Amazon Spent Nearly $23 Billion On R&D Last Year — More Than Any Other U.S. Company

from recode

Tech companies claimed the top five spots in the U.S. for research and development spending again last year, investing a combined total of $76 billion. Amazon was at the top of the list, spending $22.6 billion in 2017, 41 percent more than in 2016 (when it also topped the list).

Amazon has poured resources into AWS, Alexa and technologies like computer vision to support ambitious projects such as the Amazon Go cashierless store of the future. Amazon has also recently been the target of President Trump’s Twitter attacks accusing the company of not paying its share of taxes and for exploiting the U.S. Postal Service.

R&D spending is important not only as it contributes to a company’s own innovation and dominance, but also for its contribution to national productivity, accounting for about 3 percent of the GDP.

Productivity — which in addition to R&D includes other measures like wages and hours worked — has remained mysteriously slow the last few years despite low unemployment and higher profits from major U.S. companies.

Amazon is followed in R&D spending by Alphabet, Intel, Microsoft and Apple.

Facebook rose from 13th place in 2016 to ninth in 2017 as it increased R&D spending 32 percent to $7.8 billion. Part of the spending jump could likely be attributed to Facebook’s Building 8, the company’s secretive hardware research lab.

More here.

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19 Responses to Amazon Spent Nearly $23 Billion On R&D Last Year — More Than Any Other U.S. Company

  1. Luis F Gonzalez Jr April 12, 2018 at 9:00 pm #

    In order to remain competitive and increase growth in the long run companies need to invest tremendous amounts of money in their research and development sector. This is important for reducing costs, increasing quality, and being competitive in the market. Especially in the technology industry, where last year’s model is already considered old and many consumers wouldn’t want it. This is a key factor for companies in order to remain relevant and up to date with their products. Research and development is the most important aspect of a company when it comes to their products and sales.

    Amazon is a conglomerate with billions of fluid capital ready to be used. They have recently started investing about 23 billion dollars into their R&D sector because they realize the outcome will be greater. In other words, the more you invest, the more money you make. Amazon is expanding itself into many different markets and needs to be functioning at a low cost with high profits in order to have market influence in each field. By investing so much money, Amazon has the upper hand by being technologically better and offering more for the same service. For example, their new transportation method of using drones makes firm activities more efficient and productive thus making it more profitable and effective. Big name companies such as UPS and FedEx struggle to keep up with the transitioning corporate world because they invest less money in their R&D, letting them lag behind.

    Amazon isn’t the only player who invests lots of money. Alphabet, Intel, Microsoft and Apple are also realizing the importance of this new trend. The difference is that these four companies are true tech companies who sell or offer service in the technology world. Amazon is more of a retail/ecommerce firm but these four firms are in a more competitive industry. They sell similar products and offer identical services. How do you differentiate yourself? Well, you could release revolutionary tech like Apple accomplished when they successfully revealed the touch screen on IPhone about a decade ago or you could create a service that is more consumer friendly and easer to access like alphabet did with Google and YouTube. These companies aren’t necessarily researching industries they are already in but trying to create new ones such as the streaming age. Amazon is currently investing a lot of capital into this business and are becoming one of the top dogs in that field. Apple could also realize this new activity and start investing in producing original content on their Apple store platform. This would be a good and forward move for Apple and start increasing revenue from multiple venues.

    Not only is investing in R&D good for companies but as well for consumers. The better the technology, the better the product, and the better the offer for consumers. The cheaper it is for firms to produce an item or service, the lower the price it would be for consumers. This is a product of the invisible hand in a capitalistic economy where self-interests brings benefits and positive externalities for society. Amazon is a good example where researching in AI technology in the healthcare sector would be beneficial for citizens in the United States. The prices would decrease and services would be more available at a more accommodating price.

  2. Jacob Abel April 13, 2018 at 1:19 pm #

    The trends laid out in this article I think are pretty positive and I think it comes to no ones surprise that tech companies top the list for R and D spending. Tech companies are obviously doing very well and these numbers only reflect. They also mark that the technologies they have already developed will continue to advance. Amazon being the leader in investment only further shows that they company is further expanding into all areas of business and consumer life. It would probably be a while before we see Amazon anywhere outside of the top 5 of companies. The other interesting trend is that the top 5 companies are all located in Silicon Valley and I am curious to see if any of them are replaced by a company that is not. Ford and GM also top the list and this is probably due to the changing nature of the car industry. Self-driving cars are most likely going to be the way of the future and car companies must respond to this new develop by adopting it.
    The billions upon billions spent by Tech companies clearly outspends any other industry and I am curious to see what comes out of this spending and how much the non tech companies on the list rely on the technologies developed by the major tech companies
    Overall it will be interesting to see what developments come out of all of this R and D spending and how much these companies grow as a result of it.

