10-Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 ____________________________________

FORM 10-Q

____________________________________ 

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to             .

Commission File No. 000-22513

____________________________________

AMAZON.COM, INC.

(Exact name of registrant as specified in its charter)

 ____________________________________

Delaware	91-1646860
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

410 Terry Avenue North, Seattle, Washington 98109-5210

(206) 266-1000

(Address and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, par value $.01 per share	AMZN	Nasdaq Global Select Market

____________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

10,187,554,818 shares of common stock, par value $0.01 per share, outstanding as of July 20, 2022

Table of Contents

AMAZON.COM, INC.

FORM 10-Q

For the Quarterly Period Ended June 30, 2022

INDEX

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Consolidated Statements of Cash Flows	3
	Consolidated Statements of Operations	4
	Consolidated Statements of Comprehensive Income (Loss)	5
	Consolidated Balance Sheets	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	33
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibits	45
Signatures		46

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

AMAZON.COM, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,				Twelve Months Ended June 30,
	2021		2022		2021		2022		2021		2022
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD	$	34,155	$	36,599	$	42,377	$	36,477	$	37,842	$	40,667
OPERATING ACTIVITIES:
Net income (loss)	7,778		(2,028)		15,885		(5,872)		29,438		11,607
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation and amortization of property and equipment and capitalized content costs, operating lease assets, and other	8,038		9,594		15,546		18,572		29,687		37,322
Stock-based compensation	3,591		5,209		5,897		8,459		10,747		15,319
Other operating expense (income), net	18		122		48		337		(372)		426
Other expense (income), net	(1,258)		6,104		(2,714)		14,793		(5,092)		3,201
Deferred income taxes	701		(1,955)		2,404		(3,956)		1,063		(6,670)
Changes in operating assets and liabilities:
Inventories	(209)		(3,890)		(513)		(6,504)		(4,082)		(15,478)
Accounts receivable, net and other	(4,462)		(6,799)		(6,717)		(8,315)		(13,294)		(19,761)
Accounts payable	47		3,699		(8,219)		(5,681)		8,689		6,140
Accrued expenses and other	(1,685)		(1,412)		(5,745)		(7,315)		1,071		553
Unearned revenue	156		321		1,056		1,657		1,467		2,915
Net cash provided by (used in) operating activities	12,715		8,965		16,928		6,175		59,322		35,574
INVESTING ACTIVITIES:
Purchases of property and equipment	(14,288)		(15,724)		(26,370)		(30,675)		(52,256)		(65,358)
Proceeds from property and equipment sales and incentives	1,300		1,626		2,195		2,835		5,080		6,297
Acquisitions, net of cash acquired, and other	(320)		(259)		(950)		(6,600)		(3,066)		(7,635)
Sales and maturities of marketable securities	13,213		2,608		31,039		25,361		61,512		53,706
Purchases of marketable securities	(21,985)		(329)		(36,660)		(2,093)		(74,929)		(25,590)
Net cash provided by (used in) investing activities	(22,080)		(12,078)		(30,746)		(11,172)		(63,659)		(38,580)
FINANCING ACTIVITIES:
Common stock repurchased	—		(3,334)		—		(6,000)		—		(6,000)
Proceeds from short-term debt, and other	1,176		4,865		3,102		18,608		6,848		23,462
Repayments of short-term debt, and other	(1,176)		(7,610)		(3,177)		(13,841)		(6,817)		(18,417)
Proceeds from long-term debt	18,516		12,824		18,627		12,824		19,158		13,200
Repayments of long-term debt	(41)		(1)		(80)		(1)		(1,392)		(1,511)
Principal repayments of finance leases	(2,804)		(2,059)		(6,210)		(4,836)		(11,435)		(9,789)
Principal repayments of financing obligations	(28)		(59)		(95)		(138)		(116)		(205)
Net cash provided by (used in) financing activities	15,643		4,626		12,167		6,616		6,246		740
Foreign currency effect on cash, cash equivalents, and restricted cash	234		(412)		(59)		(396)		916		(701)
Net increase (decrease) in cash, cash equivalents, and restricted cash	6,512		1,101		(1,710)		1,223		2,825		(2,967)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD	$	40,667	$	37,700	$	40,667	$	37,700	$	40,667	$	37,700

See accompanying notes to consolidated financial statements.

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AMAZON.COM, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

(unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2022		2021		2022
Net product sales	$	58,004	$	56,575	$	115,495	$	113,030
Net service sales	55,076		64,659		106,103		124,648
Total net sales	113,080		121,234		221,598		237,678
Operating expenses:
Cost of sales	64,176		66,424		126,579		132,923
Fulfillment	17,638		20,342		34,168		40,613
Technology and content	13,871		18,072		26,359		32,914
Sales and marketing	7,524		10,086		13,731		18,406
General and administrative	2,158		2,903		4,145		5,497
Other operating expense (income), net	11		90		49		339
Total operating expenses	105,378		117,917		205,031		230,692
Operating income	7,702		3,317		16,567		6,986
Interest income	106		159		211		267
Interest expense	(435)		(584)		(834)		(1,056)
Other income (expense), net	1,261		(5,545)		2,958		(14,115)
Total non-operating income (expense)	932		(5,970)		2,335		(14,904)
Income (loss) before income taxes	8,634		(2,653)		18,902		(7,918)
Benefit (provision) for income taxes	(868)		637		(3,024)		2,059
Equity-method investment activity, net of tax	12		(12)		7		(13)
Net income (loss)	$	7,778	$	(2,028)	$	15,885	$	(5,872)
Basic earnings per share	$	0.77	$	(0.20)	$	1.57	$	(0.58)
Diluted earnings per share	$	0.76	$	(0.20)	$	1.55	$	(0.58)
Weighted-average shares used in computation of earnings per share:
Basic	10,103		10,175		10,089		10,173
Diluted	10,286		10,175		10,276		10,173

See accompanying notes to consolidated financial statements.

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AMAZON.COM, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions)

(unaudited) 

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2022		2021		2022
Net income (loss)	$	7,778	$	(2,028)	$	15,885	$	(5,872)
Other comprehensive income (loss):
Foreign currency translation adjustments, net of tax of $(17), $76, $(4), and $60	159		(2,186)		(215)		(2,519)
Net change in unrealized gains (losses) on available-for-sale debt securities:
Unrealized gains (losses), net of tax of $(2), $0, $28, and $1	(6)		(238)		(104)		(900)
Reclassification adjustment for losses (gains) included in “Other income (expense), net,” net of tax of $4, $0, $8, and $0	(12)		7		(26)		13
Net unrealized gains (losses) on available-for-sale debt securities	(18)		(231)		(130)		(887)
Total other comprehensive income (loss)	141		(2,417)		(345)		(3,406)
Comprehensive income (loss)	$	7,919	$	(4,445)	$	15,540	$	(9,278)

See accompanying notes to consolidated financial statements.

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AMAZON.COM, INC.

CONSOLIDATED BALANCE SHEETS

(in millions, except per share data) 

	December 31, 2021		June 30, 2022
			(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	36,220	$	37,478
Marketable securities	59,829		23,232
Inventories	32,640		38,153
Accounts receivable, net and other	32,891		34,804
Total current assets	161,580		133,667
Property and equipment, net	160,281		173,706
Operating leases	56,082		58,430
Goodwill	15,371		20,195
Other assets	27,235		33,730
Total assets	$	420,549	$	419,728
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	78,664	$	71,219
Accrued expenses and other	51,775		56,254
Unearned revenue	11,827		12,818
Total current liabilities	142,266		140,291
Long-term lease liabilities	67,651		66,524
Long-term debt	48,744		58,053
Other long-term liabilities	23,643		23,458
Commitments and contingencies (Note 4)
Stockholders’ equity:
Preferred stock ($0.01 par value; 500 shares authorized; no shares issued or outstanding)	—		—
Common stock ($0.01 par value; 100,000 shares authorized; 10,644 and 10,699 shares issued; 10,175 and 10,183 shares outstanding)	106		107
Treasury stock, at cost	(1,837)		(7,837)
Additional paid-in capital	55,437		63,871
Accumulated other comprehensive income (loss)	(1,376)		(4,782)
Retained earnings	85,915		80,043
Total stockholders’ equity	138,245		131,402
Total liabilities and stockholders’ equity	$	420,549	$	419,728

See accompanying notes to consolidated financial statements.

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AMAZON.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1 — ACCOUNTING POLICIES AND SUPPLEMENTAL DISCLOSURES

Unaudited Interim Financial Information

We have prepared the accompanying consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These consolidated financial statements are unaudited and, in our opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair presentation of our consolidated cash flows, operating results, and balance sheets for the periods presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for 2022 due to seasonal and other factors. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted in accordance with the rules and regulations of the SEC. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in Item 8 of Part II, “Financial Statements and Supplementary Data,” of our 2021 Annual Report on Form 10-K.

Common Stock Split

On May 27, 2022, we effected a 20-for-1 stock split of our common stock and proportionately increased the number of authorized shares of common stock. All share, restricted stock unit (“RSU”), and per share or per RSU information throughout this Quarterly Report on Form 10-Q has been retroactively adjusted to reflect the stock split. The shares of common stock retain a par value of $0.01 per share. Accordingly, an amount equal to the par value of the increased shares resulting from the stock split was reclassified from “Additional paid-in capital” to “Common stock.”

Principles of Consolidation

The consolidated financial statements include the accounts of Amazon.com, Inc. and its consolidated entities (collectively, the “Company”), consisting of its wholly-owned subsidiaries and those entities in which we have a variable interest and of which we are the primary beneficiary, including certain entities in India and certain entities that support our seller lending financing activities. Intercompany balances and transactions between consolidated entities are eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent liabilities in the consolidated financial statements and accompanying notes. Estimates are used for, but not limited to, income taxes, useful lives of equipment, commitments and contingencies, valuation of acquired intangibles and goodwill, stock-based compensation forfeiture rates, vendor funding, inventory valuation, collectability of receivables, impairment of property and equipment and operating leases, and valuation and impairment of investments. Actual results could differ materially from these estimates.

We review the useful lives of equipment on an ongoing basis, and effective January 1, 2022 we changed our estimate of the useful lives for our servers from four to five years and for our networking equipment from five to six years. The longer useful lives are due to continuous improvements in our hardware, software, and data center designs. The effect of this change in estimate for Q2 2022, based on servers and networking equipment that were included in “Property and equipment, net” as of March 31, 2022 and those acquired during the three months ended June 30, 2022, was a reduction in depreciation and amortization expense of $928 million and a benefit to net loss of $728 million, or $0.07 per basic share and $0.07 per diluted share. The effect of this change in estimate for the six months ended June 30, 2022, based on servers and networking equipment that were included in “Property and equipment, net” as of December 31, 2021 and those acquired during the six months ended June 30, 2022, was a reduction in depreciation and amortization expense of $1.9 billion and a benefit to net loss of $1.5 billion, or $0.15 per basic share and $0.15 per diluted share.

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Supplemental Cash Flow Information

The following table shows supplemental cash flow information (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,				Twelve Months Ended June 30,
	2021		2022		2021		2022		2021		2022
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest on debt	$	179	$	349	$	455	$	628	$	942	$	1,271
Cash paid for operating leases	1,577		2,088		3,217		4,455		5,577		7,960
Cash paid for interest on finance leases	129		95		286		202		569		437
Cash paid for interest on financing obligations	35		55		68		113		127		198
Cash paid for income taxes, net of refunds	1,803		3,145		2,604		3,598		3,526		4,682
Assets acquired under operating leases	5,578		5,101		9,114		7,276		19,576		23,531
Property and equipment acquired under finance leases, net of remeasurements and modifications	1,642		61		3,709		227		9,976		3,579
Property and equipment recognized during the construction period of build-to-suit lease arrangements	1,193		986		2,080		2,351		3,486		6,117
Property and equipment derecognized after the construction period of build-to-suit lease arrangements, with the associated leases recognized as operating	99		1,079		99		1,112		99		1,243

Earnings Per Share

Basic earnings per share is calculated using our weighted-average outstanding common shares. Diluted earnings per share is calculated using our weighted-average outstanding common shares including the dilutive effect of stock awards as determined under the treasury stock method. In periods when we have a net loss, stock awards are excluded from our calculation of earnings per share as their inclusion would have an antidilutive effect.

The following table shows the calculation of diluted shares (in millions):

	Three Months Ended June 30,		Six Months Ended June 30,
	2021	2022	2021	2022
Shares used in computation of basic earnings per share	10,103	10,175	10,089	10,173
Total dilutive effect of outstanding stock awards	183	—	187	—
Shares used in computation of diluted earnings per share	10,286	10,175	10,276	10,173

Other Income (Expense), Net

Other income (expense), net, is as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2022		2021		2022
Marketable equity securities valuation gains (losses)	$	157	$	(4,322)	$	81	$	(12,567)
Equity warrant valuation gains (losses)	939		(1,124)		1,244		(1,436)
Upward adjustments relating to equity investments in private companies	31		58		1,506		65
Foreign currency gains (losses)	110		(117)		79		(103)
Other, net	24		(40)		48		(74)
Total other income (expense), net	1,261		(5,545)		2,958		(14,115)

Included in other income (expense), net is a marketable equity securities valuation loss of $3.9 billion in Q2 2022, and $11.5 billion for the six months ended June 30, 2022, from our equity investment in Rivian Automotive, Inc. (“Rivian”). Our investment in Rivian’s preferred stock was accounted for at cost, with adjustments for observable changes in prices or impairments, prior to Rivian’s initial public offering in November 2021, which resulted in the conversion of our preferred stock to Class A common stock. As of June 30, 2022, we held 158 million shares of Rivian’s Class A common stock, representing an approximate 18% ownership interest, and an approximate 16% voting interest. We determined that we have the ability to exercise significant influence over Rivian through our equity investment, our commercial arrangement for the purchase of

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electric vehicles, and one of our employees serving on Rivian’s board of directors. We elected the fair value option to account for our equity investment in Rivian, which is included in “Marketable securities” on our consolidated balance sheets.

Required summarized financial information of Rivian as disclosed in its most recent SEC filings is as follows (in millions):

	Three Months Ended March 31,
	2021		2022
Revenues	$	—	$	95
Gross profit	—		(502)
Loss from operations	(410)		(1,579)
Net loss	(414)		(1,593)

Inventories

Inventories, consisting of products available for sale, are primarily accounted for using the first-in, first-out method, and are valued at the lower of cost and net realizable value. This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such as through sales to individual customers, returns to product vendors, or liquidations, and expected recoverable values of each disposition category. The inventory valuation allowance, representing a write-down of inventory, was $2.6 billion and $2.4 billion as of December 31, 2021 and June 30, 2022.

Accounts Receivable, Net and Other

Included in “Accounts receivable, net and other” on our consolidated balance sheets are amounts primarily related to customers, vendors, and sellers. As of December 31, 2021 and June 30, 2022, customer receivables, net, were $20.2 billion and $21.6 billion, vendor receivables, net, were $5.3 billion and $4.9 billion, and seller receivables, net, were $1.0 billion and $1.3 billion. Seller receivables are amounts due from sellers related to our seller lending program, which provides funding to sellers primarily to procure inventory.

We estimate losses on receivables based on expected losses, including our historical experience of actual losses. The allowance for doubtful accounts was $1.1 billion and $1.2 billion as of December 31, 2021 and June 30, 2022.

Digital Video and Music Content

The total capitalized costs of video, which is primarily released content, and music as of December 31, 2021 and June 30, 2022 were $10.7 billion and $15.2 billion. Total video and music expense was $3.1 billion and $3.7 billion in Q2 2021 and Q2 2022, and $6.2 billion and $7.3 billion for the six months ended June 30, 2021 and 2022.

