Amazon.com Inc. (AMZN) is one of the largest companies in the world, a leader in e-commerce and cloud computing. It has a market capitalization of $1.25 trillion as of July 22, 2022. Founder Jeff Bezos launched Amazon in 1994 as an online bookstore, but the company expanded quickly to turn into an e-commerce giant selling electronics, apparel, furniture, food, toys, and much more.
Later, Amazon further diversified into cloud computing, video content, music streaming, and groceries. It also builds and sells consumer electronics such as the Kindle and the Echo. For fiscal year 2021, Amazon reported net sales of $469.8 billion and net income of $33.4 billion, up 22% and 56% respectively from fiscal 2020.
The amount Amazon will pay to acquire healthcare provider One Medical (ONEM) in a deal announced July 21, 2022.
Bezos stepped down as Amazon’s chief executive officer (CEO) in July 2021, becoming the executive chair at the company. Andy Jassy succeeded him as CEO. Jassy previously headed Amazon Web Services, the company’s cloud computing business.
Amazon continues to face scrutiny from antitrust regulators. It currently faces a wide-ranging antitrust investigation into its business practices by the Federal Trade Commission (FTC). The FTC’s antitrust probe was reported to be focusing on Amazon Web Services as of December 2021. By May 2022, the probe was also reported to be looking into Amazon’s recently completed acquisition of the MGM Holdings, Inc. and MGM’s Metro-Goldwyn-Mayer Studios Inc., the Hollywood studio producing and distributing feature films and television programming.
Below we look in detail at five of Amazon’s most important acquisitions. The company does not report how much profit or revenue each acquisition currently contributes. We’ve included MGM Holdings’ financial results for fiscal 2020.
Whole Foods Market
- Type of business: Organic grocery store
- Acquisition price: $13.7 billion
- Date purchased: Aug. 28, 2017
Whole Foods is an organic groceries chain with more than 500 stores in the U.S., Canada, and the U.K. Founded in 1978 in Austin, Texas, as SaferWay, Whole Foods claims to be the only national grocer certified as organic by the U.S. Department of Agriculture (USDA).
At the time of its acquisition by Amazon, Whole Foods was an independent company with a market cap of almost $10 billion. It ranked No. 176 on the 2017 Fortune 500 list.
Whole Foods is Amazon’s costliest acquisition to date, and marked the company’s first major expansion into bricks-and-mortar retailing. Since acquiring Whole Foods, Amazon has lowered prices on key food items at the chain previously nicknamed Whole Paycheck, and integrated the grocer’s customer offerings with its Prime service.
However, the acquisition has been slow to pay off for Amazon, as sales have stagnated. Amazon’s physical stores segment, which consists primarily of Whole Foods locations but also includes the company’s Amazon Fresh supermarkets and Amazon Go convenience stores, has seen its revenue decline since 2018, the first full year following Amazon’s Whole Foods acquisition.
- Type of business: Footwear and apparel retailer
- Acquisition price: $1.2 billion
- Date purchased: Nov. 2, 2009
Zappos is an online footwear and apparel merchant. Founded as shoesite.com in 1999, it changed its name to a derivative of ‘zapatos,’ the Spanish word for shoes, soon after. Zappos grew rapidly over the ensuing decade, remaining independent until Amazon agreed in July 2009 to acquire the company for 10 million shares of Amazon common stock while paying $40 million in cash and restricted stock units to Zappos employees. The value of Amazon’s stock increased significantly between the deal’s announcement and closing, boosting the price of the acquisition to $1.2 billion. While Amazon does not provide revenue figures on Zappos, Forbes reported in 2015 that Zappos generated more than $2 billion in revenue annually.
Zappos was Amazon’s first billion-dollar acquisition. In 2020, a congressional report cited internal Amazon correspondence indicating the company viewed Zappos as a competitive threat before acquiring it. Others have reported Amazon launched its own Endless.com online footwear site in 2007 after Zappos rebuffed its initial buyout offer, and operated the business at a loss on terms Zappos would struggle to match before renewing its pursuit of its rival. Amazon shut Endless in 2012.
- Type of business: Robotics
- Acquisition price: $775 million
- Date purchased: March 19, 2012
Kiva Systems, since renamed Amazon Robotics, was one of Amazon’s largest acquisitions at the time. Founded in 2003, the company develops and manufactures robotic systems for a variety of uses, and was independent before Amazon bought it.
In contrast with its other acquisitions, Amazon has not offered Kiva’s products on its e-commerce platform. While Kiva’s role in Amazon’s strategy remains unclear, its specialization in automated storage and retrieval systems could support the company’s logistics operations, which deploy thousands of robots to speed product deliveries to customers.
- Type of business: Online pharmacy
- Acquisition price: $753 million
- Date purchased: September 2018
PillPack is an online pharmacy founded in 2013. Amazon acquired the company in 2018 in an effort to expand into online prescriptions.
Aided by Amazon’s extensive delivery network, the company’s purchase of PillPack allows it to ship prescription medications overnight across the country. Like Whole Foods and Zappos, PillPack has retained its brand under Amazon’s ownership.
- Type of business: Livestreaming video
- Acquisition price: $970 million
- Date it was purchased: Sept. 25, 2014
Twitch Interactive launched its popular video livestreaming platform Twitch in 2011. In July 2014, just prior to Amazon’s acquisition, Twitch had 55 million unique visitors.
Twitch is particularly popular among video gamers, and aided Amazon’s expansion into video games and streaming.
MGM Holdings Inc.
- Type of business: Production and distribution of film and TV content
- Acquisition price: $8.5 billion
- Date purchased: March 17, 2022
- Annual revenue (2020): $1.5 billion
- Annual net income (2020): $33.2 million
MGM, which stands for Metro-Goldwyn-Mayer, is an entertainment company focused on the production and distribution of film and TV content. It was formed in 1924 by the merger of Metro Pictures Corp., Goldwyn Pictures, and Louis B. Mayer Productions. Today, the company owns an extensive library of film and TV content, including the James Bond and Rocky franchises.
Amazon’s second-largest acquisition, trailing only Whole Foods. closed after the deadline for prior regulatory review expired, allowing the acquisition to proceed even as the FTC continued to review it on antitrust grounds. An agency representative said at the time it may yet choose to challenge the deal if the review finds legal grounds to do so.
The MGM deal bolstered Amazon’s Prime Video streaming service, increasing its content inventory. The deal positioned Amazon for continuing competition against media and streaming giants Netflix Inc. (NFLX), Walt Disney Co. (DIS), Comcast Corp. (CMCSA) unit NBCUniversal, Paramount Global (PARA) and Warner Bros. Discovery Inc. (WBD), the new media company formed through the merger of Discovery Inc, and AT&T Inc.’s (T) WarnerMedia unit.
Amazon Diversity & Inclusiveness Transparency
As part of our effort to improve the awareness of the importance of diversity in companies, we have highlighted the transparency of Amazon’s commitment to diversity, inclusiveness, and social responsibility. The below chart illustrates how Amazon reports the diversity of its management and workforce. This shows if Amazon discloses data about the diversity of its board of directors, C-Suite, general management, and employees overall across a variety of markers. We have indicated that transparency with a ✔.
|Amazon Diversity & Inclusiveness Reporting|
|Race||Gender||Ability||Veteran Status||Sexual Orientation|
|Board of Directors|
|General Management||✔ (U.S. Only)||✔|
|Employees||✔ (U.S. Only)||✔|