  3. Damian Mioduszewski April 13, 2018 at 6:33 pm #

    Amazon has been the leading company in innovation in recent years with its amazing customer service and efficiency which can destroy many industries. Amazon has recently been thrown into the spotlight for its accusations that it is effectively a monopoly but one of the main reasons it hasn’t been under for intense pressure is due to the fact it is not very harmful. One of the reasons monopolies have been disliked is due to the fact that it doesn’t promote innovation or competition but this is the opposite of Amazon. Amazon has jumped from industry to industry effectively revolutionizing them but innovating it to make it more effective which helps industry and consumers. Along with helping industries and consumers, It can also help other companies be more effective by showing new strategies and helping promote 3rd parties on their resources. The main point of this article is to show that Amazon has been the leading force in R&D spending larger then even Alphabet. This R&D is immensely helpful in keeping America as the #1 superpower as it helps us to be competitive and Amazon is leading that push which can contradict Donald Trump’s comments on it ruining the American economy. Personally I do believe Amazon should be regulated but should not be completely disintegrated and instead be denied more acquisitions and mergers. Along with the statement amazon’s services and R&D, I do think that is immensely helpful to the American economy and should not be completely ruined by the government. Their interests in improving Alexa and online shopping is also very helpful in just generally evolving and improving the world directly related to consumers.

  4. Nathaniel Valyo April 13, 2018 at 7:16 pm #

    This article is living proof that you must spend money in order to make money. By spending loads of money on research and development, Amazon ensured that the products they are providing for consumers are the very best out there. The belief of “you must spend money to make money” is crucial for any business in order to do well. The thought of it seems paradoxical, but it is just like any investment. What you put in will always be greater than what you put out, assuming what you put the money towards is a strong and educated guess.

    This is better for us consumers for two reasons. First, we get the very best of products, which is obviously good because we are not only getting what we want, but we are getting what we want at the highest possible quality. Secondly, the very best of products in the market prompts us to spend more money, which bolsters the overall economy. Again, this seems like a paradox, because we are spending money in the hopes of an economy with lower prices and more competition. But if we do not spend money, the overall economy will worsen and we, the consumers, will suffer the consequences.

    It is very interesting that of the sixteen companies on the list, ten are technology companies, five of which are the top five companies in the country for research and development spending. This, in my opinion, captures the growing trend of technology companies in the nation perfectly. We have discussed time and time again in class that each and every industry as we know it is going digital, and there is an ever-growing need for tech savvy employees for any and all companies. If spending money as a way of making money is one of the key components of a company, it comes as no surprise that the companies who are best at this are the tech companies, since they are a part of the fastest growing field in the world. These companies recognize the huge need to cater directly to their consumers, and their successes are clearly paying off. Additionally, research and development spending is essential in tech because new and competing products from companies like Amazon, Apple, Samsung, Google and Microsoft are emerging every year, which further prompts the competitors to provide the very best for consumers; the only other option is bankruptcy.

  5. Alan Josefsek April 13, 2018 at 9:16 pm #

    Amazon is undoubtedly one of the largest ecommerce business platforms in the world, and the fact that they have spent much more money on research and development efforts than any other company should come to no surprise. They own many subsidiaries including the following: A9.com, AbeBooks, Alexa Internet, Amazon Books, Amazon Game Studios, Amazon Lab126, Amazon Publishing, Amazon Robotics, Amazon Studios, Amazon Web Services, Audible Inc., Body Labs, Book Depository, Box Office Mojo, Digital Photography Review, Goodreads, Graphiq, Internet Movie Database, Ring Souq.com, Twitch.tv, Whole Foods Market, Woot, and Zappos. These subsidiaries, or sub companies owned by their parent company Amazon, are very research and development intensive. In addition to this, Amazon seems to be trying to become the main company to use for future POS systems, also known as points of sale systems. We see this in their Amazon Go experiment. Is Amazon going to enter the convenience store industry as a competitor to seven eleven? Sure, they can theoretically, but only somebody with a shallow mindset of corporate strategy and operations will believe this is Amazon’s only motive. Based on information that has surfaced over the last few months including a surge in its popularity, the Amazon Go POS is crushing expectations. I believe Amazon is using its Amazon Go store in Seattle, Washington as a proof of concept. This is used to prove the viability of an idea and put it into focus before determining whether or not more money and resources should be directed towards the project. With the success of Amazon Go, it would not make sense for the Amazon corporation to ignore this. If Amazon remains on schedule, I believe they are going to sell their Amazon Go system to other corporations and stores that use in person POS systems. This would eliminate a huge portion of an exponential expense: payroll. While this is unfortunate for the employees in retail around the United States and abroad, it is the future and will occur regardless of the long term expense to employees. For most companies, payroll is anywhere from sixty to eighty percent of a business’s expenditures. So why not eliminate most of this cost?