Unearned Revenue

Unearned revenue is recorded when payments are received or due in advance of performing our service obligations and is recognized over the service period. Unearned revenue primarily relates to prepayments of AWS services and Amazon Prime memberships. Our total unearned revenue as of December 31, 2021 was $14.0 billion, of which $8.1 billion was recognized as revenue during the six months ended June 30, 2022. Included in “Other long-term liabilities” on our consolidated balance sheets was $2.2 billion and $2.6 billion of unearned revenue as of December 31, 2021 and June 30, 2022.

Additionally, we have performance obligations, primarily related to AWS, associated with commitments in customer contracts for future services that have not yet been recognized in our consolidated financial statements. For contracts with original terms that exceed one year, those commitments not yet recognized were $100.1 billion as of June 30, 2022. The weighted-average remaining life of our long-term contracts is 3.9 years. However, the amount and timing of revenue recognition is largely driven by customer usage, which can extend beyond the original contractual term.

Acquisition Activity

On March 17, 2022, we acquired MGM Holdings Inc. (“MGM”), for cash consideration of approximately $6.1 billion, net of cash acquired, to provide more digital media content options for customers. We also assumed $2.5 billion of debt, which we repaid immediately after closing. The acquired assets primarily consist of $3.4 billion of video content and $4.9 billion of goodwill, the majority of which is allocated to our North America segment. The valuation of certain assets and liabilities is preliminary and subject to change.

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Pro forma results of operations have not been presented because the effects of the MGM acquisition were not material to our consolidated results of operations. Acquisition-related costs were expensed as incurred and were not significant.

Note 2 — FINANCIAL INSTRUMENTS

Cash, Cash Equivalents, Restricted Cash, and Marketable Securities

As of December 31, 2021 and June 30, 2022, our cash, cash equivalents, restricted cash, and marketable securities primarily consisted of cash, AAA-rated money market funds, U.S. and foreign government and agency securities, other investment grade securities, and marketable equity securities. Cash equivalents and marketable securities are recorded at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3—Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

We measure the fair value of money market funds and certain marketable equity securities based on quoted prices in active markets for identical assets or liabilities. Other marketable securities were valued either based on recent trades of securities in inactive markets or based on quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data. We did not hold significant amounts of marketable securities categorized as Level 3 assets as of December 31, 2021 and June 30, 2022.

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The following table summarizes, by major security type, our cash, cash equivalents, restricted cash, and marketable securities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in millions):

	December 31, 2021		June 30, 2022
	Total Estimated Fair Value		Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Total Estimated Fair Value
Cash	$	10,942	$	9,825	$	—	$	—	$	9,825
Level 1 securities:
Money market funds	20,312		18,816		—		—		18,816
Equity securities (1)(3)	1,646								4,946
Level 2 securities:
Foreign government and agency securities	181		50		—		(1)		49
U.S. government and agency securities	4,300		2,344		—		(122)		2,222
Corporate debt securities	35,764		21,756		—		(673)		21,083
Asset-backed securities	6,738		3,736		—		(164)		3,572
Other fixed income securities	686		407		—		(18)		389
Equity securities (1)(3)	15,740								30
	$	96,309	$	56,934	$	—	$	(978)	$	60,932
Less: Restricted cash, cash equivalents, and marketable securities (2)	(260)								(222)
Total cash, cash equivalents, and marketable securities	$	96,049							$	60,710

___________________

(1)The related unrealized gain (loss) recorded in “Other income (expense), net” was $119 million and $(4.2) billion in Q2 2021 and Q2 2022, and $122 million and $(12.3) billion for the six months ended June 30, 2021 and 2022.

(2)We are required to pledge or otherwise restrict a portion of our cash, cash equivalents, and marketable fixed income securities primarily as collateral for real estate, amounts due to third-party sellers in certain jurisdictions, debt, and standby and trade letters of credit. We classify cash, cash equivalents, and marketable fixed income securities with use restrictions of less than twelve months as “Accounts receivable, net and other” and of twelve months or longer as non-current “Other assets” on our consolidated balance sheets. See “Note 4 — Commitments and Contingencies.”

(3)Our equity investment in Rivian had a fair value of $15.6 billion and $4.1 billion as of December 31, 2021 and June 30, 2022, respectively. The investment was subject to regulatory sales restrictions resulting in a discount for lack of marketability of approximately $800 million as of December 31, 2021, which expired in Q1 2022.

The following table summarizes the remaining contractual maturities of our cash equivalents and marketable fixed income securities as of June 30, 2022 (in millions):

	Amortized Cost		Estimated Fair Value
Due within one year	$	29,370	$	29,344
Due after one year through five years	14,776		13,967
Due after five years through ten years	796		760
Due after ten years	2,167		2,060
Total	$	47,109	$	46,131

Actual maturities may differ from the contractual maturities because borrowers may have certain prepayment conditions.

Equity Warrants and Non-Marketable Equity Investments

We hold equity warrants giving us the right to acquire stock of other companies. As of December 31, 2021 and June 30, 2022, these warrants had a fair value of $3.4 billion and $2.4 billion, and are recorded within “Other assets” on our consolidated balance sheets with gains and losses recognized in “Other income (expense), net” on our consolidated statements of operations. These warrants are primarily classified as Level 2 assets.

As of December 31, 2021 and June 30, 2022, equity investments not accounted for under the equity-method and without readily determinable fair values had a carrying value of $603 million and $768 million, and are recorded within “Other assets”

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on our consolidated balance sheets with adjustments recognized in “Other income (expense), net” on our consolidated statements of operations.

Consolidated Statements of Cash Flows Reconciliation

The following table provides a reconciliation of the amount of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets to the total of the same such amounts shown in the consolidated statements of cash flows (in millions):

	December 31, 2021		June 30, 2022
Cash and cash equivalents	$	36,220	$	37,478
Restricted cash included in accounts receivable, net and other	242		207
Restricted cash included in other assets	15		15
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows	$	36,477	$	37,700

Note 3 — LEASES

We have entered into non-cancellable operating and finance leases for fulfillment, delivery, office, physical store, data center, and sortation facilities as well as server and networking equipment, vehicles, and aircraft. Gross assets acquired under finance leases, inclusive of those where title transfers at the end of the lease, are recorded in “Property and equipment, net” and were $72.2 billion and $68.6 billion as of December 31, 2021 and June 30, 2022. Accumulated amortization associated with finance leases was $43.4 billion and $43.5 billion as of December 31, 2021 and June 30, 2022.

Lease cost recognized in our consolidated statements of operations is summarized as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2022		2021		2022
Operating lease cost	$	1,662	$	2,133	$	3,218	$	4,236
Finance lease cost:
Amortization of lease assets	2,489		1,530		4,945		3,090
Interest on lease liabilities	119		92		251		195
Finance lease cost	2,608		1,622		5,196		3,285
Variable lease cost	415		471		763		940
Total lease cost	$	4,685	$	4,226	$	9,177	$	8,461

Other information about lease amounts recognized in our consolidated financial statements is as follows:

	December 31, 2021		June 30, 2022
Weighted-average remaining lease term – operating leases	11.3 years		11.1 years
Weighted-average remaining lease term – finance leases	8.1 years		8.7 years
Weighted-average discount rate – operating leases	2.2	%	2.4	%
Weighted-average discount rate – finance leases	2.0	%	2.1	%

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Our lease liabilities were as follows (in millions):

	December 31, 2021
	Operating Leases		Finance Leases		Total
Gross lease liabilities	$	66,269	$	25,866	$	92,135
Less: imputed interest	(7,939)		(2,113)		(10,052)
Present value of lease liabilities	58,330		23,753		82,083
Less: current portion of lease liabilities	(6,349)		(8,083)		(14,432)
Total long-term lease liabilities	$	51,981	$	15,670	$	67,651

	June 30, 2022
	Operating Leases		Finance Leases		Total
Gross lease liabilities	$	69,341	$	20,426	$	89,767
Less: imputed interest	(8,735)		(2,009)		(10,744)
Present value of lease liabilities	60,606		18,417		79,023
Less: current portion of lease liabilities	(6,707)		(5,792)		(12,499)
Total long-term lease liabilities	$	53,899	$	12,625	$	66,524

Note 4 — COMMITMENTS AND CONTINGENCIES

Commitments

The following summarizes our principal contractual commitments, excluding open orders for purchases that support normal operations and are generally cancellable, as of June 30, 2022 (in millions): 

	Six Months Ended December 31,		Year Ended December 31,
	2022		2023		2024		2025		2026		Thereafter		Total
Long-term debt principal and interest	$	2,303	$	5,536	$	8,940	$	5,280	$	4,187	$	67,529	$	93,775
Operating lease liabilities	3,966		7,856		7,360		6,796		6,226		37,137		69,341
Finance lease liabilities, including interest	3,184		4,630		2,226		1,337		1,201		7,848		20,426
Financing obligations, including interest (1)	229		464		463		456		463		7,179		9,254
Leases not yet commenced	545		1,711		2,324		2,350		2,381		22,512		31,823
Unconditional purchase obligations (2)	3,110		7,088		6,208		4,927		4,342		9,404		35,079
Other commitments (3)(4)	1,898		2,229		1,492		1,051		1,132		11,234		19,036
Total commitments	$	15,235	$	29,514	$	29,013	$	22,197	$	19,932	$	162,843	$	278,734

___________________

(1)Includes non-cancellable financing obligations for fulfillment, sortation, and data center facilities. Excluding interest, current financing obligations of $196 million and $251 million are recorded within “Accrued expenses and other” and $6.2 billion and $6.8 billion are recorded within “Other long-term liabilities” as of December 31, 2021 and June 30, 2022. The weighted-average remaining term of the financing obligations was 18.8 years and 18.4 years and the weighted-average imputed interest rate was 3.2% as of December 31, 2021 and June 30, 2022.

(2)Includes unconditional purchase obligations related to long-term agreements to acquire and license digital media content that are not reflected on the consolidated balance sheets and certain products offered in our Whole Foods Market stores. For those digital media content agreements with variable terms, we do not estimate the total obligation beyond any minimum quantities and/or pricing as of the reporting date. Purchase obligations associated with renewal provisions solely at the option of the content provider are included to the extent such commitments are fixed or a minimum amount is specified.

(3)Includes the estimated timing and amounts of payments for rent and tenant improvements associated with build-to-suit lease arrangements that are under construction, asset retirement obligations, and liabilities associated with digital media content agreements with initial terms greater than one year.

(4)Excludes approximately $3.3 billion of accrued tax contingencies for which we cannot make a reasonably reliable estimate of the amount and period of payment, if any.

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In addition, we are paying the previously disclosed €1.13 billion fine imposed by the Italian Competition Authority in December 2021, which we will seek to recover pending conclusion of all appeals.

In July 2022, we entered into an agreement to acquire 1Life Healthcare, Inc. (One Medical) for approximately $3.9 billion, including its debt, subject to customary closing conditions. We expect to fund this acquisition with cash on hand.

Other Contingencies

We are disputing claims and denials of refunds or credits related to various non-income taxes (such as sales, value added, consumption, service, and similar taxes), including in jurisdictions in which we already collect and remit these taxes. These non-income tax controversies typically relate to (i) the taxability of products and services, including cross-border intercompany transactions, (ii) collection and withholding on transactions with third parties, and (iii) the adequacy of compliance with reporting obligations, including evolving documentation requirements. Due to the inherent complexity and uncertainty of these matters and the judicial and regulatory processes in certain jurisdictions, the final outcome of any such controversies may be materially different from our expectations.

Legal Proceedings

The Company is involved from time to time in claims, proceedings, and litigation, including the matters described in Item 8 of Part II, “Financial Statements and Supplementary Data — Note 7 — Commitments and Contingencies — Legal Proceedings” of our 2021 Annual Report on Form 10-K and in Item 1 of Part I, “Financial Statements — Note 4 — Commitments and Contingencies — Legal Proceedings” of our Quarterly Report on Form 10-Q for the period ended March 31, 2022, as supplemented by the following:

In November 2015, Eolas Technologies, Inc. filed a complaint against Amazon.com, Inc. in the United States District Court for the Eastern District of Texas. The complaint alleges, among other things, that the use of “interactive features” on www.amazon.com, including “search suggestions and search results,” infringes U.S. Patent No. 9,195,507, entitled “Distributed Hypermedia Method and System for Automatically Invoking External Application Providing Interaction and Display of Embedded Objects Within A Hypermedia Document.” The complaint sought a judgment of infringement together with costs and attorneys’ fees. In February 2016, Eolas filed an amended complaint seeking, among other things, an unspecified amount of damages. In February 2017, Eolas alleged in its damages report that in the event of a finding of liability Amazon could be subject to $130-$250 million in damages. In April 2017, the case was transferred to the United States District Court for the Northern District of California. In May 2022, the district court granted summary judgment holding that the patent is invalid. In June 2022, Eolas filed a notice of appeal. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter.

In October 2020, BroadbandiTV, Inc. filed a complaint against Amazon.com, Inc., Amazon.com Services LLC, and Amazon Web Services, Inc. in the United States District Court for the Western District of Texas. The complaint alleges, among other things, that certain Amazon Prime Video features and services infringe U.S. Patent Nos. 9,648,388, 10,546,750, and 10,536,751, each entitled “Video-On-Demand Content Delivery System For Providing Video-On-Demand Services To TV Services Subscribers”; 10,028,026, entitled “System For Addressing On-Demand TV Program Content On TV Services Platform Of A Digital TV Services Provider”; and 9,973,825, entitled “Dynamic Adjustment Of Electronic Program Guide Displays Based On Viewer Preferences For Minimizing Navigation In VOD Program Selection.” The complaint seeks an unspecified amount of damages. In April 2022, BroadbandiTV alleged in its damages report that, in the event of a finding of liability, Amazon.com, Inc., Amazon.com Services LLC, and Amazon Web Services, Inc. could be subject to $166-$986 million in damages. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter.

In July 2022, Acceleration Bay, LLC filed a complaint against Amazon Web Services, Inc. in the United States District Court for the District of Delaware. The complaint alleges, among other things, that Amazon EC2, Amazon CloudFront, AWS Lambda, Amazon Lumberyard, Luna, Amazon Prime Video, Twitch, Amazon GameLift, GridMate, Amazon EKS, AWS App Mesh, and Amazon VPC infringe U.S. Patent Nos. 6,701,344, entitled “Distributed Game Environment”; 6,714,966, entitled “Information Delivery Service”; 6,732,147, entitled “Leaving A Broadcast Service”; 6,829,634, entitled “Broadcasting Network”; and 6,910,069, entitled “Joining A Broadcast Channel.” The complaint seeks injunctive relief, an unspecified amount of damages, enhanced damages, interest, attorneys’ fees, and costs. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter.

In addition, we are regularly subject to claims, litigation, and other proceedings, including potential regulatory proceedings, involving patent and other intellectual property matters, taxes, labor and employment, competition and antitrust, privacy and data protection, consumer protection, commercial disputes, goods and services offered by us and by third parties, and other matters.

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The outcomes of our legal proceedings and other contingencies are inherently unpredictable, subject to significant uncertainties, and could be material to our operating results and cash flows for a particular period. We evaluate, on a regular basis, developments in our legal proceedings and other contingencies that could affect the amount of liability, including amounts in excess of any previous accruals and reasonably possible losses disclosed, and make adjustments and changes to our accruals and disclosures as appropriate. For the matters we disclose that do not include an estimate of the amount of loss or range of losses, such an estimate is not possible or is immaterial, and we may be unable to estimate the possible loss or range of losses that could potentially result from the application of non-monetary remedies. Until the final resolution of such matters, if any of our estimates and assumptions change or prove to have been incorrect, we may experience losses in excess of the amounts recorded, which could have a material effect on our business, consolidated financial position, results of operations, or cash flows.

See also “Note 7 — Income Taxes.”

