AWS CEO Stepping Down At Critical Time For Data Center Giant
Amazon Web Services CEO Adam Selipsky is stepping down from his role as the head of the world’s largest cloud company, which has driven a boom in data center development.
Starting next month, Selipsky will hand over the reins of Amazon’s cloud computing division to Matt Garman, who now serves as Amazon’s head of AWS sales, marketing and global services.
The leadership change, set to go into effect June 3, was first reported by The Verge and announced Tuesday morning by Amazon CEO Andy Jassy in a blog post.
“I’d like to thank Adam for everything he’s done to lead AWS over the past three years,” Jassy wrote. “He took over in the middle of the pandemic, which presented a wide array of leadership and business challenges.”
Selipsky’s departure concludes a tenure at the helm of the cloud computing giant that began in 2021. He first joined AWS in 2005 as one of the first vice presidents hired in the division. He then headed sales, marketing and support at AWS for 11 years before departing to take the CEO position at Tableau, a data visualization software firm owned by Salesforce.
As CEO, Selipsky was forced to navigate a period of significant transition for both AWS and the cloud industry as a whole. Taking over amid record growth sparked by pandemic-fueled trends like remote work and streaming, Selipsky soon had to navigate decelerating revenue growth as rising interest rates and other macroeconomic trends tempered cloud spending. These headwinds, along with a range of difficulties faced by parent Amazon, led to multiple rounds of layoffs that continued into this year.
Still, Selipsky oversaw the emergence of AWS as parent Amazon’s most profitable business unit. In the first quarter of this year, AWS’s $9.42B in operating income accounted for around 62% of Amazon’s total.
The final months of Selipsky’s tenure saw AWS increasingly focused on generative AI amid an infrastructure arms race with competitors like Microsoft and Google. Under Selipsky’s leadership, Amazon invested $4B in AI startup Anthropic, with the firm designating AWS as its infrastructure partner — a similar arrangement to Microsoft’s partnership with OpenAI.
He also oversaw record spending on new data centers that cemented AWS as the world’s largest data center user, with the firm now operating more than 125 facilities totaling more than 38M SF globally.
“Given the state of the business and the leadership team, now is an appropriate moment for me to make this transition, and to take the opportunity to spend more time with family for a while, recharge a bit, and create some mental free space to reflect and consider the possibilities,” Selipsky wrote in the company's blog post Tuesday morning.
Garman will take over the head role at AWS after a nearly 19-year career in Amazon’s cloud division. He first joined AWS in 2006 as a product manager, and by 2016 he was the general manager of all AWS compute services. Prior to taking over as head of sales in 2020, he led AWS’ EC2, a cloud computing initiative focused on allowing clients to scale their computing capacity up or down as needed.
Garman has long been considered a likely candidate for the top spot at AWS. Some industry observers had expressed surprise in 2021 when it was Selipsky, not Garman, who was chosen to lead the division after AWS chief Andy Jassy took over as CEO of Amazon following the departure of Jeff Bezos.
“I am more optimistic than I have ever been for the potential for innovation and growth ahead of us, and I look forward to helping us move faster, invent more, and operate as one team to help our customers,” said Garman in a blog post Tuesday morning.
The change in leadership comes at a critical time for AWS.
Although AWS remains the world’s largest cloud provider, accounting for nearly a third of all cloud spending, the emerging generative AI arms race has seen it shed market share to competitors — particularly Microsoft. Microsoft arguably beat AWS to the punch in its pivot toward AI, partnering with OpenAI in 2023 and quickly incorporating the company models into its Azure products. The result: over the past nine months Microsoft has captured an additional 4% of market share compared to AWS, according to data from Synergy Research Group.
AWS is cranking up spending on data centers to support AI and general cloud demand in the months ahead. Speaking on Amazon’s quarterly earnings call in April, CEO Andy Jassy indicated capital expenditures would increase meaningfully from 2023, with the $14B spent in Q1 being the lowest quarterly capex expected this year.
“We expect the combination of AWS' reaccelerating growth and high demand for gen AI to meaningfully increase year-over-year capital expenditures in 2024,” Jassy said. “Given the way the AWS business model works, it’s a positive sign of the future growth. The more demand AWS has, the more we have to procure new data centers, power and hardware.”
This accelerated buildout of new data center capacity adds to what was already a torrent of data center development launched by AWS over the past 18 months. The company plans $35B of new data center buildout in Virginia alone, with a pipeline of large-scale campuses in the works across the state.
Elsewhere, Amazon is planning an $11B data center campus in northern Indiana, as well as a $10B campus in Madison County, Mississippi, that is the largest capital investment in the history of the state. In March, the company acquired a data center campus attached to a nuclear power plant in Pennsylvania in a deal with Talen Energy valued at $650M. AWS has also acquired land for new campuses this year in Ohio and Georgia.
UPDATE, MAY 14, 5:55 P.M. ET: This story has been updated with additional context on AWS and its data center strategy.