  6. Ryan Mack April 13, 2018 at 10:44 pm #

    Research and development, or usually just R&D for short, is vital to a company’s growth and innovation but is also important to innovation, productivity and advancement of society overall. It gets us closer to our envisioned future. Many of the products we have today, especially tech and medical, are the products or result of millions of dollars and lots of hours put into research and development. In 2017, tech companies took the top five spots in the United States for research and development spending for a combined total of $76 billion. Amazon held their spot at the top, spending $22.6 billion in 2017. This is a 41 percent increase than what was spent in 2016. Amazon has its foot in almost every market there is, and many companies are fearful that they will get “Amazoned”, that Amazon will enter into and disrupt their market next. Of all the things that Amazon is involved in, they are very focused on developing Amazon Web Services (AWS), Alexa and technologies such as computer vision, which is vital for projects such as Amazon Go, a cashierless/checkout line-less grocery store. Amazon currently operates one in Seattle. It works by having cameras tracking you throughout the store and what you pick up and charges your Amazon account only for what you get. Amazon also plans to use computer vision to develop or improve public safety and home security systems, as well as authentication, autonomous driving, and medical imaging. I find this technology interesting and important for authentication, autonomous driving, and medical imaging, but I’m not to on board with using it as a tracking and surveillance tool. The companies that follow Amazon in Research and Development spending are Alphabet, Intel, Microsoft, and Apple at top 5. Behind them are Johnson & Johnson, Merck, Ford, Facebook, Pfizer, General Motors, Oracle, Cisco, Celgene, Qualcomm, and IBM. R&D is also important to developing medical products, including medicine, medical devices, and even overall treatment methods. There are companies working om developing devices and software that help doctors make more accurate diagnoses. They already utilize IBM’s Watson to help with that. The government also spends on R&D to develop technologies and weapons for defense, though typically it’s with a defense company such as Boeing Defense Space and Security and Lockheed Martin. Not only does research and development contribute to the growth of the economy, but also to the growth of ingenuity, security and the future.

  7. Zachary Corby April 14, 2018 at 11:23 pm #

    Amazon leading the U.S in research and development really does not surprise me, but the amount of money they spend is a little shocking. 22 billion dollars is a ton of money to be investing into trying to develop new products, but it is what Amazon has built themselves up on. The company continues to sacrifice profits for power in the market, and this stat only supports that argument. Amazon is more concerned at looking forward to the future and what could generate huge future profits rather than what can temporarily bring in more profits. The idea of a cashier less store is something that is particularly interesting and I believe completely worth investing in. We have already seen self checkout aisles in almost every supermarket in the U.S, making a whole store full of them would help cut down jobs and save money. Especially with the acquisition of whole foods, this idea seems like it could come to fruition rather quickly so it definitely is worth researching more. What is a little peculiar to me is that the article states that this 22 billion in research and development is 41 percent more then last year. That makes it seem suspicious as if they are planning something very big, but since it is Amazon I guess that number is justifiable. Still that is a huge increase in one year even for a company as powerful as Amazon. I am curious to see how the companies behind them like alphabet and apple choose to respond to this. Investors could be worried long term that they are not spending enough money in research and development and it could create an arms race.
    It is important to understand from reading this article how hard it is going to be for Trump and the Department of Justice to breakup Amazon as a trust because of the implications it will have on the rest of the economy. All of the research they are doing are helping other businesses to make more money, and destroying Amazon would hurt them. The fact that it is for research makes it interesting, because innovation is typically good for the market and the consumers. It allows for new markets to be created, and lower prices while creating better services for consumers. If Amazon is also putting that much money back into the economy and research, it will be hard to find Amazon as a trust. With their profits being lower, and them reinvesting their money into the market it gives an appealing argument to Amazon on why they should not be broken up.
    I fully expect this number to continue growing each and every year moving forward. Amazon has continually proved that they will always be willing to spend the big bucks on innovation, and will sacrifice profit in order to do so. People seem to have complete trust in whatever Amazon does, and given that people are willing to pay so much for their stock they have the resources to do so. In the long run this may pay off for Amazon, and the amount of money they put in to research and development shows their growing power over the market.