Note 5 — DEBT

As of June 30, 2022, we had $62.5 billion of unsecured senior notes outstanding (the “Notes”), including $12.8 billion issued in April 2022 for general corporate purposes, and $935 million of borrowings under our credit facility. Our total long-term debt obligations are as follows (in millions):

	Maturities (1)	Stated Interest Rates	Effective Interest Rates	December 31, 2021		June 30, 2022
2012 Notes issuance of $3.0 billion	2022	2.50%	2.66%	1,250		1,250
2014 Notes issuance of $6.0 billion	2024 - 2044	3.80% - 4.95%	3.90% - 5.11%	4,000		4,000
2017 Notes issuance of $17.0 billion	2023 - 2057	2.40% - 5.20%	2.56% - 4.33%	16,000		16,000
2020 Notes issuance of $10.0 billion	2023 - 2060	0.40% - 2.70%	0.56% - 2.77%	10,000		10,000
2021 Notes issuance of $18.5 billion	2023 - 2061	0.25% - 3.25%	0.35% - 3.31%	18,500		18,500
2022 Notes Issuance of $12.8 billion	2024 - 2062	2.73% - 4.10%	2.83% - 4.15%	—		12,750
Credit Facility				803		935
Total face value of long-term debt				50,553		63,435
Unamortized discount and issuance costs, net				(318)		(384)
Less: current portion of long-term debt				(1,491)		(4,998)
Long-term debt				$	48,744	$	58,053

___________________

(1) The weighted-average remaining lives of the 2012, 2014, 2017, 2020, 2021, and 2022 Notes were 0.4, 13.1, 14.7, 17.2, 13.8, and 13.8 years as of June 30, 2022. The combined weighted-average remaining life of the Notes was 14.3 years as of June 30, 2022.

Interest on the Notes is payable semi-annually in arrears. We may redeem the Notes at any time in whole, or from time to time, in part at specified redemption prices. We are not subject to any financial covenants under the Notes. The estimated fair value of the Notes was approximately $53.3 billion and $57.1 billion as of December 31, 2021 and June 30, 2022, which is based on quoted prices for our debt as of those dates.

We have a $1.0 billion secured revolving credit facility with a lender that is secured by certain seller receivables, which we may from time to time increase in the future subject to lender approval (the “Credit Facility”). The Credit Facility is available until October 2022, bears interest at the London interbank offered rate (“LIBOR”) plus 1.40%, and has a commitment fee of 0.50% on the undrawn portion. There were $803 million and $935 million of borrowings outstanding under the Credit Facility as of December 31, 2021 and June 30, 2022, which had a weighted-average interest rate of 2.7%. As of December 31, 2021 and June 30, 2022, we have pledged $918 million and $1.1 billion of our cash and seller receivables as collateral for debt related to our Credit Facility. The estimated fair value of the Credit Facility, which is based on Level 2 inputs, approximated its carrying value as of December 31, 2021 and June 30, 2022.

We have U.S. Dollar and Euro commercial paper programs (the “Commercial Paper Programs”) under which we may from time to time issue unsecured commercial paper up to a total of $20.0 billion (including up to €3.0 billion) at the date of issue, with individual maturities that may vary but will not exceed 397 days from the date of issue. In March 2022, we increased the size of the Commercial Paper Programs from $10.0 billion to $20.0 billion. There were $725 million and $8.2 billion of borrowings outstanding under the Commercial Paper Programs as of December 31, 2021 and June 30, 2022, which were included in “Accrued expenses and other” on our consolidated balance sheets and had a weighted-average effective

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interest rate, including issuance costs, of 0.08% and 0.99%, respectively. We use the net proceeds from the issuance of commercial paper for general corporate purposes.

We also have a $10.0 billion unsecured revolving credit facility with a syndicate of lenders (the “Credit Agreement”), which was amended and restated in March 2022 to increase the borrowing capacity from $7.0 billion to $10.0 billion and to extend the term to March 2025. It may be extended for up to three additional one-year terms if approved by the lenders. The interest rate applicable to outstanding balances under the Credit Agreement is the applicable benchmark rate specified in the Credit Agreement plus 0.45%, with a commitment fee of 0.03% on the undrawn portion of the credit facility. There were no borrowings outstanding under the Credit Agreement as of December 31, 2021 and June 30, 2022.

We also utilize other short-term credit facilities for working capital purposes. There were $318 million and $235 million of borrowings outstanding under these facilities as of December 31, 2021 and June 30, 2022, which were included in “Accrued expenses and other” on our consolidated balance sheets. In addition, we had $10.0 billion of unused letters of credit as of June 30, 2022.

Note 6 — STOCKHOLDERS’ EQUITY

Stock Repurchase Activity

In March 2022, the Board of Directors authorized a program to repurchase up to $10.0 billion of our common stock, with no fixed expiration, which replaced the previous $5.0 billion stock repurchase authorization, approved by the Board of Directors in February 2016. We repurchased 46.2 million shares of our common stock for $6.0 billion during the six months ended June 30, 2022 under these programs. As of June 30, 2022, we have $6.1 billion remaining under the repurchase program.

Stock Award Activity

Common shares outstanding plus shares underlying outstanding stock awards totaled 10.5 billion and 10.6 billion as of December 31, 2021 and June 30, 2022. These totals include all vested and unvested stock awards outstanding, including those awards we estimate will be forfeited. Stock-based compensation expense is as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2022		2021		2022
Cost of sales	$	145	$	213	$	235	$	359
Fulfillment	566		763		908		1,261
Technology and content	1,887		2,814		3,115		4,459
Sales and marketing	691		990		1,147		1,655
General and administrative	302		429		492		725
Total stock-based compensation expense	$	3,591	$	5,209	$	5,897	$	8,459

The following table summarizes our restricted stock unit activity for the six months ended June 30, 2022 (in millions):

	Number of Units	Weighted-Average Grant-Date Fair Value
Outstanding as of December 31, 2021	279.9	$	134
Units granted	166.0	159
Units vested	(54.2)	108
Units forfeited	(24.2)	140
Outstanding as of June 30, 2022	367.5	149

Scheduled vesting for outstanding restricted stock units as of June 30, 2022, is as follows (in millions):

	Six Months Ended December 31,	Year Ended December 31,
	2022	2023	2024	2025	2026	Thereafter	Total
Scheduled vesting — restricted stock units	57.7	134.5	123.3	38.0	9.8	4.2	367.5

As of June 30, 2022, there was $26.9 billion of net unrecognized compensation cost related to unvested stock-based compensation arrangements. This compensation is recognized on an accelerated basis with approximately half of the compensation expected to be expensed in the next twelve months, and has a remaining weighted-average recognition period of

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1.1 years. The estimated forfeiture rate as of December 31, 2021 and June 30, 2022 was 27%. Changes in our estimates and assumptions relating to forfeitures may cause us to realize material changes in stock-based compensation expense in the future.

Changes in Stockholders’ Equity

The following table shows changes in stockholders’ equity (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2022		2021		2022
Total beginning stockholders’ equity	$	103,320	$	134,001	$	93,404	$	138,245
Beginning common stock	106		107		105		106
Stock-based compensation and issuance of employee benefit plan stock	0		0		1		1
Ending common stock	106		107		106		107
Beginning treasury stock	(1,837)		(4,503)		(1,837)		(1,837)
Common stock repurchased	—		(3,334)		—		(6,000)
Ending treasury stock	(1,837)		(7,837)		(1,837)		(7,837)
Beginning additional paid-in capital	45,060		58,691		42,765		55,437
Stock-based compensation and issuance of employee benefit plan stock	3,563		5,180		5,858		8,434
Ending additional paid-in capital	48,623		63,871		48,623		63,871
Beginning accumulated other comprehensive income (loss)	(666)		(2,365)		(180)		(1,376)
Other comprehensive income (loss)	141		(2,417)		(345)		(3,406)
Ending accumulated other comprehensive income (loss)	(525)		(4,782)		(525)		(4,782)
Beginning retained earnings	60,658		82,071		52,551		85,915
Net income (loss)	7,778		(2,028)		15,885		(5,872)
Ending retained earnings	68,436		80,043		68,436		80,043
Total ending stockholders’ equity	$	114,803	$	131,402	$	114,803	$	131,402

Note 7 — INCOME TAXES

Our tax provision or benefit from income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment.

Our quarterly tax provision, and our quarterly estimate of our annual effective tax rate, is subject to significant variation due to several factors, including variability in accurately predicting our pre-tax and taxable income and loss and the mix of jurisdictions to which they relate, intercompany transactions, the applicability of special tax regimes, changes in how we do business, acquisitions, investments, developments in tax controversies, changes in our stock price, changes in our deferred tax assets and liabilities and their valuation, foreign currency gains (losses), changes in statutes, regulations, case law, and administrative practices, principles, and interpretations related to tax, including changes to the global tax framework, competition, and other laws and accounting rules in various jurisdictions, and relative changes of expenses or losses for which tax benefits are not recognized. Our effective tax rate can be more or less volatile based on the amount of pre-tax income or loss. For example, the impact of discrete items and non-deductible expenses on our effective tax rate is greater when our pre-tax income is lower. In addition, we record valuation allowances against deferred tax assets when there is uncertainty about our ability to generate future income in relevant jurisdictions.

For 2022, we estimate that our effective tax rate will be reduced by the U.S. federal research and development credit and increased by state income taxes. In addition, valuation gains and losses from our equity investment in Rivian impact our pre-tax income and may cause variability in our effective tax rate.

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Our income tax provision for the six months ended June 30, 2021 was $3.0 billion, which included $1.4 billion of net discrete tax benefits primarily attributable to excess tax benefits from stock-based compensation and audit-related developments. Our income tax benefit for the six months ended June 30, 2022 was $2.1 billion, which included $3.2 billion of net discrete tax benefits primarily attributable to a valuation loss related to our equity investment in Rivian.

Cash paid for income taxes, net of refunds was $1.8 billion and $3.1 billion in Q2 2021 and Q2 2022, and $2.6 billion and $3.6 billion for the six months ended June 30, 2021 and 2022.

As of December 31, 2021 and June 30, 2022, tax contingencies were approximately $3.2 billion and $3.3 billion. Changes in tax laws, regulations, administrative practices, principles, and interpretations may impact our tax contingencies. Due to various factors, including the inherent complexities and uncertainties of the judicial, administrative, and regulatory processes in certain jurisdictions, the timing of the resolution of income tax controversies is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ from the amounts accrued. It is reasonably possible that within the next twelve months we will receive additional assessments by various tax authorities or possibly reach resolution of income tax controversies in one or more jurisdictions. These assessments or settlements could result in changes to our contingencies related to positions on prior years’ tax filings.

We are under examination, or may be subject to examination, by the Internal Revenue Service for the calendar year 2016 and thereafter. These examinations may lead to ordinary course adjustments or proposed adjustments to our taxes or our net operating losses with respect to years under examination as well as subsequent periods.

We are also subject to taxation in various states and other foreign jurisdictions including China, France, Germany, India, Japan, Luxembourg, and the United Kingdom. We are under, or may be subject to, audit or examination and additional assessments by the relevant authorities in respect of these particular jurisdictions primarily for 2009 and thereafter. We are currently disputing tax assessments in multiple jurisdictions, including with respect to the allocation and characterization of income.

In October 2014, the European Commission opened a formal investigation to examine whether decisions by the tax authorities in Luxembourg with regard to the corporate income tax paid by certain of our subsidiaries comply with European Union rules on state aid. On October 4, 2017, the European Commission announced its decision that determinations by the tax authorities in Luxembourg did not comply with European Union rules on state aid. Based on that decision, the European Commission announced an estimated recovery amount of approximately €250 million, plus interest, for the period May 2006 through June 2014, and ordered Luxembourg tax authorities to calculate the actual amount of additional taxes subject to recovery. Luxembourg computed an initial recovery amount, consistent with the European Commission’s decision, which we deposited into escrow in March 2018, subject to adjustment pending conclusion of all appeals. In December 2017, Luxembourg appealed the European Commission’s decision. In May 2018, we appealed. On May 12, 2021, the European Union General Court annulled the European Commission’s state aid decision. In July 2021, the European Commission appealed the decision to the European Court of Justice. We will continue to defend ourselves vigorously in this matter. 

Note 8 — SEGMENT INFORMATION

We have organized our operations into three segments: North America, International, and AWS. We allocate to segment results the operating expenses “Fulfillment,” “Technology and content,” “Sales and marketing,” and “General and administrative” based on usage, which is generally reflected in the segment in which the costs are incurred. The majority of technology infrastructure costs are allocated to the AWS segment based on usage. The majority of the remaining non-infrastructure technology costs are incurred in the U.S. and are allocated to our North America segment. There are no internal revenue transactions between our reportable segments. These segments reflect the way our chief operating decision maker evaluates the Company’s business performance and manages its operations.

North America

The North America segment primarily consists of amounts earned from retail sales of consumer products (including from sellers) and subscriptions through North America-focused online and physical stores. This segment includes export sales from these online stores.

International

The International segment primarily consists of amounts earned from retail sales of consumer products (including from sellers) and subscriptions through internationally-focused online stores. This segment includes export sales from these internationally-focused online stores (including export sales from these online stores to customers in the U.S., Mexico, and Canada), but excludes export sales from our North America-focused online stores.

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AWS

The AWS segment consists of amounts earned from global sales of compute, storage, database, and other services for start-ups, enterprises, government agencies, and academic institutions.

Information on reportable segments and reconciliation to consolidated net income (loss) is as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2022		2021		2022
North America
Net sales	$	67,550	$	74,430	$	131,916	$	143,674
Operating expenses	64,403		75,057		125,319		145,869
Operating income (loss)	$	3,147	$	(627)	$	6,597	$	(2,195)
International
Net sales	$	30,721	$	27,065	$	61,370	$	55,824
Operating expenses	30,359		28,836		59,756		58,876
Operating income (loss)	$	362	$	(1,771)	$	1,614	$	(3,052)
AWS
Net sales	$	14,809	$	19,739	$	28,312	$	38,180
Operating expenses	10,616		14,024		19,956		25,947
Operating income	$	4,193	$	5,715	$	8,356	$	12,233
Consolidated
Net sales	$	113,080	$	121,234	$	221,598	$	237,678
Operating expenses	105,378		117,917		205,031		230,692
Operating income	7,702		3,317		16,567		6,986
Total non-operating income (expense)	932		(5,970)		2,335		(14,904)
Benefit (provision) for income taxes	(868)		637		(3,024)		2,059
Equity-method investment activity, net of tax	12		(12)		7		(13)
Net income (loss)	$	7,778	$	(2,028)	$	15,885	$	(5,872)

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Net sales by groups of similar products and services, which also have similar economic characteristics, is as follows (in millions):    

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2022		2021		2022
Net Sales:
Online stores (1)	$	53,157	$	50,855	$	106,058	$	101,984
Physical stores (2)	4,198		4,721		8,118		9,312
Third-party seller services (3)	25,085		27,376		48,794		52,711
Subscription services (4)	7,917		8,716		15,497		17,126
Advertising services (5)	7,451		8,757		13,832		16,634
AWS	14,809		19,739		28,312		38,180
Other (6)	463		1,070		987		1,731
Consolidated	$	113,080	$	121,234	$	221,598	$	237,678

____________________________

(1)Includes product sales and digital media content where we record revenue gross. We leverage our retail infrastructure to offer a wide selection of consumable and durable goods that includes media products available in both a physical and digital format, such as books, videos, games, music, and software. These product sales include digital products sold on a transactional basis. Digital product subscriptions that provide unlimited viewing or usage rights are included in “Subscription services.”

(2)Includes product sales where our customers physically select items in a store. Sales to customers who order goods online for delivery or pickup at our physical stores are included in “Online stores.”

(3)Includes commissions and any related fulfillment and shipping fees, and other third-party seller services.

(4)Includes annual and monthly fees associated with Amazon Prime memberships, as well as digital video, audiobook, digital music, e-book, and other non-AWS subscription services.

(5)Includes sales of advertising services to sellers, vendors, publishers, authors, and others, through programs such as sponsored ads, display, and video advertising.

