it was considering offering AMD's new AI chips last year.
• AMD recently increased the sales forecast for its AI chips.

Last year, Amazon Web Service said it was considering offering cloud access to AMD's latest AI chips.

18 months in, the cloud giant still hasn't made any public commitment to AMD's MI300 series.

One reason: low demand.

AWS is not seeing the type of huge customer demand that would lead to selling AMD's AI chips via its cloud service, according to Gadi Hutt, senior director for customer and product engineering at Amazon's chip unit, Annapurna Labs.

"We follow customer demand. If customers have strong indications that those are needed, then there's no reason not to deploy," Hutt told Business Insider at AWS's re:Invent conference this week.

AWS is "not yet" seeing that high demand for AMD's AI chips, he added.

AMD shares dropped roughly 2% after this story first ran.

AMD's line of AI chips has grown since its launch last year. The company recently increased its GPU sales forecast, citing robust demand. However, the chip company still is a long way behind market leader Nvidia.

AWS provides cloud access to other AI chips, such as Nvidia's GPUs. At re:Invent, AWS announced the launch of P6 servers, which come with Nvidia's latest Blackwell GPUs.

AWS and AMD are still close partners, according to Hutt. AWS offers cloud access to AMD's CPU server chips, and AMD's AI chip product line is "always under consideration," he added.

Hutt discussed other topics during the interview, including AWS's relationship with Nvidia, Anthropic, and Intel.

An AMD spokesperson declined to comment.

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Editor's note: This story was first published on December 6, 2024, and was updated later that day to reflect developments in AMD's stock price.