  8. Timothy Guerrero April 16, 2018 at 12:43 pm #

    This articles just sheds more light on the absolute dominance Amazon has exhibited as a result of innovation and investment into technological advancements. We’ve discussed several times in class how Amazon is practicing absurdly innovative things such as drone technology and its seamless integration with Whole Foods, however, this article exhibits just how extensive Amazon is in striving for innovations, as it seems as though this is how they believe they will not only remain as, rather become an even bigger powerhouse on the world’s stage. As one constituent commented above – $22 billion is a lot of money. It’s about 7 times the net worth of the businessman defunct President of the United States, Donald Trump, which is a perfect segway as to the implications surrounding his attacks on Amazon. President Trump has recently gone after Amazon for unfair usage of the United States Postal Service and claims that there are perhaps billions of unpaid taxes on behalf of the Seattle based giant. There is more substance to the story, as many argue that this is more of a strike on Amazon CEO Jeff Bezos and how he also operates The Washington Post, an outlet Trump has cited as fake news and criticizes often. This makes us wonder just to what extent the President has on affecting businesses, especially the giants such as Amazon, and how Amazon will respond. By the looks of this chart, we can only assume they’ll further invest in innovation, and slowly cripple smaller businesses in the names of technology and convenience.

  9. Nicholas Marinelli April 19, 2018 at 4:54 pm #

    Amazon is one of the most influential, powerful, and well-known companies in the world. They are exceptional in the field of technological innovation and development, and as the numbers show they are the country’s largest spending R&D company; with a whopping $22.6B spent on R&D, Amazon is leading the way by $6B.
    There is no doubt that Amazon would be on the forefront and in the lead when it comes to this department. Essentially, they are known for their innovational products and their ideas that serve for the customer; consumer behavior is something they clearly specialize in and want the customer to be on the top priority.
    When taking a look at that list provided by Recode, it is important to note that 10 out of the 16 companies there are technology companies. That means companies such as Amazon, Google, Intel, Microsoft, Apple, and Facebook are doing more research and development than healthcare and medical companies. These tech companies are doing more research into our consumer wants and data, than companies trying to cure diseases and cancers. This is alarming and shows where the “money is” in today’s society. There is more of a profit to be found in creating innovation and collect data than there is trying to find a cure for cancer.
    If you look at Amazon, there is no doubt that they are the nation’s number 1 R&D company for a reason. They have a website that is probably used just as much as Facebook, while staying out of the spotlight and understand the consumer better than any other company on that list. They have gone to great lengths to develop such technologies that just a few years ago were believed to be unimaginable. They have created a store with seamless interaction and no cashiers- something only thought of in movies. They have taken pages out of books and scenes from movies to create Bezos’ world- all due to the extensive research, development, and capital put into becoming the world’s number one company.

  10. Connor Wiedeman April 20, 2018 at 8:42 pm #

    Amazon is an American corporate titan with significant market share in multiple different industries, most notably for dominating the online shopping industry. With countless services and products to offer to consumers, they are a household name and a force to be reckoned with. As the article states, Amazon has topped the list of research and development spending for two years in a row, beating out other companies with endlessly deep pockets such as Apple, Microsoft, and Google. This is not a surprising statistic taking into account Amazons history of branching out and innovating. In order for them to continue their expansion, it requires them to sink billions of dollars into research and development. Amazon also has a track record of coming out with many new services and products without much downtime. They constantly are working on a big project such as their cashier-less stores, echo, and Fire stick.
    While Amazon continues to be a growing and expanding business after so many years, people have begun to speculate on how much longer until they start to slow down. While people attempt to make their arguments on Amazons limited further potential, Amazon has indicated that they have other plans for further growth judging by the fortune they are spending on research and development. An interesting factor mentioned in the article is Trump’s role in Amazons value. He has repeatedly voiced his negative opinion about Amazon through his twitter account which directly results in Amazons stock value dropping significantly. His main complaints and accusations regarding Amazons are that they have been exploiting the United States Postal Service, and that they do not pay their fair share of taxes. He has made claims that they are “doing great damage to tax paying retailers” and that “Towns, cities, and states throughout the US are being hurt- many jobs being lost!” These types of remarks by a person such as the President of the United States can have a tremendous impact on a company’s stock, as seen with Amazon, although their stock always bounces back. People speculate why this is but in my opinion, people know that Amazon is a pioneer company and will continue to find a way to change the American household.