(6)Includes sales related to various other offerings, such as certain licensing and distribution of video content and shipping services, and our co-branded credit card agreements.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including statements regarding guidance, industry prospects, or future results of operations or financial position, made in this Quarterly Report on Form 10-Q are forward-looking. We use words such as anticipates, believes, expects, future, intends, and similar expressions to identify forward-looking statements. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Actual results and outcomes could differ materially for a variety of reasons, including, among others, fluctuations in foreign exchange rates, changes in global economic conditions and customer spending, inflation, regional labor market and global supply chain constraints, world events, the rate of growth of the Internet, online commerce, and cloud services, the amount that Amazon.com invests in new business opportunities and the timing of those investments, the mix of products and services sold to customers, the mix of net sales derived from products as compared with services, the extent to which we owe income or other taxes, competition, management of growth, potential fluctuations in operating results, international growth and expansion, the outcomes of claims, litigation, government investigations, and other proceedings, fulfillment, sortation, delivery, and data center optimization, risks of inventory management, variability in demand, the degree to which we enter into, maintain, and develop commercial agreements, proposed and completed acquisitions and strategic transactions, payments risks, and risks of fulfillment throughput and productivity. In addition, global economic conditions and additional or unforeseen effects from the COVID-19 pandemic amplify many of these risks. These risks and uncertainties, as well as other risks and uncertainties that could cause our actual results or outcomes to differ significantly from management’s expectations, are described in greater detail in Item 1A of Part II, “Risk Factors.”

For additional information, see Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Overview” of our 2021 Annual Report on Form 10-K.

Critical Accounting Judgments

The preparation of financial statements in conformity with GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent liabilities in the consolidated financial statements and accompanying notes. The SEC has defined a company’s critical accounting policies as the ones that are most important to the portrayal of the company’s financial condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, we have identified the critical accounting policies and judgments addressed below. We also have other key accounting policies, which involve the use of estimates, judgments, and assumptions that are significant to understanding our results. For additional information, see Item 8 of Part II, “Financial Statements and Supplementary Data — Note 1 — Description of Business, Accounting Policies, and Supplemental Disclosures” of our 2021 Annual Report on Form 10-K and Item 1 of Part I, “Financial Statements — Note 1 — Accounting Policies and Supplemental Disclosures,” of this Form 10-Q. Although we believe that our estimates, assumptions, and judgments are reasonable, they are based upon information presently available. Actual results may differ significantly from these estimates under different assumptions, judgments, or conditions.

Inventories

Inventories, consisting of products available for sale, are primarily accounted for using the first-in first-out method, and are valued at the lower of cost and net realizable value. This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such as through sales to individual customers, returns to product vendors, or liquidations, and expected recoverable values of each disposition category. These assumptions about future disposition of inventory are inherently uncertain and changes in our estimates and assumptions may cause us to realize material write-downs in the future. As a measure of sensitivity, for every 1% of additional inventory valuation allowance as of June 30, 2022, we would have recorded an additional cost of sales of approximately $425 million.

In addition, we enter into supplier commitments for certain electronic device components and certain products. These commitments are based on forecasted customer demand. If we reduce these commitments, we may incur additional costs.

Income Taxes

We are subject to income taxes in the U.S. (federal and state) and numerous foreign jurisdictions. Tax laws, regulations, administrative practices, principles, and interpretations in various jurisdictions may be subject to significant change, with or without notice, due to economic, political, and other conditions, and significant judgment is required in evaluating and estimating our provision and accruals for these taxes. There are many transactions that occur during the ordinary course of business for which the ultimate tax determination is uncertain. In addition, our actual and forecasted earnings are subject to

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change due to economic, political, and other conditions and significant judgment is required in determining our ability to use our deferred tax assets.

Our effective tax rates could be affected by numerous factors, such as changes in our business operations, acquisitions, investments, entry into new businesses and geographies, intercompany transactions, the relative amount of our foreign earnings, including earnings being lower than anticipated in jurisdictions where we have lower statutory rates and higher than anticipated in jurisdictions where we have higher statutory rates, losses incurred in jurisdictions for which we are not able to realize related tax benefits, the applicability of special tax regimes, changes in foreign currency exchange rates, changes in our stock price, changes to our forecasts of income and loss and the mix of jurisdictions to which they relate, changes in our deferred tax assets and liabilities and their valuation, changes in the laws, regulations, administrative practices, principles, and interpretations related to tax, including changes to the global tax framework, competition, and other laws and accounting rules in various jurisdictions. In addition, a number of countries have enacted or are actively pursuing changes to their tax laws applicable to corporate multinationals.

We are also currently subject to tax controversies in various jurisdictions, and these jurisdictions may assess additional income tax liabilities against us. Developments in an audit, investigation, or other tax controversy could have a material effect on our operating results or cash flows in the period or periods for which that development occurs, as well as for prior and subsequent periods. We regularly assess the likelihood of an adverse outcome resulting from these proceedings to determine the adequacy of our tax accruals. Although we believe our tax estimates are reasonable, the final outcome of audits, investigations, and any other tax controversies could be materially different from our historical income tax provisions and accruals.

Liquidity and Capital Resources

Cash flow information is as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,				Twelve Months Ended June 30,
	2021		2022		2021		2022		2021		2022
Cash provided by (used in):
Operating activities	$	12,715	$	8,965	$	16,928	$	6,175	$	59,322	$	35,574
Investing activities	(22,080)		(12,078)		(30,746)		(11,172)		(63,659)		(38,580)
Financing activities	15,643		4,626		12,167		6,616		6,246		740

Our principal sources of liquidity are cash flows generated from operations and our cash, cash equivalents, and marketable securities balances, which, at fair value, were $96.0 billion and $60.7 billion as of December 31, 2021 and June 30, 2022. Amounts held in foreign currencies were $22.7 billion and $12.4 billion as of December 31, 2021 and June 30, 2022. Our foreign currency balances include British Pounds, Canadian Dollars, Euros, and Japanese Yen.

Cash provided by (used in) operating activities was $12.7 billion and $9.0 billion for Q2 2021 and Q2 2022, and $16.9 billion and $6.2 billion for the six months ended June 30, 2021 and 2022. Our operating cash flows result primarily from cash received from our consumer, seller, developer, enterprise, and content creator customers, and advertisers, offset by cash payments we make for products and services, employee compensation, payment processing and related transaction costs, operating leases, and interest payments on our long-term obligations. Cash received from our customers and other activities generally corresponds to our net sales. Because consumers primarily use credit cards to buy from us, our receivables from consumers settle quickly. The decrease in operating cash flow for the trailing twelve months ended June 30, 2022, compared to the comparable prior year period, was primarily due to changes in working capital, as well as changes in net income (loss), excluding non-cash expenses. Working capital at any specific point in time is subject to many variables, including variability in demand, inventory management and category expansion, the timing of cash receipts and payments, vendor payment terms, and fluctuations in foreign exchange rates.

Cash provided by (used in) investing activities corresponds with cash capital expenditures, including leasehold improvements, incentives received from property and equipment vendors, proceeds from asset sales, cash outlays for acquisitions, investments in other companies and intellectual property rights, and purchases, sales, and maturities of marketable securities. Cash provided by (used in) investing activities was $(22.1) billion and $(12.1) billion for Q2 2021 and Q2 2022, and $(30.7) billion and $(11.2) billion for the six months ended June 30, 2021 and 2022, with the variability caused primarily by purchases, sales, and maturities of marketable securities. Cash capital expenditures were $13.0 billion and $14.1 billion during Q2 2021 and Q2 2022, and $24.2 billion and $27.8 billion for the six months ended June 30, 2021 and 2022, which primarily reflect investments in technology infrastructure (the majority of which is to support AWS business growth) and in additional capacity to support our fulfillment network. We expect to continue these investments over time, with increased spending on technology infrastructure in 2022. We made cash payments, net of acquired cash, related to acquisition and other investment activity of $320 million and $259 million during Q2 2021 and Q2 2022, and $950 million and $6.6 billion for the six months

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ended June 30, 2021 and 2022. We funded the acquisition of MGM Holdings Inc. with cash on hand. We expect to fund the acquisition of 1Life Healthcare, Inc. (One Medical) with cash on hand.

Cash provided by (used in) financing activities was $15.6 billion and $4.6 billion for Q2 2021 and Q2 2022, and $12.2 billion and $6.6 billion for the six months ended June 30, 2021 and 2022. Cash inflows from financing activities resulted from proceeds from short-term debt, and other and long-term debt of $19.7 billion and $17.7 billion for Q2 2021 and Q2 2022, and $21.7 billion and $31.4 billion for the six months ended June 30, 2021 and 2022. Cash outflows from financing activities resulted from repurchases of common stock, payments of short-term debt, and other, long-term debt, finance leases, and financing obligations of $4.0 billion and $13.1 billion in Q2 2021 and Q2 2022, and $9.6 billion and $24.8 billion for the six months ended June 30, 2021 and 2022. Property and equipment acquired under finance leases was $1.6 billion and $61 million during Q2 2021 and Q2 2022, and $3.7 billion and $227 million for the six months ended June 30, 2021 and 2022.

We had no borrowings outstanding under the Credit Agreement, $8.2 billion of borrowings outstanding under the Commercial Paper Programs, and $935 million of borrowings outstanding under our Credit Facility as of June 30, 2022. See Item 1 of Part I, “Financial Statements — Note 5 — Debt” for additional information.

Certain foreign subsidiary earnings and losses are subject to current U.S. taxation and the subsequent repatriation of those earnings is not subject to tax in the U.S. We intend to invest substantially all of our foreign subsidiary earnings, as well as our capital in our foreign subsidiaries, indefinitely outside of the U.S. in those jurisdictions in which we would incur significant, additional costs upon repatriation of such amounts.

Our U.S. taxable income is reduced by tax benefits relating to excess stock-based compensation deductions and accelerated depreciation deductions and increased by the impact of capitalized research and development expenses. U.S. tax rules provide for enhanced accelerated depreciation deductions by allowing the election of full expensing of qualified property, primarily equipment, through 2022. Effective January 1, 2022, research and development expenses are required to be capitalized and amortized for U.S. tax purposes, which delays the deductibility of these expenses. Cash taxes paid (net of refunds) were $1.8 billion and $3.1 billion for Q2 2021 and Q2 2022, and $2.6 billion and $3.6 billion for the six months ended June 30, 2021 and 2022.

As of December 31, 2021 and June 30, 2022, restricted cash, cash equivalents, and marketable securities were $260 million and $222 million. See Item 1 of Part I, “Financial Statements — Note 4 — Commitments and Contingencies” and “Financial Statements — Note 5 — Debt” for additional discussion of our principal contractual commitments, as well as our pledged assets. Additionally, we have purchase obligations and open purchase orders, including for inventory and capital expenditures, that support normal operations and are primarily due in the next twelve months. These purchase obligations and open purchase orders are generally cancellable in full or in part through the contractual provisions.

We believe that cash flows generated from operations and our cash, cash equivalents, and marketable securities balances, as well as our borrowing arrangements, will be sufficient to meet our anticipated operating cash needs for at least the next twelve months. However, any projections of future cash needs and cash flows are subject to substantial uncertainty. See Item 1A of Part II, “Risk Factors.” We continually evaluate opportunities to sell additional equity or debt securities, obtain credit facilities, obtain finance and operating lease arrangements, enter into financing obligations, repurchase common stock, pay dividends, or repurchase, refinance, or otherwise restructure our debt for strategic reasons or to further strengthen our financial position.

The sale of additional equity or convertible debt securities would be dilutive to our shareholders. In addition, we will, from time to time, consider the acquisition of, or investment in, complementary businesses, products, services, capital infrastructure, and technologies, which might affect our liquidity requirements or cause us to secure additional financing, or issue additional equity or debt securities. There can be no assurance that additional credit lines or financing instruments will be available in amounts or on terms acceptable to us, if at all. In addition, economic conditions and actions by policymaking bodies are contributing to rising interest rates, which, along with increases in our borrowing levels, could increase our future borrowing costs.

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Results of Operations

We have organized our operations into three segments: North America, International, and AWS. These segments reflect the way the Company evaluates its business performance and manages its operations. See Item 1 of Part I, “Financial Statements — Note 8 — Segment Information.”

Overview

Macroeconomic factors, including increased inflation rates, the prolonged COVID-19 pandemic, global supply chain constraints, and global economic and geopolitical developments, have direct and indirect impacts on our results of operations that are difficult to isolate and quantify. In addition, the COVID-19 pandemic and the related societal impacts, such as lockdowns, caused a significant increase in growth rates across our North America and International segments throughout much of 2020 and 2021, and we are seeing a return to pre-pandemic demand patterns as consumers’ mobility increases.

The factors described above contributed to a deceleration in our net sales growth rate and increases in our operating costs during Q2 2022, particularly across our North America and International segments, primarily due to a return to more normal, seasonal demand volumes in relation to our fulfillment network fixed costs as well as increased transportation costs, increased wage rates and incentives, and fulfillment network inefficiencies resulting from regional labor market and global supply chain constraints. We expect some or all of these factors to continue to impact our operations into Q3 2022.

Net Sales

Net sales include product and service sales. Product sales represent revenue from the sale of products and related shipping fees and digital media content where we record revenue gross. Service sales primarily represent third-party seller fees, which includes commissions and any related fulfillment and shipping fees, AWS sales, advertising services, Amazon Prime membership fees, and certain digital content subscriptions. Net sales information is as follows (in millions):

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2022			2021			2022
Net Sales:
North America	$	67,550		$	74,430		$	131,916		$	143,674
International	30,721			27,065			61,370			55,824
AWS	14,809			19,739			28,312			38,180
Consolidated	$	113,080		$	121,234		$	221,598		$	237,678
Year-over-year Percentage Growth (Decline):
North America	22		%	10		%	30		%	9		%
International	36			(12)			47			(9)
AWS	37			33			35			35
Consolidated	27			7			35			7
Year-over-year Percentage Growth (Decline), excluding the effect of foreign exchange rates:
North America	21		%	10		%	29		%	9		%
International	26			(1)			37			0
AWS	37			33			35			35
Consolidated	24			10			32			10
Net sales mix:
North America	60		%	62		%	59		%	60		%
International	27			22			28			24
AWS	13			16			13			16
Consolidated	100		%	100		%	100		%	100		%

Sales increased 7% in Q2 2022, and 7% for the six months ended June 30, 2022 compared to the comparable prior year periods. Changes in foreign currency exchange rates impacted net sales by $(3.6) billion for Q2 2022 and by $(5.4) billion for the six months ended June 30, 2022. For a discussion of the effect of foreign exchange rates on sales growth, see “Effect of Foreign Exchange Rates” below.

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North America sales increased 10% in Q2 2022, and 9% for the six months ended June 30, 2022 compared to the comparable prior year periods. The sales growth primarily reflects increased unit sales, including sales by third-party sellers, and advertising sales. Increased unit sales were driven largely by our continued focus on price, selection, and convenience for our customers, including from our shipping offers.

International sales decreased 12% in Q2 2022, and 9% for the six months ended June 30, 2022 compared to the comparable prior year periods, primarily due to the impact of foreign currency exchange rates, and also due to decreased unit sales, partially offset by increased subscription services and advertising sales. Unit sales decreased compared to the higher levels we experienced in the comparable prior year periods due to widespread regional and national COVID-19 lockdowns in the 2021 periods. Changes in foreign currency exchange rates impacted International net sales by $(3.5) billion for Q2 2022, and by $(5.3) billion for the six months ended June 30, 2022.

AWS sales increased 33% in Q2 2022, and 35% for the six months ended June 30, 2022 compared to the comparable prior year periods. The sales growth primarily reflects increased customer usage, partially offset by pricing changes. Pricing changes were driven largely by our continued efforts to reduce prices for our customers.

