ACQUISITIONS, GOODWILL, AND ACQUIRED INTANGIBLE ASSETS

2016 Acquisition Activity

During 2016, we acquired certain companies for an aggregate purchase price of $103 million. The primary reason for these acquisitions, none of which were individually material to our consolidated financial statements, was to acquire technologies and know-how to enable Amazon to serve customers more effectively.

2017 Acquisition Activity

On May 12, 2017, we acquired Souq Group Ltd. (“Souq”), an e-commerce company, for approximately $583 million, net of cash acquired, and on August 28, 2017, we acquired Whole Foods Market, a grocery store chain, for approximately $13.2 billion, net of cash acquired. Both acquisitions are intended to expand our retail presence. During 2017, we also acquired certain other companies for an aggregate purchase price of $204 million. The primary reason for our other 2017 acquisitions was to acquire technologies and know-how to enable Amazon to serve customers more effectively.

2018 Acquisition Activity

On April 12, 2018, we acquired Ring Inc. (“Ring”) for cash consideration of approximately $839 million, net of cash acquired, and on September 11, 2018, we acquired PillPack, Inc. (“PillPack”) for cash consideration of approximately $753 million, net of cash acquired, to expand our product and service offerings. During 2018, we also acquired certain other companies for an aggregate purchase price of $57 million. The primary reason for our other 2018 acquisitions was to acquire technologies and know-how to enable Amazon to serve customers more effectively.

Acquisition-related costs were expensed as incurred and were not significant.

Pro forma results of operations have not been presented because the effects of these acquisitions, individually and in the aggregate, were not material to our consolidated results of operations.

Purchase Price Allocation

The aggregate purchase price of these acquisitions was allocated as follows (in millions):



	December 31,
	2016			2017			2018

Purchase Price
Cash paid, net of cash acquired	$	81		$	13,859		$	1,618
Indemnification holdback	22			104			31
	$	103		$	13,963		$	1,649
Allocation
Goodwill	$	60		$	9,501		$	1,228
Intangible assets (1):
Marketing-related	2			1,987			186
Contract-based	1			440			13
Technology-based	53			166			285
Customer-related	1			54			193
	57			2,647			677
Property and equipment	3			3,810			11
Deferred tax assets	17			117			174
Other assets acquired	10			1,858			282
Long-term debt	(5		)	(1,165		)	(176		)
Deferred tax liabilities	(18		)	(961		)	(159		)
Other liabilities assumed	(21		)	(1,844		)	(388		)
	$	103		$	13,963		$	1,649

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(1)	Intangible assets acquired in 2016, 2017, and 2018 have estimated useful lives of between one and seven years, one and twenty-five years, and two and seven years, with weighted-average amortization periods of five years, twenty-one years, and six years.

We determined the estimated fair value of identifiable intangible assets acquired primarily by using the income approach. These assets are included within “Other assets” on our consolidated balance sheets and are being amortized to operating expenses on a straight-line basis over their estimated useful lives.

Goodwill

The goodwill of the acquired companies is primarily related to expected improvements in technology performance and functionality, as well as sales growth from future product and service offerings and new customers, together with certain intangible assets that do not qualify for separate recognition. The goodwill of the acquired companies is generally not deductible for tax purposes. The following summarizes our goodwill activity in 2017 and 2018 by segment (in millions):



	North America			International			AWS			Consolidated
Goodwill - January 1, 2017	$	2,044		$	694		$	1,046		$	3,784
New acquisitions (1)	9,115			368			18			9,501
Other adjustments (2)	6			46			13			65
Goodwill - December 31, 2017	11,165			1,108			1,077			13,350
New acquisitions (1)	1,031			177			20			1,228
Other adjustments (2)	(5		)	(15		)	(10		)	(30		)
Goodwill - December 31, 2018	$	12,191		$	1,270		$	1,087		$	14,548

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(1)	Primarily includes the acquisition of Whole Foods Market in the North America segment and Souq in the International segment in 2017 and the acquisitions of Ring and PillPack in the North America segment in 2018.


(2)	Primarily includes changes in foreign exchange rates.

Intangible Assets

Acquired intangible assets, included within “Other assets” on our consolidated balance sheets, consist of the following (in millions):



	December 31,
	2017							2018
	Acquired Intangibles, Gross (1)		Accumulated Amortization (1)			Acquired Intangibles, Net		Acquired Intangibles, Gross (1)		Accumulated Amortization (1)			Acquired Intangibles, Net		Weighted Average Life Remaining
Marketing-related	$	2,486	$	(418	)	$	2,068	$	2,542	$	(431	)	$	2,111	21.2
Contract-based	1,013		(213		)	800		1,430		(224		)	1,206		12.3
Technology- and content-based	640		(252		)	388		941		(377		)	564		4.6
Customer-related	283		(168		)	115		437		(208		)	229		4.4
Acquired intangibles (2)	$	4,422	$	(1,051	)	$	3,371	$	5,350	$	(1,240	)	$	4,110	15.4

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(1)	Excludes the original cost and accumulated amortization of fully-amortized intangibles.


(2)	Intangible assets have estimated useful lives of between one and twenty-five years.

Amortization expense for acquired intangibles was $287 million, $366 million, and $475 million in 2016, 2017, and 2018. Expected future amortization expense of acquired intangible assets as of December 31, 2018 is as follows (in millions):



Year Ended December 31,
2019	$	511
2020	412
2021	355
2022	323
2023	270
Thereafter	2,217
	$	4,088