  11. Frank Mabalatan April 21, 2018 at 1:09 am #

    What has allowed Amazon to propel itself into a dimension of market success is the vision of the company in its work. Amazon’s allocation of $76 billion into their research and development work is a reflection of their consistent belief that their company will remain relevant and a leader for the years to come. Having an R&D budget of this magnitude may turn off several companies because it does not immediately produce a stream of revenue, but it is because of this budget that Amazon has reached a level of innovation and technological advancement that other companies can only dream of. Results of their research have led to Amazon entering new markets and establishing itself as a legitimate player in said market. It takes a lot for a company to sacrifice its immediate revenue for an opportunity to improve upon itself and secure its future.
    Amazon has taken strides in revolutionizing the grocery industry by launching their new franchise, Amazon Go, in which there are no cashiers and users can free buy items by walking out with them. This would not be possible if Amazon did not devote the time and funds to experiment and design a method in which this free-flowing method could actually work. To challenge an established societal norm such as the cashier as a company involves a lot of trust and determination in the R&D process, but Amazon has proved time and time again that these sacrifices pay off because it pushes the market and the competition within it to greater heights. While productivity has slowed at the company, I believe these valleys in production are necessary for any company to progress and improve upon itself so that it may continue to set a standard for the rest of the economy to meet. Amazon is a leader of industry and leaders exist to bring out the best in other market competitors and with Amazon’s R&D budget, its competition has to do a lot to catch up.

  12. Mark Marino April 25, 2018 at 6:14 pm #

    Research and Development also known as R&D is a very crucial part in a growing company. This is an investment back into a company that allows them to grow. In areas such as the technology industry, writing new code, and developing their services overall. In the case of Facebook, this may include where they will sell out data. Anyway, Amazon uses their R&D to boost their Amazon Web Services portion of the company. AWS is a piece of Amazon for which many people have no idea even exists. This is the mobile storage, website development, and coding portion of the company. With millions and perhaps billions of terabytes of data, Amazon has one of the largest databases in the world. Amazon Web Services is the database for which streaming services such as Netflix works off of. The extent of Amazon must do for maintenance and the development of AWS is tremendous and most of the $23 billion spent goes to their service.
    Amazon also has their cashier-less stores for which they put a good portion of their R&D into. Amazon also has their fights with the shipping services. Amazon is developing their own services, so they do not have to rely on the post office. This also includes planes, trucks, delivery vehicles and a staff. Their services will eliminate the use of USPS, UPS, and FedEx, saving Amazon millions a year. Amazon has emerged from a book selling company to a company that literally does anything. Amazon rose to the most innovative tech company with Facebook and Google’s Alphabet behind their heels. Previously, Apple has held the top spot in the tech industry with physical hardware but has moved to more software based.
    Amazon has tough competition with Google and Facebook becoming larger technology companies by the minute. Amazon and these other companies need to put their efforts into R&D, it will be the only thing that keeps them going. Innovative ideas in a exponentially growing industry is the importance to survival. With Facebook and Google on their heels, I think that Amazon will be the force to be reckon with when it comes to these companies competing for market share.

  13. Coby Dunn April 26, 2018 at 12:00 am #

    When you spend money, you make money. This has been the case for tech companies, and their investments in R&D. I think these recent trend in spending says something about the course our country is going to take. If tech companies are pouring money into research we should expect to see new developements and technology emerging. What does this investment mean for smaller companies though? Amazon, alphabet, intel, and other big companies may be benefitting from this trend in investment, but smaller companies could be feeling pressure. They obviously cannot keep up with the billions that larger companies are spending, so they are going to face a serious problem. They are going to get left behind in this race for research and technology. One trend im noticing is that Amazon is investing a lot into their cashierless stores. What is this going to mean for low wage jobs? Are other companies going to follow this trend? The money has already been spent, and these companies are going to continue to spend in this pattern. The future is here, and I think its going to look a lot different. Amazon is setting the trend, and I think big companies are heading towards more humanless applications. We see this with AI developement, and again, cashierless stores. Most grocery stores even offer online shopping. You can have your groceries delivered to your front door. This research and developement is eliminating the need for employees. So, less wage expenses, and more people using these new services, these big tech companies are making more money than ever. So, the more you spend, the more you make.