Operating Income (Loss)

Operating income (loss) by segment is as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2022		2021		2022
Operating Income (Loss)
North America	$	3,147	$	(627)	$	6,597	$	(2,195)
International	362		(1,771)		1,614		(3,052)
AWS	4,193		5,715		8,356		12,233
Consolidated	$	7,702	$	3,317	$	16,567	$	6,986

Operating income decreased from $7.7 billion in Q2 2021 to $3.3 billion in Q2 2022, and decreased from $16.6 billion for the six months ended June 30, 2021 to $7.0 billion for the six months ended June 30, 2022. We believe that operating income is a more meaningful measure than gross profit and gross margin due to the diversity of our product categories and services.

The North America operating loss in Q2 2022 and for the six months ended June 30, 2022, as compared to the operating income in the comparable prior year periods, is primarily due to increased shipping and fulfillment costs, due in part to increased investments in our fulfillment network, increased transportation costs, increased wage rates and incentives, and fulfillment network inefficiencies, and growth in certain operating expenses, partially offset by increased unit sales, including sales by third-party sellers, and advertising sales. Changes in foreign exchange rates positively impacted operating income (loss) by $61 million for Q2 2022, and by $103 million for the six months ended June 30, 2022.

The International operating loss in Q2 2022 and for the six months ended June 30, 2022, as compared to the operating income in the comparable prior year periods, is primarily due to: increased shipping and fulfillment costs, due in part to increased investments in our fulfillment network, increased transportation costs, increased wage rates and incentives, and fulfillment network inefficiencies; decreased unit sales; and growth in certain operating expenses; partially offset by increased advertising sales. Changes in foreign exchange rates negatively impacted operating income (loss) by $231 million for Q2 2022, and by $310 million for the six months ended June 30, 2022.

The increase in AWS operating income in absolute dollars in Q2 2022 and for the six months ended June 30, 2022, compared to the comparable prior year periods, is primarily due to increased customer usage and cost structure productivity, including a reduction in depreciation and amortization expense from our change in the estimated useful lives of our servers and networking equipment, partially offset by increased payroll and related expenses and spending on technology infrastructure, all of which were primarily driven by additional investments to support AWS business growth, and reduced prices for our customers. Changes in foreign exchange rates positively impacted operating income by $335 million for Q2 2022, and by $498 million for the six months ended June 30, 2022.

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Operating Expenses

Information about operating expenses is as follows (in millions):

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2022			2021			2022
Operating expenses:
Cost of sales	$	64,176		$	66,424		$	126,579		$	132,923
Fulfillment	17,638			20,342			34,168			40,613
Technology and content	13,871			18,072			26,359			32,914
Sales and marketing	7,524			10,086			13,731			18,406
General and administrative	2,158			2,903			4,145			5,497
Other operating expense (income), net	11			90			49			339
Total operating expenses	$	105,378		$	117,917		$	205,031		$	230,692
Year-over-year Percentage Growth:
Cost of sales	22		%	4		%	31		%	5		%
Fulfillment	28			15			35			19
Technology and content	34			30			34			25
Sales and marketing	73			34			50			34
General and administrative	37			35			37			33
Other operating expense (income), net	(96)			673			(86)			588
Percent of Net Sales:
Cost of sales	56.8		%	54.8		%	57.1		%	55.9		%
Fulfillment	15.6			16.8			15.4			17.1
Technology and content	12.3			14.9			11.9			13.8
Sales and marketing	6.7			8.3			6.2			7.7
General and administrative	1.9			2.4			1.9			2.3
Other operating expense (income), net	0.0			0.1			0.0			0.1

Cost of Sales

Cost of sales primarily consists of the purchase price of consumer products, inbound and outbound shipping costs, including costs related to sortation and delivery centers and where we are the transportation service provider, and digital media content costs where we record revenue gross, including video and music.

The increase in cost of sales in absolute dollars in Q2 2022, and for the six months ended June 30, 2022, compared to the comparable prior year periods, is primarily due to increased product and shipping costs resulting from increased sales, increased investments in our fulfillment network, as well as increased transportation costs, increased wage rates and incentives, and fulfillment network inefficiencies resulting from regional labor market and global supply chain constraints. Changes in foreign exchange rates reduced cost of sales by $2.5 billion for Q2 2022, and by $3.8 billion for the six months ended June 30, 2022.

Shipping costs to receive products from our suppliers are included in our inventory and recognized as cost of sales upon sale of products to our customers. Shipping costs, which include sortation and delivery centers and transportation costs, were $17.7 billion and $19.3 billion in Q2 2021 and Q2 2022, and $34.9 billion and $38.9 billion for the six months ended June 30, 2021 and 2022. We expect our cost of shipping to continue to increase to the extent our customers accept and use our shipping offers at an increasing rate, we use more expensive shipping methods, including faster delivery, and we offer additional services. We seek to mitigate costs of shipping over time in part through achieving higher sales volumes, optimizing our fulfillment network, negotiating better terms with our suppliers, and achieving better operating efficiencies. We believe that offering low prices to our customers is fundamental to our future success, and one way we offer lower prices is through shipping offers.

Costs to operate our AWS segment are primarily classified as “Technology and content” as we leverage a shared infrastructure that supports both our internal technology requirements and external sales to AWS customers.

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Fulfillment

Fulfillment costs primarily consist of those costs incurred in operating and staffing our North America and International fulfillment centers, physical stores, and customer service centers and payment processing costs. While AWS payment processing and related transaction costs are included in “Fulfillment,” AWS costs are primarily classified as “Technology and content.” Fulfillment costs as a percentage of net sales may vary due to several factors, such as payment processing and related transaction costs, our level of productivity and accuracy, changes in volume, size, and weight of units received and fulfilled, the extent to which third party sellers utilize Fulfillment by Amazon services, timing of fulfillment network and physical store expansion, the extent we utilize fulfillment services provided by third parties, mix of products and services sold, and our ability to affect customer service contacts per unit by implementing improvements in our operations and enhancements to our customer self-service features. Additionally, sales by our sellers have higher payment processing and related transaction costs as a percentage of net sales compared to our retail sales because payment processing costs are based on the gross purchase price of underlying transactions.

The increase in fulfillment costs in absolute dollars in Q2 2022 and for the six months ended June 30, 2022, compared to the comparable prior year periods, is primarily due to increased investments in our fulfillment network and variable costs corresponding with increased product and service sales volume and inventory levels, increased wage rates and incentives and fulfillment network inefficiencies resulting from regional labor market and global supply chain constraints.

We seek to expand our fulfillment network to accommodate a greater selection and in-stock inventory levels and to meet anticipated shipment volumes from sales of our own products as well as sales by third parties for which we provide the fulfillment services. We regularly evaluate our facility requirements.

Technology and Content

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 stores, curation and display of products and services made available in our online stores, and infrastructure costs. Infrastructure costs include servers, networking equipment, and data center related depreciation and amortization, rent, utilities, and other expenses necessary to support AWS and other Amazon businesses. Collectively, these costs reflect the investments we make in order to offer a wide variety of products and services to our customers.

We seek to invest efficiently in numerous areas of technology and content so we may continue to enhance the customer experience and improve our process efficiency through rapid technology developments, while operating at an ever increasing scale. Our technology and content investment and capital spending projects often support a variety of product and service offerings due to geographic expansion and the cross-functionality of our systems and operations. We expect spending in technology and content to increase over time as we continue to add employees and technology infrastructure. These costs are allocated to segments based on usage. The increase in technology and content costs in absolute dollars in Q2 2022 and for the six months ended June 30, 2022, compared to the comparable prior year periods, is primarily due to increased payroll and related costs associated with technical teams responsible for expanding our existing products and services and initiatives to introduce new products and service offerings, and an increase in spending on technology infrastructure, partially offset by a reduction in depreciation and amortization expense from our change in the estimated useful lives of our servers and networking equipment. See Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Overview” of our 2021 Annual Report on Form 10-K for a discussion of how management views advances in technology and the importance of innovation. See Item 1 of Part I, “Financial Statements — Note 1 — Accounting Policies and Supplemental Disclosures — Use of Estimates” for additional information on the change in estimated useful lives of our servers and networking equipment.

Sales and Marketing

Sales and marketing costs include advertising and payroll and related expenses for personnel engaged in marketing and selling activities, including sales commissions related to AWS. We direct customers to our stores primarily through a number of marketing channels, such as our sponsored search, social and online advertising, third party customer referrals, television advertising, and other initiatives. Our marketing costs are largely variable, based on growth in sales and changes in rates. To the extent there is increased or decreased competition for these traffic sources, or to the extent our mix of these channels shifts, we would expect to see a corresponding change in our marketing costs.

The increase in sales and marketing costs in absolute dollars in Q2 2022 and for the six months ended June 30, 2022, compared to the comparable prior year periods, is primarily due to increased payroll and related expenses for personnel engaged in marketing and selling activities and higher marketing spend.

While costs associated with Amazon Prime membership benefits and other shipping offers are not included in sales and marketing expense, we view these offers as effective worldwide marketing tools, and intend to continue offering them indefinitely.

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General and Administrative

The increase in general and administrative costs in absolute dollars in Q2 2022 and for the six months ended June 30, 2022, compared to the comparable prior year periods, is primarily due to increases in payroll and related expenses and professional fees.

Other Operating Expense (Income), Net

Other operating expense (income), net was $11 million and $90 million for Q2 2021 and Q2 2022, and $49 million and $339 million for the six months ended June 30, 2021 and 2022, and was primarily related to impairments of property and equipment and operating leases in 2022 and the amortization of intangible assets.

Interest Income and Expense

Our interest income was $106 million and $159 million during Q2 2021 and Q2 2022, and $211 million and $267 million for the six months ended June 30, 2021 and 2022. We generally invest our excess cash in AAA-rated money market funds and investment grade short- to intermediate-term fixed income securities. Our interest income corresponds with the average balance of invested funds based on the prevailing rates, which vary depending on the geographies and currencies in which they are invested.

Interest expense was $435 million and $584 million during Q2 2021 and Q2 2022, and $834 million and $1.1 billion for the six months ended June 30, 2021 and 2022, and was primarily related to debt and finance leases.

Other Income (Expense), Net

Other income (expense), net was $1.3 billion and $(5.5) billion during Q2 2021 and Q2 2022, and $3.0 billion and $(14.1) billion for the six months ended June 30, 2021 and 2022. The primary components of other income (expense), net are related to equity securities valuations and adjustments, equity warrant valuations, and foreign currency. Included in other income (expense), net is a marketable equity securities valuation loss of $3.9 billion in Q2 2022, and $11.5 billion for the six months ended June 30, 2022, from our equity investment in Rivian.

Income Taxes

Our income tax provision for the six months ended June 30, 2021 was $3.0 billion, which included $1.4 billion of net discrete tax benefits primarily attributable to excess tax benefits from stock-based compensation and audit-related developments. Our income tax benefit for the six months ended June 30, 2022 was $2.1 billion, which included $3.2 billion of net discrete tax benefits primarily attributable to a valuation loss related to our equity investment in Rivian. See Item 1 of Part I, “Financial Statements — Note 7 — Income Taxes” for additional information.

Non-GAAP Financial Measures

Regulation G, Conditions for Use of Non-GAAP Financial Measures, and other SEC regulations define and prescribe the conditions for use of certain non-GAAP financial information. Our measures of free cash flows and the effect of foreign exchange rates on our consolidated statements of operations meet the definition of non-GAAP financial measures.

We provide multiple measures of free cash flows because we believe these measures provide additional perspective on the impact of acquiring property and equipment with cash and through finance leases and financing obligations.

Free Cash Flow

Free cash flow is cash flow from operations reduced by “Purchases of property and equipment, net of proceeds from sales and incentives.” The following is a reconciliation of free cash flow to the most comparable GAAP cash flow measure, “Net cash provided by (used in) operating activities,” for the trailing twelve months ended June 30, 2021 and 2022 (in millions):

	Twelve Months Ended June 30,
	2021		2022
Net cash provided by (used in) operating activities	$	59,322	$	35,574
Purchases of property and equipment, net of proceeds from sales and incentives	(47,176)		(59,061)
Free cash flow	$	12,146	$	(23,487)
Net cash provided by (used in) investing activities	$	(63,659)	$	(38,580)
Net cash provided by (used in) financing activities	$	6,246	$	740

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Free Cash Flow Less Principal Repayments of Finance Leases and Financing Obligations

Free cash flow less principal repayments of finance leases and financing obligations is free cash flow reduced by “Principal repayments of finance leases” and “Principal repayments of financing obligations.” Principal repayments of finance leases and financing obligations approximates the actual payments of cash for our finance leases and financing obligations. The following is a reconciliation of free cash flow less principal repayments of finance leases and financing obligations to the most comparable GAAP cash flow measure, “Net cash provided by (used in) operating activities,” for the trailing twelve months ended June 30, 2021 and 2022 (in millions):

	Twelve Months Ended June 30,
	2021		2022
Net cash provided by (used in) operating activities	$	59,322	$	35,574
Purchases of property and equipment, net of proceeds from sales and incentives	(47,176)		(59,061)
Free cash flow	12,146		(23,487)
Principal repayments of finance leases	(11,435)		(9,789)
Principal repayments of financing obligations	(116)		(205)
Free cash flow less principal repayments of finance leases and financing obligations	$	595	(33,481)
Net cash provided by (used in) investing activities	$	(63,659)	$	(38,580)
Net cash provided by (used in) financing activities	$	6,246	$	740

Free Cash Flow Less Equipment Finance Leases and Principal Repayments of All Other Finance Leases and Financing Obligations

Free cash flow less equipment finance leases and principal repayments of all other finance leases and financing obligations is free cash flow reduced by equipment acquired under finance leases, which is included in “Property and equipment acquired under finance leases, net of remeasurements and modifications,” principal repayments of all other finance lease liabilities, which is included in “Principal repayments of finance leases,” and “Principal repayments of financing obligations.” All other finance lease liabilities and financing obligations consists of property. In this measure, equipment acquired under finance leases is reflected as if these assets had been purchased with cash, which is not the case as these assets have been leased. The following is a reconciliation of free cash flow less equipment finance leases and principal repayments of all other finance leases and financing obligations to the most comparable GAAP cash flow measure, “Net cash provided by (used in) operating activities,” for the trailing twelve months ended June 30, 2021 and 2022 (in millions):

	Twelve Months Ended June 30,
	2021		2022
Net cash provided by (used in) operating activities	$	59,322	$	35,574
Purchases of property and equipment, net of proceeds from sales and incentives	(47,176)		(59,061)
Free cash flow	12,146		(23,487)
Equipment acquired under finance leases (1)	(7,295)		(1,621)
Principal repayments of all other finance leases (2)	(550)		(751)
Principal repayments of financing obligations	(116)		(205)
Free cash flow less equipment finance leases and principal repayments of all other finance leases and financing obligations	$	4,185	$	(26,064)
Net cash provided by (used in) investing activities	$	(63,659)	$	(38,580)
Net cash provided by (used in) financing activities	$	6,246	$	740

___________________

(1)For the twelve months ended June 30, 2021 and 2022, this amount relates to equipment included in “Property and equipment acquired under finance leases, net of remeasurements and modifications” of $9,976 million and $3,579 million.

(2)For the twelve months ended June 30, 2021 and 2022, this amount relates to property included in “Principal repayments of finance leases” of $11,435 million and $9,789 million.

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All of these free cash flows measures have limitations as they omit certain components of the overall cash flow statement and do not represent the residual cash flow available for discretionary expenditures. For example, these measures of free cash flows do not incorporate the portion of payments representing principal reductions of debt or cash payments for business acquisitions. Additionally, our mix of property and equipment acquisitions with cash or other financing options may change over time. Therefore, we believe it is important to view free cash flows measures only as a complement to our entire consolidated statements of cash flows.

