Sales on the website are increasingly from third-party merchants, who pay Amazon fees for listing and shipping their items. That business as a fee collector is also more profitable for Amazon than when it sells items directly from its inventory.
Finally, Amazon’s high-margin ad business reaches more than an estimated $10 billion a year in sales, as it has become almost a necessity for people selling on the website. Amazon has also been building out tools to use consumers’ shopping behavior to target them for ads across the web. Amazon’s “Other” business segment, which it says is largely ads, had $3 billion in sales in the last quarter.
Those profit machines let Amazon spend heavily on the infrastructure for fast delivery or other major pushes that don’t yet produce major revenue, like the Alexa voice assistant. “They have cover with this ad business scaling and A.W.S. as the incredible business it is,” said Mr. Blackledge.
Has the scrutiny in Washington hurt the business?
The pressure in Washington has been ramping up, as lawmakers and regulators focus on antitrust concerns. Amazon had to testify before Congress last week, where an executive was peppered with questions about whether it misuses customer and seller data for its own benefit, and the Justice Department announced this week that it was opening a sweeping antitrust review into big tech companies.
On Wednesday, Facebook disclosed that the Federal Trade Commission had begun a formal antitrust investigation into the social network. The F.T.C. also has taken the lead for antitrust oversight for Amazon.
Investors, so far, aren’t worried. Michael Levine, an analyst at the Pivotal Research Group, said the “risk is remote” that antitrust scrutiny will severely harm Amazon. In a research note, Wedbush Securities echoed that sentiment.
“On balance, we think that a broad movement to break up companies solely because they are large will fail without a change to existing antitrust laws,” the note read. “In order to change the laws, Congress would have to agree to change them, which we view as exceedingly unlikely.”
In a call with reporters on Thursday, Mr. Olsavsky said the company did not comment on regulatory matters. He added that the company’s expectations for the next quarter did “ not include any particular penalties or impact from regulations.”