  14. Gabrielle Pietanza April 26, 2018 at 12:06 pm #

    I am not surprised to learn that it is the technology companies that are the ones that claim the top spots in the ranking which regards to money being spent on research and development. Technology is an entity that is ever growing and changing and so companies must continue to develop their products in order to stay competitive in their respective market. Other companies which rate on the top of the list for high research and development spending include Alphabet (Google), Intel, Microsoft, and Apple. Facebook is also jumping many companies becoming a large player when it comes to these practices. Technology is ever changing thus a great deal of development is required by these companies. Research and development assists in the growth of companies, products, and the national economy as a whole. All companies in some capacity use the practice of research and development to improve their business practices and to stay competitive.

    Amazon specifically is an overarching power which has a hand in many aspects of business. Their countless subsidiaries require a great deal of research and development in order for Amazon to gauge and ensure the effectiveness and profitability of each branch of their company. With that said this company more than others must complete a great deal of research and development in order to determine which opportunities are beneficial and which are not helping them. Due to their structure, other companies struggle to keep up and compete with Amazon. There mere size and consumer base are pieces that some other companies cannot fathom. For this reason I do not foresee a time when Amazon is not among the top companies in research and development. In order for Amazon to continue growing and making profits they must spend money in the way of research and development in order to understand the wants and needs of their customers. As they continue to make individuals happy they will continue to make the money they spend back. As the article mentions, these practices account for approximately three percent of the GDP and so, research and development does not only contribute to a company’s innovation, yet also for national productivity.

  15. Mary Margaret Miller April 27, 2018 at 2:00 pm #

    It can only be inferred and implied that Amazon is using their research and development money to become more powerful. Amazon can already be classified as a monopoly since it is hurting multiple markets, such as retail and the postal market. Since adding Alexa and artificial intelligence to their business, the company’s revenue has increased by $700 billion and is only expected to rise. Each second, 35 orders are made on Amazon’s site, and we can only project that the number will rise to above 100 sooner than we know it.
    Could their amount of spending hint that the company is not allocating their funds ethically? In other terms, could it mean that Amazon could be on their way to a type of breach that Facebook had not too long ago? According to analytics, companies like Amazon can determine the type of individual you are based on your purchase history. Algorithms are what decodes the messages, and assists with companies interpreting who we as consumers truly are. A case that came up a few years ago occurred between Target, a 14 year old, and her father. Since the 14 year old had purchased a pregnancy test from their store, she was beginning to receive coupons from Target for diapers, formula, and other necessities. Her father became infuriated and tried to take Target to court. It turns out that the 14 year old was in fact pregnant but did not tell her father about it. Her father then issued an apology to the company explaining how he was sorry for him attempting to go after them. This case further revealed that Target kept more tabs on their shoppers than anyone could bargain for, and it turned out that they were able to tell based on analytics whether or not you were divorced, your credit background, whether or not you are married, etc. If Amazon is spending more on the research and development side of the company, could it very well be possible that Amazon owns that much data on us as well? Since the government still has yet to intervene with Amazon and its monopolistic tendencies, only time will be able to tell what they are truly up to.
    It is interesting that the article concludes with the mentions of Facebook’s expenditures for research and development are on a “secretive software.” Considering Facebook is under fire for exploiting the rights of billions of users, it sparks an investigation to determine what their “secret software” will consist of. Facebook is loosely watched by the government since the government itself is unable to comprehend the amount of power Facebook truly has. After downloading my data from Facebook, I found that they owned more information about me than I thought, and saw how powerful the company really is. Since Amazon is allocating their finances heavily in this area, it could be highly possible that they are planning to take even more control over the market.
    https://www.marketwatch.com/story/amazon-heads-toward-700-billion-valuation-thanks-to-alexa-aws-and-tax-gains-2018-02-01
    https://www.forbes.com/sites/kashmirhill/2012/02/16/how-target-figured-out-a-teen-girl-was-pregnant-before-her-father-did/2/#4e99179547e8