Effect of Foreign Exchange Rates

Information regarding the effect of foreign exchange rates, versus the U.S. Dollar, on our net sales, operating expenses, and operating income is provided to show reported period operating results had the foreign exchange rates remained the same as those in effect in the comparable prior year period. The effect on our net sales, operating expenses, and operating income from changes in our foreign exchange rates versus the U.S. Dollar is as follows (in millions):

	Three Months Ended June 30,												Six Months Ended June 30,
	2021						2022						2021						2022
	As Reported		Exchange Rate Effect (1)		At Prior Year Rates (2)		As Reported		Exchange Rate Effect (1)		At Prior Year Rates (2)		As Reported		Exchange Rate Effect (1)		At Prior Year Rates (2)		As Reported		Exchange Rate Effect (1)		At Prior Year Rates (2)
Net sales	$	113,080	$	(2,471)	$	110,609	$	121,234	$	3,599	$	124,833	$	221,598	$	(4,544)	$	217,054	$	237,678	$	5,440	$	243,118
Operating expenses	105,378		(2,464)		102,914		117,917		3,764		121,681		205,031		(4,430)		200,601		230,692		5,731		236,423
Operating income	7,702		(7)		7,695		3,317		(165)		3,152		16,567		(114)		16,453		6,986		(291)		6,695

___________________

(1)Represents the change in reported amounts resulting from changes in foreign exchange rates from those in effect in the comparable prior year period for operating results.

(2)Represents the outcome that would have resulted had foreign exchange rates in the reported period been the same as those in effect in the comparable prior year period for operating results.

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Guidance

We provided guidance on July 28, 2022, in our earnings release furnished on Form 8-K as set forth below. These forward-looking statements reflect Amazon.com’s expectations as of July 28, 2022, and are subject to substantial uncertainty. Our results are inherently unpredictable and may be materially affected by many factors, such as uncertainty regarding the impacts of the COVID-19 pandemic, fluctuations in foreign exchange rates, changes in global economic conditions and customer demand and spending, inflation, regional labor market and global supply chain constraints, world events, the rate of growth of the Internet, online commerce, and cloud services, as well as those outlined in Item 1A of Part II, “Risk Factors.” This guidance reflects our estimates as of July 28, 2022 regarding the impacts of the COVID-19 pandemic on our operations as well as the effect of other factors discussed above.

Third Quarter 2022 Guidance

•Net sales are expected to be between $125.0 billion and $130.0 billion, or to grow between 13% and 17% compared with third quarter 2021. This guidance anticipates an unfavorable impact of approximately 390 basis points from foreign exchange rates.

•Operating income is expected to be between $0 and $3.5 billion, compared with $4.9 billion in third quarter 2021.

•This guidance assumes, among other things, that no additional business acquisitions, restructurings, or legal settlements are concluded.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk for the effect of interest rate changes, foreign currency fluctuations, and changes in the market values of our investments. Information relating to quantitative and qualitative disclosures about market risk is set forth below and in Item 2 of Part I, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.”

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio and our long-term debt. Our long-term debt is carried at amortized cost and fluctuations in interest rates do not impact our consolidated financial statements. However, the fair value of our debt, which pays interest at a fixed rate, will generally fluctuate with movements of interest rates, increasing in periods of declining rates of interest and declining in periods of increasing rates of interest. We generally invest our excess cash in AAA-rated money market funds and investment grade short- to intermediate-term fixed income securities. Fixed income securities may have their fair market value adversely affected due to a rise in interest rates, and we may suffer losses in principal if forced to sell securities that have declined in market value due to changes in interest rates.

Foreign Exchange Risk

During Q2 2022, net sales from our International segment accounted for 22% of our consolidated revenues. Net sales and related expenses generated from our internationally-focused stores, including within Canada and Mexico (which are included in our North America segment), are primarily denominated in the functional currencies of the corresponding stores and primarily include Euros, British Pounds, and Japanese Yen. The results of operations of, and certain of our intercompany balances associated with, our internationally-focused stores and AWS are exposed to foreign exchange rate fluctuations. Upon consolidation, as foreign exchange rates vary, net sales and other operating results may differ materially from expectations, and we may record significant gains or losses on the remeasurement of intercompany balances. For example, as a result of fluctuations in foreign exchange rates throughout the period compared to rates in effect the prior year, International segment net sales in Q2 2022 decreased by $3.5 billion in comparison with Q2 2021.

We have foreign exchange risk related to foreign-denominated cash, cash equivalents, and marketable securities (“foreign funds”). Based on the balance of foreign funds as of June 30, 2022, of $12.4 billion, an assumed 5%, 10%, and 20% adverse change to foreign exchange would result in fair value declines of $620 million, $1.2 billion, and $2.5 billion. Fluctuations in fair value are recorded in “Accumulated other comprehensive income (loss),” a separate component of stockholders’ equity. Equity securities with readily determinable fair values are included in “Marketable securities” on our consolidated balance sheets and are measured at fair value with changes recognized in “Other income (expense), net” on our consolidated statements of operations.

We have foreign exchange risk related to our intercompany balances denominated in various foreign currencies. Based on the intercompany balances as of June 30, 2022, an assumed 5%, 10%, and 20% adverse change to foreign exchange rates would result in losses of $405 million, $805 million, and $1.6 billion, recorded to “Other income (expense), net.”

See Item 2 of Part I, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Effect of Foreign Exchange Rates” for additional information on the effect on reported results of changes in foreign exchange rates.

Equity Investment Risk

As of June 30, 2022, our recorded value in equity and equity warrant investments in public and private companies was $8.8 billion. Our equity and equity warrant investments in publicly traded companies, which primarily relate to Rivian, represent $6.6 billion of our investments as of June 30, 2022, and are recorded at fair value, which is subject to market price volatility. We record our equity warrant investments in private companies at fair value and adjust our equity investments in private companies for observable price changes or impairments. Valuations of private companies are inherently more complex due to the lack of readily available market data. The current global economic conditions provide additional uncertainty. As such, we believe that market sensitivities are not practicable.

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Item 4. Controls and Procedures

We carried out an evaluation required by the Securities Exchange Act of 1934 (the “1934 Act”), under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) of the 1934 Act, as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the 1934 Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to provide reasonable assurance that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

During the most recent fiscal quarter, there has not occurred any change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives as specified above. Management does not expect, however, that our disclosure controls and procedures will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

See Item 1 of Part I, “Financial Statements — Note 4 — Commitments and Contingencies — Legal Proceedings.”

Item 1A. Risk Factors

Please carefully consider the following discussion of significant factors, events, and uncertainties that make an investment in our securities risky. The events and consequences discussed in these risk factors could, in circumstances we may or may not be able to accurately predict, recognize, or control, have a material adverse effect on our business, growth, reputation, prospects, financial condition, operating results (including components of our financial results), cash flows, liquidity, and stock price. These risk factors do not identify all risks that we face; our operations could also be affected by factors, events, or uncertainties that are not presently known to us or that we currently do not consider to present significant risks to our operations. In addition to the effects of the COVID-19 pandemic and resulting global disruptions on our business and operations discussed in Item 2 of Part I, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in the risk factors below, global economic conditions and additional or unforeseen circumstances, developments, or events may give rise to or amplify many of the risks discussed below.

Business and Industry Risks

We Face Intense Competition

Our businesses are rapidly evolving and intensely competitive, and we have many competitors across geographies, including cross-border competition, and in different industries, including physical, e-commerce, and omnichannel retail, e-commerce services, web and infrastructure computing services, electronic devices, digital content, advertising, grocery, and transportation and logistics services. Some of our current and potential competitors have greater resources, longer histories, more customers, and/or greater brand recognition, particularly with our newly-launched products and services and in our newer geographic regions. They may secure better terms from vendors, adopt more aggressive pricing, and devote more resources to technology, infrastructure, fulfillment, and marketing.

Competition continues to intensify, including with the development of new business models and the entry of new and well-funded competitors, and as our competitors enter into business combinations or alliances and established companies in other market segments expand to become competitive with our business. In addition, new and enhanced technologies, including search, web and infrastructure computing services, digital content, and electronic devices continue to increase our competition. The Internet facilitates competitive entry and comparison shopping, which enhances the ability of new, smaller, or lesser known businesses to compete against us. As a result of competition, our product and service offerings may not be successful, we may fail to gain or may lose business, and we may be required to increase our spending or lower prices, any of which could materially reduce our sales and profits.

Our Expansion into New Products, Services, Technologies, and Geographic Regions Subjects Us to Additional Risks

We may have limited or no experience in our newer market segments, and our customers may not adopt our product or service offerings. These offerings, which can present new and difficult technology challenges, may subject us to claims if customers of these offerings experience service disruptions or failures or other quality issues. In addition, profitability, if any, in our newer activities may not meet our expectations, and we may not be successful enough in these newer activities to recoup our investments in them. Failure to realize the benefits of amounts we invest in new technologies, products, or services could result in the value of those investments being written down or written off. In addition, our sustainability initiatives may be unsuccessful for a variety of reasons, including if we are unable to realize the expected benefits of new technologies or if we do not successfully plan or execute new strategies, which could harm our business or damage our reputation.

Our International Operations Expose Us to a Number of Risks

Our international activities are significant to our revenues and profits, and we plan to further expand internationally. In certain international market segments, we have relatively little operating experience and may not benefit from any first-to-market advantages or otherwise succeed. It is costly to establish, develop, and maintain international operations and stores, and promote our brand internationally. Our international operations may not become profitable on a sustained basis.

In addition to risks described elsewhere in this section, our international sales and operations are subject to a number of risks, including:

•local economic and political conditions;

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•government regulation (such as regulation of our product and service offerings and of competition); restrictive governmental actions (such as trade protection measures, including export duties and quotas and custom duties and tariffs); nationalization; and restrictions on foreign ownership;

•restrictions on sales or distribution of certain products or services and uncertainty regarding liability for products, services, and content, including uncertainty as a result of less Internet-friendly legal systems, local laws, lack of legal precedent, and varying rules, regulations, and practices regarding the physical and digital distribution of media products and enforcement of intellectual property rights;

•business licensing or certification requirements, such as for imports, exports, web services, and electronic devices;

•limitations on the repatriation and investment of funds and foreign currency exchange restrictions;

•limited fulfillment and technology infrastructure;

•shorter payable and longer receivable cycles and the resultant negative impact on cash flow;

•laws and regulations regarding privacy, data use, data protection, data security, network security, consumer protection, payments, advertising, and restrictions on pricing or discounts;

•lower levels of use of the Internet;

•lower levels of consumer spending and fewer opportunities for growth compared to the U.S.;

•lower levels of credit card usage and increased payment risk;

•difficulty in staffing, developing, and managing foreign operations as a result of distance, language, and cultural differences;

•different employee/employer relationships and the existence of works councils and labor unions;

•compliance with the U.S. Foreign Corrupt Practices Act and other applicable U.S. and foreign laws prohibiting corrupt payments to government officials and other third parties;

•laws and policies of the U.S. and other jurisdictions affecting trade, foreign investment, loans, and taxes; and

•geopolitical events, including war and terrorism.

As international physical, e-commerce, and omnichannel retail, cloud services, and other services grow, competition will intensify, including through adoption of evolving business models. Local companies may have a substantial competitive advantage because of their greater understanding of, and focus on, the local customer, as well as their more established local brand names. The inability to hire, train, retain, and manage sufficient required personnel may limit our international growth.

The People’s Republic of China (“PRC”) and India regulate Amazon’s and its affiliates’ businesses and operations in country through regulations and license requirements that may restrict (i) foreign investment in and operation of the Internet, IT infrastructure, data centers, retail, delivery, and other sectors, (ii) Internet content, and (iii) the sale of media and other products and services. For example, in order to meet local ownership, regulatory licensing, and cybersecurity requirements, we provide certain technology services in China through contractual relationships with third parties that hold PRC licenses to provide services. In India, the government restricts the ownership or control of Indian companies by foreign entities involved in online multi-brand retail trading activities. For www.amazon.in, we provide certain marketing tools and logistics services to third-party sellers to enable them to sell online and deliver to customers, and we hold indirect minority interests in entities that are third-party sellers on the www.amazon.in marketplace. Although we believe these structures and activities comply with existing laws, they involve unique risks, and the PRC and India may from time to time consider and implement additional changes in their regulatory, licensing, or other requirements that could impact these structures and activities. There are substantial uncertainties regarding the interpretation of PRC and Indian laws and regulations, and it is possible that these governments will ultimately take a view contrary to ours. In addition, our Chinese and Indian businesses and operations may be unable to continue to operate if we or our affiliates are unable to access sufficient funding or, in China, enforce contractual relationships we or our affiliates have in place. Violation of any existing or future PRC, Indian, or other laws or regulations or changes in the interpretations of those laws and regulations could result in our businesses in those countries being subject to fines and other financial penalties, having licenses revoked, or being forced to restructure our operations or shut down entirely.

The Variability in Our Retail Business Places Increased Strain on Our Operations

Demand for our products and services can fluctuate significantly for many reasons, including as a result of seasonality, promotions, product launches, or unforeseeable events, such as in response to natural or human-caused disasters (including public health crises) or extreme weather (including as a result of climate change), or geopolitical events. For example, we expect a disproportionate amount of our retail sales to occur during our fourth quarter. Our failure to stock or restock popular products in sufficient amounts such that we fail to meet customer demand could significantly affect our revenue and our future

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growth. When we overstock products, we may be required to take significant inventory markdowns or write-offs and incur commitment costs, which could materially reduce profitability. We regularly experience increases in our net shipping cost due to complimentary upgrades, split-shipments, and additional long-zone shipments necessary to ensure timely delivery for the holiday season. If too many customers access our websites within a short period of time due to increased demand, we may experience system interruptions that make our websites unavailable or prevent us from efficiently fulfilling orders, which may reduce the volume of goods we offer or sell and the attractiveness of our products and services. In addition, we may be unable to adequately staff our fulfillment network and customer service centers during these peak periods and delivery and other fulfillment companies and customer service co-sourcers may be unable to meet the seasonal demand. Risks described elsewhere in this Item 1A relating to fulfillment network optimization and inventory are magnified during periods of high demand.

We generally have payment terms with our retail vendors that extend beyond the amount of time necessary to collect proceeds from our consumer customers. As a result of holiday sales, as of December 31 of each year, our cash, cash equivalents, and marketable securities balances typically reach their highest level (other than as a result of cash flows provided by or used in investing and financing activities). This operating cycle results in a corresponding increase in accounts payable as of December 31. Our accounts payable balance generally declines during the first three months of the year, resulting in a corresponding decline in our cash, cash equivalents, and marketable securities balances.

We Are Impacted by Fraudulent or Unlawful Activities of Sellers

The law relating to the liability of online service providers is currently unsettled. In addition, governmental agencies have in the past and could in the future require changes in the way this business is conducted. Under our seller programs, we maintain policies and processes designed to prevent sellers from collecting payments, fraudulently or otherwise, when buyers never receive the products they ordered or when the products received are materially different from the sellers’ descriptions, and to prevent sellers in our stores or through other stores from selling unlawful, counterfeit, pirated, or stolen goods, selling goods in an unlawful or unethical manner, violating the proprietary rights of others, or otherwise violating our policies. When these policies and processes are circumvented or fail to operate sufficiently, it can harm our business or damage our reputation and we could face civil or criminal liability for unlawful activities by our sellers. Under our A2Z Guarantee, we reimburse buyers for payments up to certain limits in these situations, and as our third-party seller sales grow, the cost of this program will increase and could negatively affect our operating results.

We Face Risks Related to Adequately Protecting Our Intellectual Property Rights and Being Accused of Infringing Intellectual Property Rights of Third Parties

We regard our trademarks, service marks, copyrights, patents, trade dress, trade secrets, proprietary technology, and similar intellectual property as critical to our success, and we rely on trademark, copyright, and patent law, trade secret protection, and confidentiality and/or license agreements with our employees, customers, and others to protect our proprietary rights. Effective intellectual property protection is not available in every country in which our products and services are made available. We also may not be able to acquire or maintain appropriate domain names in all countries in which we do business. Furthermore, regulations governing domain names may not protect our trademarks and similar proprietary rights. We may be unable to prevent third parties from acquiring domain names that are similar to, infringe upon, or diminish the value of our trademarks and other proprietary rights.

We are not always able to discover or determine the extent of any unauthorized use of our proprietary rights. Actions taken by third parties that license our proprietary rights may materially diminish the value of our proprietary rights or reputation. The protection of our intellectual property requires the expenditure of significant financial and managerial resources. Moreover, the steps we take to protect our intellectual property do not always adequately protect our rights or prevent third parties from infringing or misappropriating our proprietary rights. We also cannot be certain that others will not independently develop or otherwise acquire equivalent or superior technology or other intellectual property rights.

We have been subject to, and expect to continue to be subject to, claims and legal proceedings regarding alleged infringement by us of the intellectual property rights of third parties. Such claims, whether or not meritorious, have in the past, and may in the future, result in the expenditure of significant financial and managerial resources, injunctions against us, or significant payments for damages, including to satisfy indemnification obligations or to obtain licenses from third parties who allege that we have infringed their rights. Such licenses may not be available on terms acceptable to us or at all. These risks have been amplified by the increase in third parties whose sole or primary business is to assert such claims.

Our digital content offerings depend in part on effective digital rights management technology to control access to digital content. Breach or malfunctioning of the digital rights management technology that we use could subject us to claims, and content providers may be unwilling to include their content in our service.

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We Have Foreign Exchange Risk

The results of operations of, and certain of our intercompany balances associated with, our international stores and product and service offerings are exposed to foreign exchange rate fluctuations. Due to these fluctuations, operating results may differ materially from expectations, and we may record significant gains or losses on the remeasurement of intercompany balances. As we have expanded our international operations, our exposure to exchange rate fluctuations has increased. We also hold cash equivalents and/or marketable securities in foreign currencies such as British Pounds, Canadian Dollars, Euros, and Japanese Yen. When the U.S. Dollar strengthens compared to these currencies, cash equivalents, and marketable securities balances, when translated, may be materially less than expected and vice versa.

Operating Risks

Our Expansion Places a Significant Strain on our Management, Operational, Financial, and Other Resources

We are continuing to rapidly and significantly expand our global operations, including increasing our product and service offerings and scaling our infrastructure to support our retail and services businesses. The complexity of the current scale of our business can place significant strain on our management, personnel, operations, systems, technical performance, financial resources, and internal financial control and reporting functions, and our expansion increases these factors. Failure to manage growth effectively could damage our reputation, limit our growth, and negatively affect our operating results.

We Experience Significant Fluctuations in Our Operating Results and Growth Rate

We are not always able to accurately forecast our growth rate. We base our expense levels and investment plans on sales estimates. A significant portion of our expenses and investments is fixed, and we are not always able to adjust our spending quickly enough if our sales are less than expected.

Our revenue growth may not be sustainable, and our percentage growth rates may decrease. Our revenue and operating profit growth depends on the continued growth of demand for the products and services offered by us or our sellers, and our business is affected by general economic and business conditions worldwide. A softening of demand, whether caused by changes in customer preferences or a weakening of the U.S. or global economies, may result in decreased revenue or growth.

Our sales and operating results will also fluctuate for many other reasons, including due to factors described elsewhere in this section and the following:

•our ability to retain and increase sales to existing customers, attract new customers, and satisfy our customers’ demands;

•our ability to retain and expand our network of sellers;

•our ability to offer products on favorable terms, manage inventory, and fulfill orders;

•the introduction of competitive stores, websites, products, services, price decreases, or improvements;

•changes in usage or adoption rates of the Internet, e-commerce, electronic devices, and web services, including outside the U.S.;

•timing, effectiveness, and costs of expansion and upgrades of our systems and infrastructure;

•the success of our geographic, service, and product line expansions;

•the extent to which we finance, and the terms of any such financing for, our current operations and future growth;

•the outcomes of legal proceedings and claims, which may include significant monetary damages or injunctive relief and could have a material adverse impact on our operating results;

•variations in the mix of products and services we sell;

•variations in our level of merchandise and vendor returns;

•the extent to which we offer fast and free delivery, continue to reduce prices worldwide, and provide additional benefits to our customers;

•factors affecting our reputation or brand image (including any actual or perceived inability to achieve our goals or commitments, whether related to sustainability, customers, employees, or other topics);

•the extent to which we invest in technology and content, fulfillment, and other expense categories;

•increases in the prices of fuel and gasoline, energy products, commodities like paper and packing supplies and hardware products, and technology infrastructure products;

•constrained labor markets, which increase our payroll costs;

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•the extent to which operators of the networks between our customers and our stores successfully charge fees to grant our customers unimpaired and unconstrained access to our online services;

•our ability to collect amounts owed to us when they become due;

•the extent to which new and existing technologies, or industry trends, restrict online advertising or affect our ability to customize advertising or otherwise tailor our product and service offerings;

•the extent to which use of our services is affected by spyware, viruses, phishing and other spam emails, denial of service attacks, data theft, computer intrusions, outages, and similar events; and

•disruptions from natural or human-caused disasters (including public health crises) or extreme weather (including as a result of climate change), geopolitical events and security issues (including terrorist attacks and armed hostilities), labor or trade disputes, and similar events.

We Face Risks Related to Successfully Optimizing and Operating Our Fulfillment Network and Data Centers

Failures to adequately predict customer demand or otherwise optimize and operate our fulfillment network and data centers successfully from time to time result in excess or insufficient fulfillment or data center capacity, service interruptions, increased costs, and impairment charges, any of which could materially harm our business. As we continue to add fulfillment and data center capability or add new businesses with different requirements, our fulfillment and data center networks become increasingly complex and operating them becomes more challenging. There can be no assurance that we will be able to operate our networks effectively.

In addition, failure to optimize inventory or staffing in our fulfillment network increases our net shipping cost by requiring long-zone or partial shipments. We and our co-sourcers may be unable to adequately staff our fulfillment network and customer service centers. For example, productivity across our fulfillment network currently is being affected by global supply chain constraints and constrained labor markets, which increase payroll costs and make it difficult to hire, train, and deploy a sufficient number of people to operate our fulfillment network as efficiently as we would like. We are also subject to labor union efforts to organize groups of our employees from time to time and, if successful, those organizational efforts may decrease our operational flexibility, which could adversely affect our fulfillment network operating efficiency.

Under some of our commercial agreements, we maintain the inventory of other companies, thereby increasing the complexity of tracking inventory and operating our fulfillment network. Our failure to properly handle such inventory or the inability of the other businesses on whose behalf we perform inventory fulfillment services to accurately forecast product demand may result in us being unable to secure sufficient storage space or to optimize our fulfillment network or cause other unexpected costs and other harm to our business and reputation.

We rely on a limited number of shipping companies to deliver inventory to us and completed orders to our customers. An inability to negotiate acceptable terms with these companies or performance problems, staffing limitations, or other difficulties experienced by these companies or by our own transportation systems, including as a result of labor market constraints and related costs, could negatively impact our operating results and customer experience. In addition, our ability to receive inbound inventory efficiently and ship completed orders to customers also may be negatively affected by natural or human-caused disasters (including public health crises) or extreme weather (including as a result of climate change), geopolitical events and security issues, labor or trade disputes, and similar events.

We Could Be Harmed by Data Loss or Other Security Breaches

Because we collect, process, store, and transmit large amounts of data, including confidential, sensitive, proprietary, and business and personal information, failure to prevent or mitigate data loss, theft, misuse, or other security breaches or vulnerabilities affecting our or our vendors’ or customers’ technology, products, and systems, could: expose us or our customers to a risk of loss, disclosure, or misuse of such information; adversely affect our operating results; result in litigation, liability, or regulatory action (including under laws related to privacy, data use, data protection, data security, network security, and consumer protection); deter customers or sellers from using our stores, products, and services; and otherwise harm our business and reputation. We use third-party technology and systems for a variety of reasons, including, without limitation, encryption and authentication technology, employee email, content delivery to customers, back-office support, and other functions. Some of our systems have experienced past security breaches, and, although they did not have a material adverse effect on our operating results, there can be no assurance that future incidents will not have material adverse effects on our operations or financial results. Although we have developed systems and processes that are designed to protect customer data and prevent such incidents, including systems and processes designed to reduce the impact of a security breach at a third-party vendor or customer, such measures cannot provide absolute security and may fail to operate as intended or be circumvented.

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We Face Risks Related to System Interruption and Lack of Redundancy

We experience occasional system interruptions and delays that make our websites and services unavailable or slow to respond and prevent us from efficiently accepting or fulfilling orders or providing services to customers and third parties, which may reduce our net sales and the attractiveness of our products and services. Steps we take to add software and hardware, upgrade our systems and network infrastructure, and improve the stability and efficiency of our systems may not be sufficient to avoid system interruptions or delays that could adversely affect our operating results.

Our computer and communications systems and operations in the past have been, or in the future could be, damaged or interrupted due to events such as natural or human-caused disasters (including public health crises) or extreme weather (including as a result of climate change), geopolitical events and security issues (including terrorist attacks and armed hostilities), computer viruses, physical or electronic break-ins, operational failures, and similar events or disruptions. Any of these events could cause system interruption, delays, and loss of critical data, and could prevent us from accepting and fulfilling customer orders and providing services, which could make our product and service offerings less attractive and subject us to liability. Our systems are not fully redundant and our disaster recovery planning may not be sufficient. In addition, our insurance may not provide sufficient coverage to compensate for related losses. Any of these events could damage our reputation and be expensive to remedy.

The Loss of Key Senior Management Personnel or the Failure to Hire and Retain Highly Skilled and Other Key Personnel Could Negatively Affect Our Business

We depend on our senior management and other key personnel, including our President and CEO. We do not have “key person” life insurance policies. We also rely on other highly skilled personnel. Competition for qualified personnel in the industries in which we operate, as well as senior management, has historically been intense. For example, we experience significant competition in the technology industry, particularly for software engineers, computer scientists, and other technical staff. In addition, changes we make to our current and future work environments may not meet the needs or expectations of our employees or may be perceived as less favorable compared to other companies’ policies, which could negatively impact our ability to hire and retain qualified personnel. The loss of any of our executive officers or other key employees, the failure to successfully transition key roles, or the inability to hire, train, retain, and manage qualified personnel, could harm our business.

Our Supplier Relationships Subject Us to a Number of Risks

We have significant suppliers, including content and technology licensors, and in some cases, limited or single-sources of supply, that are important to our sourcing, services, manufacturing, and any related ongoing servicing of merchandise and content. We do not have long-term arrangements with most of our suppliers to guarantee availability of merchandise, content, components, or services, particular payment terms, or the extension of credit limits. Decisions by our current suppliers to limit or stop selling or licensing merchandise, content, components, or services to us on acceptable terms, or delay delivery, including as a result of one or more supplier bankruptcies due to poor economic conditions, as a result of natural or human-caused disasters (including public health crises), or for other reasons, may result in our being unable to procure alternatives from other suppliers in a timely and efficient manner and on acceptable terms, or at all. In addition, violations by our suppliers or other vendors of applicable laws, regulations, contractual terms, intellectual property rights of others, or our Supply Chain Standards, as well as products or practices regarded as unethical, unsafe, or hazardous, could expose us to claims, damage our reputation, limit our growth, and negatively affect our operating results.

Our Commercial Agreements, Strategic Alliances, and Other Business Relationships Expose Us to Risks

We provide physical, e-commerce, and omnichannel retail, cloud services, and other services to businesses through commercial agreements, strategic alliances, and business relationships. Under these agreements, we provide web services, technology, fulfillment, computing, digital storage, and other services, as well as enable sellers to offer products or services through our stores. These arrangements are complex and require substantial infrastructure capacity, personnel, and other resource commitments, which may limit the amount of business we can service. We may not be able to implement, maintain, and develop the components of these commercial relationships, which may include web services, fulfillment, customer service, inventory management, tax collection, payment processing, hardware, content, and third-party software, and engaging third parties to perform services. The amount of compensation we receive under certain of our commercial agreements is partially dependent on the volume of the other company’s sales. Therefore, when the other company’s offerings are not successful, the compensation we receive may be lower than expected or the agreement may be terminated. Moreover, we may not be able to enter into additional or alternative commercial relationships and strategic alliances on favorable terms. We also may be subject to claims from businesses to which we provide these services if we are unsuccessful in implementing, maintaining, or developing these services.

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As our agreements terminate, we may be unable to renew or replace these agreements on comparable terms, or at all. We may in the future enter into amendments on less favorable terms or encounter parties that have difficulty meeting their contractual obligations to us, which could adversely affect our operating results.

Our present and future commercial agreements, strategic alliances, and business relationships create additional risks such as:

•disruption of our ongoing business, including loss of management focus on existing businesses;

•impairment of other relationships;

•variability in revenue and income from entering into, amending, or terminating such agreements or relationships; and

•difficulty integrating under the commercial agreements.

Our Business Suffers When We Are Unsuccessful in Making, Integrating, and Maintaining Acquisitions and Investments

We have acquired and invested in a number of companies, and we may in the future acquire or invest in or enter into joint ventures with additional companies. These transactions create risks such as:

•disruption of our ongoing business, including loss of management focus on existing businesses;

•problems retaining key personnel;

•additional operating losses and expenses of the businesses we acquired or in which we invested;

•the potential impairment of tangible and intangible assets and goodwill, including as a result of acquisitions;

•the potential impairment of customer and other relationships of the company we acquired or in which we invested or our own customers as a result of any integration of operations;

•the difficulty of completing such transactions and achieving anticipated benefits within expected timeframes, or at all;

•the difficulty of incorporating acquired operations, technology, and rights into our offerings, and unanticipated expenses related to such integration;

•the difficulty of integrating a new company’s accounting, financial reporting, management, information and data security, human resource, and other administrative systems to permit effective management, and the lack of control if such integration is delayed or not successfully implemented;

•losses we may incur as a result of declines in the value of an investment or as a result of incorporating an investee’s financial performance into our financial results;

•for investments in which an investee’s financial performance is incorporated into our financial results, either in full or in part, or investments for which we are required to file financial statements or provide financial information, the dependence on the investee’s accounting, financial reporting, and similar systems, controls, and processes;

•the difficulty of implementing at companies we acquire the controls, procedures, and policies appropriate for a larger public company;

•the risks associated with businesses we acquire or invest in, which may differ from or be more significant than the risks our other businesses face;

•potential unknown liabilities associated with a company we acquire or in which we invest; and

•for foreign transactions, additional risks related to the integration of operations across different cultures and languages, and the economic, political, and regulatory risks associated with specific countries.

As a result of future acquisitions or mergers, we might need to issue additional equity securities, spend our cash, or incur debt, contingent liabilities, or amortization expenses related to intangible assets, any of which could reduce our profitability and harm our business or only be available on unfavorable terms, if at all. In addition, valuations supporting our acquisitions and strategic investments could change rapidly. We could determine that such valuations have experienced impairments or other-than-temporary declines in fair value which could adversely impact our financial results.

We Face Significant Inventory Risk

In addition to risks described elsewhere in this Item 1A relating to fulfillment network and inventory optimization by us and third parties, we are exposed to significant inventory risks that may adversely affect our operating results as a result of seasonality, new product launches, rapid changes in product cycles and pricing, defective merchandise, changes in consumer demand and consumer spending patterns, changes in consumer tastes with respect to our products, spoilage, and other factors. We endeavor to accurately predict these trends and avoid overstocking or understocking products we manufacture and/or sell.

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Demand for products, however, can change significantly between the time inventory or components are ordered and the date of sale. In addition, when we begin selling or manufacturing a new product, it may be difficult to establish vendor relationships, determine appropriate product or component selection, and accurately forecast demand. The acquisition of certain types of inventory or components requires significant lead-time and prepayment and they may not be returnable. We carry a broad selection and significant inventory levels of certain products, such as consumer electronics, and at times we are unable to sell products in sufficient quantities or to meet demand during the relevant selling seasons. Any one of the inventory risk factors set forth above may adversely affect our operating results.