  16. Grace April 27, 2018 at 2:06 pm #

    Amazon is one of largest companies in the United States with a net worth of 702.46 billion dollars. Furthermore, it is not surprising that Amazon spent the most money on research and development with a whopping 23 billion dollars in 2017 alone. Amazon also has a variety of services, including their food delivery service. Moreover, Amazon’s services allows consumers to buy anything they could ever need in one place and with a quick delivery time. Personally, I use my sister’s amazon prime account because it offers two-day delivery and it is perfect for when I need something quickly. I have to raise the question, why did amazon increase their research and development budget by 41 percent in one year.
    Amazon has a project in the works, Amazon Go cashier less stores, which allows consumers to grab what they need without the need to pay at a cash register. Alternately, the customers are able to scan their phone upon entering the store, pick out the products they need and be automatically charged as they walk out the door. Amazon is stilling testing the stores, with only a couple in service now, Amazon has hopes to open another six by the end of this year, according to recode. Although this service would revolutionize the tech industry, it will cause a serve damage to the cashier and service industries. As of now, there were more than 3.5 million cashier jobs in the US in 2016. What will happen to those workers if more companies adapt the Amazon Go stores business model and technologies. Amazon spent over a year researching and developing the glitches the Amazon stores had before opening their first store in Seattle and spent a large amount of money toward its technology.
    The article presented a graph of that showed the amount of money each company spent on their research and development for the past year. The first five companies, who’s research and development costs were between 11.6 billion to 22.6 billion dollars, where all tech companies. In addition, out of the 16 companies listed 10 were tech companies. I believe that tech companies need to spent more money on their research and development because it is more costly to create the innovative technology their firm needs to stay ahead. However, research and development spending is important to the country in terms of national productivity as it accounts for 3 percent of the nation’s GDP (gross domestic product). Overall, consumers benefit from research and development spending because they are given more options when companies create innovative services and or products.

  17. M. R. May 18, 2018 at 12:59 pm #

    Amazon is one of the largest and fastest growing company in the years. Even though it is not one of the leading companies in technology, it definitely wants to be able to compete and possibly position itself among the top ones. For Amazon to be able to compete with other technology companies in the industry, they have to invest a large amount of money in Research and Development. There is a great demand for new innovation. Especially any type of technology that would make life of consumers easier. With this is mind, it does not come to a surprise that Amazon dedicated a huge amount of its profits to R&D. Nevertheless, on its annual reports, Amazon describe the R&D cost using the term “Technology and Content” not R&D. So, what is actually included under the amounts reported by Amazon? According to Amazon, the following costs are reflected in its annual reports under Technology and Content. “Costs include payroll and related expenses for employees involved in the research and development of new and existing products and services, development, design, and maintenance of our websites, curation and display of products and services made available on our websites, and infrastructure costs. Infrastructure costs include servers, networking equipment, and data center related depreciation, rent, utilities, and other expenses necessary to support AWS [Amazon Web Services], as well as these and other efforts. Collectively, these costs reflect the investments we make in order to offer a wide variety of products and services to our customers.” (SEC).In order to understand how amazon came to this conclusion, let see the rule and how the R&D cost is classified under the government rule. According to the FASB Accounting Standards Codification 730 (FASB), Research and Development activities is directed at evolving a new product, service, process or technique or making a major upgrading to an existing one. The R&D definition used by Amazon is definitely different from the ASC 730.
    Amazon’s explanation of the cost reported under “Technology and Content” evidently merges the major and routine. By comparing Amazon description and ASC 730, it is obvious to see that Amazon is including costs that perhaps is not necessarily categorized under R&D cost. For instance, maintenance for their website might not classified under this category. Perhaps it might be difficult for a company like Amazon to separate R&D from maintenance work. These types of cost might be some of the reasons for Amazon reporting a huge amount of investment under “Technology and Content.” Taking all these into consideration, it is clear to say that Amazon might not be a far away from the R&D costs from its competitor such as Facebook, Microsoft, Alphabet and Apple to mention just few major companies. In the near future, it should not be a surprise if Amazon continues to rank among the top companies spending large amount of money in Research and Development costs. Amazon’s expectations in the future years to come conquer the technology industry.

    https://www.sec.gov/Archives/edgar/data/1018724/000101872418000005/amzn-20171231x10k.htm

    https://www.iasplus.com/en-us/standards/fasb/expenses/asc730

  18. Jacob McDougall May 18, 2018 at 7:21 pm #

    Looking at the big picture, it is not very surprising to see that Amazon spent the most money on R&D last year. Amazon can still be considered a relatively new company since its time being a main player in the tech field is quite short. Amazon has been constantly adjusting/expanding its target markets in the past few years to attract virtually every online shopper. Amazon produced “Alexa” in order to compete with Apple’s “Siri” and it has proven to do extremely well for the company. Americans are attracted to Alexa because they do not need to be on a device at all in order to utilize the technology – they simply just say “Alexa…put ___ on the shopping list” and it’s done. In addition to Alexa, their investments in retail spaces like Amazon Books and Amazon Go are definitely groundbreaking, especially Amazon Go.

    Amazon Go is an unprecedented idea that no other company has been able to accomplish in the past. I had the opportunity to travel to Seattle for work a couple of weeks ago and I actually visited the Amazon Go store. It felt extremely strange being able to just check into a grocery store, take my desired grocery products off of the shelf, and simply use walk out. Even though it felt strange at first, there is not a doubt in my mind that this is what American consumerism’s future looks like. As the pace of peoples’ lives isn’t getting any slower, it only seems applicable that markets like Amazon Go will be many shoppers’ “go-to” location on the way home from work to pick up dinner. It allows you to get in and get out, and it still allows consumers to not feel as if they are being constantly monitored like they are. The store has thousands of cameras hanging above the retail space constantly seeing what consumers pick up and/or put back on/off of the shelves, along with sensors that allow for the company to accurately send a bill to its customers upon SECONDS once they leave. That is incredible.

    Overall, it is clear that Amazon has gotten a hold of the “spend money to make money” mentality, and so far it is working for them. They are one of the fastest growing corporations in the world and they are creating thousands of new jobs and opportunities within in the United States alone. Amazon’s integration into consumers’ daily lives has become a way of life, and not just an online shopping experience. Especially living in a very densely populated state like New Jersey (where Amazon has several warehouses and distribution centers), I find myself almost reliant on Amazon prime to get what I need when I need it. And since there are Amazon distribution centers in multiple NJ cities, it is very common that when I place an order I can expect to find the merchandise I purchased at my doorstep in less than 24 hours. It is clear that Amazon is able to make big changes much faster than its competitors because it is putting the money and time required to receive enough credible feedback in order to give the market what it wants – ultimately more convenience. Not only are these investments by Amazon helping boost their own profits, but it is helping the United States’ GDP rise, since R&D accounts for around 3% of GDP (despite what our current president may think). However, with great success also comes great scrutiny. I think it is extremely important to pay close attention to the financial statements like this big players like Amazon, Apple, IBM, and Microsoft in order to make sure they are truly paying their fair share of taxes. Amazon’s competitors are going to have to make some drastic changes in order to catch up with Amazon’s quick intuitive launches of new technologies. Until that happens, I think we can expect a lot more to come from Amazon in the near future.

  19. Gary Dinmore June 8, 2018 at 2:15 pm #

    R&D is a very broad developmental process of a company, it is the backbone of creation and growth and can contribute to finding solutions for most of the issues companies face. For example, Facebook’s R&D increased a tremendous amount since 2016 moving from 13th place overall to ninth. The article states that a large factor of the increase in research and development spending was for Facebook’s new factory for hardware research, but I beg to differ. Facebook has been targeted greatly over the past decade or so about privacy regulation discrepancies and user data selling controversies; for this reason, I do not believe it is too far-fetched to trust that a large portion of research has been put into developing new methods to protect user data and cover any liabilities that may come their way in the misuse of data form.

    The article’s main focus is Amazon because of their impressive ranking as #1 among all companies in the U.S. by the R&D department. Recently Amazon has been placing a large portion of their money into Alexa devices and appliances and firestick television stream decks. This year’s super bowl commercials had a large amount of Amazon, and it shows how much they are working on these specific products. The Alexa, for instance, has had 3 fully restored upgrades done to it over the past 3 years and seems to have a new appliance for it added every couple of weeks. With the number of products, they have been churning out recently, not to mention the warehouse innovations they have been making, it is no surprise that R&D is their most heavily spent department.

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