We Are Subject to Payments-Related Risks

We accept payments using a variety of methods, including credit card, debit card, credit accounts (including promotional financing), gift cards, direct debit from a customer’s bank account, consumer invoicing, physical bank check, and payment upon delivery. For existing and future payment options we offer to our customers, we currently are subject to, and may become subject to additional, regulations and compliance requirements (including obligations to implement enhanced authentication processes that could result in significant costs and reduce the ease of use of our payments products), as well as fraud. For certain payment methods, including credit and debit cards, we pay interchange and other fees, which may increase over time and raise our operating costs and lower profitability. We rely on third parties to provide certain Amazon-branded payment methods and payment processing services, including the processing of credit cards, debit cards, electronic checks, and promotional financing. In each case, it could disrupt our business if these companies become unwilling or unable to provide these services to us. We also offer co-branded credit card programs, which could adversely affect our operating results if renewed on less favorable terms or terminated. We are also subject to payment card association operating rules, including data security rules, certification requirements, and rules governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply. Failure to comply with these rules or requirements, as well as any breach, compromise, or failure to otherwise detect or prevent fraudulent activity involving our data security systems, could result in our being liable for card issuing banks’ costs, subject to fines and higher transaction fees, and loss of our ability to accept credit and debit card payments from our customers, process electronic funds transfers, or facilitate other types of online payments, and our business and operating results could be adversely affected.

In addition, we provide regulated services in certain jurisdictions because we enable customers to keep account balances with us and transfer money to third parties, and because we provide services to third parties to facilitate payments on their behalf. Jurisdictions subject us to requirements for licensing, regulatory inspection, bonding and capital maintenance, the use, handling, and segregation of transferred funds, consumer disclosures, maintaining or processing data, and authentication. We are also subject to or voluntarily comply with a number of other laws and regulations relating to payments, money laundering, international money transfers, privacy, data use, data protection, data security, network security, consumer protection, and electronic fund transfers. If we were found to be in violation of applicable laws or regulations, we could be subject to additional requirements and civil and criminal penalties, or forced to cease providing certain services.

We Have a Rapidly Evolving Business Model and Our Stock Price Is Highly Volatile

We have a rapidly evolving business model. The trading price of our common stock fluctuates significantly in response to, among other risks, the risks described elsewhere in this Item 1A, as well as:

•changes in interest rates;

•conditions or trends in the Internet and the industry segments we operate in;

•quarterly variations in operating results;

•fluctuations in the stock market in general and market prices for Internet-related companies in particular;

•changes in financial estimates by us or decisions to increase or decrease future spending or investment levels;

•changes in financial estimates and recommendations by securities analysts;

•changes in our capital structure, including issuance of additional debt or equity to the public;

•changes in the valuation methodology of, or performance by, other e-commerce or technology companies; and

•transactions in our common stock by major investors and certain analyst reports, news, and speculation.

Volatility in our stock price could adversely affect our business and financing opportunities and force us to increase our cash compensation to employees or grant larger stock awards than we have historically, which could hurt our operating results or reduce the percentage ownership of our existing stockholders, or both.

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Legal and Regulatory Risks

Government Regulation Is Evolving and Unfavorable Changes Could Harm Our Business

We are subject to general business regulations and laws, as well as regulations and laws specifically governing the Internet, physical, e-commerce, and omnichannel retail, digital content, web services, electronic devices, advertising, artificial intelligence technologies and services, and other products and services that we offer or sell. These regulations and laws cover taxation, privacy, data use, data protection, data security, network security, consumer protection, pricing, content, copyrights, distribution, transportation, mobile communications, electronic device certification, electronic waste, energy consumption, environmental regulation, electronic contracts and other communications, competition, employment, trade and protectionist measures, web services, the provision of online payment services, registration, licensing, and information reporting requirements, unencumbered Internet access to our services or access to our facilities, the design and operation of websites, health, safety, and sanitation standards, the characteristics, legality, and quality of products and services, product labeling, the commercial operation of unmanned aircraft systems, healthcare, and other matters. It is not clear how existing laws governing issues such as property ownership, libel, privacy, data use, data protection, data security, network security, and consumer protection apply to aspects of our operations such as the Internet, e-commerce, digital content, web services, electronic devices, advertising, and artificial intelligence technologies and services. A large number of jurisdictions regulate our operations, and the extent, nature, and scope of such regulations is evolving and expanding as the scope of our businesses expand. We are regularly subject to formal and informal reviews, investigations, and other proceedings by governments and regulatory authorities under existing laws, regulations, or interpretations or pursuing new and novel approaches to regulate our operations. For example, we face a number of open investigations based on claims that aspects of our operations violate competition rules, including aspects of Amazon’s European marketplace for sellers, particularly with respect to use of data, fulfillment services, and featured offers, and legislative and regulatory initiatives in Europe and elsewhere allow authorities to restrict or prohibit certain operations or actions pre-emptively without the need to assess specific competitive effects. Unfavorable regulations, laws, decisions, or interpretations by government or regulatory authorities applying those laws and regulations, or inquiries, investigations, or enforcement actions threatened or initiated by them, could cause us to incur substantial costs, expose us to unanticipated civil and criminal liability or penalties (including substantial monetary fines), diminish the demand for, or availability of, our products and services, increase our cost of doing business, require us to change our business practices in a manner materially adverse to our business, damage our reputation, impede our growth, or otherwise have a material effect on our operations. The media, political, and regulatory scrutiny we face, which may continue to increase, amplifies these risks.

Claims, Litigation, Government Investigations, and Other Proceedings May Adversely Affect Our Business and Results of Operations

As an innovative company offering a wide range of consumer and business products and services around the world, we are regularly subject to actual and threatened claims, litigation, reviews, investigations, and other proceedings, including proceedings by governments and regulatory authorities, involving a wide range of issues, including patent and other intellectual property matters, taxes, labor and employment, competition and antitrust, privacy, data use, data protection, data security, network security, consumer protection, commercial disputes, goods and services offered by us and by third parties, and other matters. The number and scale of these proceedings have increased over time as our businesses have expanded in scope and geographic reach, as our products, services, and operations have become more complex and available to, and used by, more people, and as governments and regulatory authorities seek to regulate us on a pre-emptive basis. Any of these types of proceedings can have an adverse effect on us because of legal costs, disruption of our operations, diversion of management resources, negative publicity, and other factors. The outcomes of these matters are inherently unpredictable and subject to significant uncertainties. Determining legal reserves or possible losses from such matters involves judgment and may not reflect the full range of uncertainties and unpredictable outcomes. Until the final resolution of such matters, we may be exposed to losses in excess of the amount recorded, and such amounts could be material. Should any of our estimates and assumptions change or prove to have been incorrect, it could have a material effect on our business, consolidated financial position, results of operations, or cash flows. In addition, it is possible that a resolution of one or more such proceedings, including as a result of a settlement, could involve licenses, sanctions, consent decrees, or orders requiring us to make substantial future payments, preventing us from offering certain products or services, requiring us to change our business practices in a manner materially adverse to our business, requiring development of non-infringing or otherwise altered products or technologies, damaging our reputation, or otherwise having a material effect on our operations.

We Are Subject to Product Liability Claims When People or Property Are Harmed by the Products We Sell or Manufacture

Some of the products we sell or manufacture expose us to product liability or food safety claims relating to personal injury or illness, death, or environmental or property damage, and can require product recalls or other actions. Third parties who sell products using our services and stores also expose us to product liability claims. Although we maintain liability insurance, we cannot be certain that our coverage will be adequate for liabilities actually incurred or that insurance will continue to be

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available to us on economically reasonable terms, or at all. Although we impose contractual terms on sellers that are intended to prohibit sales of certain type of products, we may not be able to detect, enforce, or collect sufficient damages for breaches of such agreements. In addition, some of our agreements with our vendors and sellers do not indemnify us from product liability.

We Face Additional Tax Liabilities and Collection Obligations

We are subject to a variety of taxes and tax collection obligations in the U.S. (federal and state) and numerous foreign jurisdictions. We may recognize additional tax expense and be subject to additional tax liabilities, including other liabilities for tax collection obligations due to changes in laws, regulations, administrative practices, principles, and interpretations related to tax, including changes to the global tax framework, competition, and other laws and accounting rules in various jurisdictions. Such changes could come about as a result of economic, political, and other conditions. An increasing number of jurisdictions are considering or have adopted laws or administrative practices that impose new tax measures, including revenue-based taxes, targeting online commerce and the remote selling of goods and services. These include new obligations to withhold or collect sales, consumption, value added, or other taxes on online marketplaces and remote sellers, or other requirements that may result in liability for third party obligations. For example, non-U.S. jurisdictions have proposed or enacted taxes on online advertising and marketplace service revenues. Proliferation of these or similar unilateral tax measures may continue unless broader international tax reform is implemented. Our results of operations and cash flows could be adversely affected by additional taxes imposed on us prospectively or retroactively or additional taxes or penalties resulting from the failure to comply with any collection obligations or failure to provide information about our customers, suppliers, and other third parties for tax reporting purposes to various government agencies. In some cases we also may not have sufficient notice to enable us to build systems and adopt processes to properly comply with new reporting or collection obligations by the effective date.

Our tax expense and liabilities are also affected by other factors, such as changes in our business operations, acquisitions, investments, entry into new businesses and geographies, intercompany transactions, the relative amount of our foreign earnings, losses incurred in jurisdictions for which we are not able to realize related tax benefits, the applicability of special or extraterritorial tax regimes, changes in foreign currency exchange rates, changes in our stock price, changes to our forecasts of income and loss and the mix of jurisdictions to which they relate, and changes in our tax assets and liabilities and their valuation. In the ordinary course of our business, there are many transactions and calculations for which the ultimate tax determination is uncertain. Significant judgment is required in evaluating and estimating our tax expense, assets, and liabilities.

We are also subject to tax controversies in various jurisdictions that can result in tax assessments against us. Developments in an audit, investigation, or other tax controversy can have a material effect on our operating results or cash flows in the period or periods for which that development occurs, as well as for prior and subsequent periods. Due to the inherent complexity and uncertainty of these matters, interpretations of certain tax laws by authorities, and judicial, administrative, and regulatory processes in certain jurisdictions, the final outcome of any such controversy may be materially different from our expectations. We regularly assess the likelihood of an adverse outcome resulting from these proceedings to determine the adequacy of our tax accruals. Although we believe our tax estimates are reasonable, the final outcome of audits, investigations, and any other tax controversies could be materially different from our historical tax accruals.

We Are Subject to Risks Related to Government Contracts and Related Procurement Regulations

Our contracts with U.S., as well as state, local, and foreign, government entities are subject to various procurement regulations and other requirements relating to their formation, administration, and performance. We are subject to audits and investigations relating to our government contracts, and any violations could result in various civil and criminal penalties and administrative sanctions, including termination of contract, refunding or suspending of payments, forfeiture of profits, payment of fines, and suspension or debarment from future government business. In addition, some of these contracts are subject to periodic funding approval and/or provide for termination by the government at any time, without cause.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In March 2022, the Board of Directors authorized a program to repurchase up to $10.0 billion of our common stock, with no fixed expiration, which replaced the previous $5.0 billion stock repurchase authorization, approved by the Board of Directors in February 2016. We repurchased 27.5 million shares of our common stock for $3.3 billion during the three months ended June 30, 2022 under the program. The table below sets forth information regarding the Company’s purchases of its common stock during three months ended June 30, 2022 (in millions, except per share data):

	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Approximate Dollar Value of Shares that May Yet be Repurchased Under the Program
April 1 - April 30, 2022	8.5	$	138	8.5	$	8,266
May 1 - May 31, 2022	13.7	117		13.7	6,675
June 1 - June 30, 2022	5.3	106		5.3	6,119
Total	27.5			27.5

All repurchases disclosed in the table were pursuant to the March 2022 Board of Directors’ authorization.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

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Item 6. Exhibits

Exhibit Number	Description
3.1	Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to the Company’s Current Report on Form 8-K, filed May 27, 2022).
3.2	Amended and Restated Bylaws of the Company (incorporated by reference to the Company’s Current Report on Form 8-K, filed May 29, 2020).
4.1	Supplemental Indenture, dated as of April 13, 2022, among Amazon.com, Inc., Wells Fargo Bank, National Association, as prior trustee, and Computershare Trust Company, National Association, as successor trustee, containing Form of 2.730% Note due 2024, Form of 3.000% Note due 2025, Form of 3.300% Note due 2027, Form of 3.450% Note due 2029, Form of 3.600% Note due 2032, Form of 3.950% Note due 2052, and Form of 4.100% Note due 2062 (incorporated by reference to the Company’s Current Report on Form 8-K, filed April 13, 2022).
10.1	1997 Stock Incentive Plan (amended and restated).
10.2	1999 Nonofficer Employee Stock Option Plan (amended and restated).
31.1	Certification of Andrew R. Jassy, President and Chief Executive Officer of Amazon.com, Inc., pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
31.2	Certification of Brian T. Olsavsky, Senior Vice President and Chief Financial Officer of Amazon.com, Inc., pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
32.1	Certification of Andrew R. Jassy, President and Chief Executive Officer of Amazon.com, Inc., pursuant to 18 U.S.C. Section 1350.
32.2	Certification of Brian T. Olsavsky, Senior Vice President and Chief Financial Officer of Amazon.com, Inc., pursuant to 18 U.S.C. Section 1350.
101	The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, formatted in Inline XBRL: (i) Consolidated Statements of Cash Flows, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Balance Sheets, and (v) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
104	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, formatted in Inline XBRL (included as Exhibit 101).

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

AMAZON.COM, INC. (REGISTRANT)
By:	/s/ Shelley L. Reynolds
	Shelley L. Reynolds
	Vice President, Worldwide Controller
	(Principal Accounting Officer)

Dated: July 28, 2022

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EX-10.1

Exhibit 10.1

AMAZON.COM, INC.

1997 STOCK INCENTIVE PLAN
(as amended and restated)

SECTION 1. PURPOSE

The purpose of the Amazon.com, Inc. 1997 Stock Incentive Plan (the “Plan”) is to enhance the long-term stockholder value of Amazon.com, Inc., a Delaware corporation (the “Company”), by offering opportunities to employees, directors, officers, consultants, agents, advisors and independent contractors of the Company and its Subsidiaries (as defined in Section 2) to participate in the Company’s growth and success, and to encourage them to remain in the service of the Company and its Subsidiaries and to acquire and maintain stock ownership in the Company.

SECTION 2. DEFINITIONS

For purposes of the Plan, the following terms shall be defined as set forth below:

2.1Award

“Award” means an award or grant made pursuant to the Plan, including, without limitation, awards or grants of Options and Stock Awards , or any combination of the foregoing.

2.2Board

“Board” means the Board of Directors of the Company.

2.3Cause

“Cause” means dishonesty, fraud, misconduct, unauthorized use or disclosure of confidential information or trade secrets, or conviction or confession of a crime punishable by law (except minor violations), in each case as determined by the Plan Administrator, and its determination shall be conclusive and binding.

2.4Code

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

2.5Common Stock

“Common Stock” means the common stock, par value $.01 per share, of the Company.

2.6Corporate Transaction

“Corporate Transaction” means any of the following events:

(a)Consummation of any merger or consolidation of the Company in which the Company is not the continuing or surviving corporation, or pursuant to which shares of the Common Stock are converted into cash, securities or other property (other than a merger of the Company in which the holders of Common Stock immediately prior to the merger have the same proportionate ownership of capital stock of the surviving corporation immediately after the merger);

(b)Consummation of any sale, lease, exchange or other transfer in one transaction or a series of related transactions of all or substantially all of the Company’s assets other than a transfer of the Company’s assets to a majority-owned subsidiary corporation (as the term “subsidiary corporation” is defined in Section 8.3) of the Company; or

(c)Approval by the holders of the Common Stock of any plan or proposal for the liquidation or dissolution of the Company.

2.7Disability

“Disability” means “permanent and total disability” as that term is defined for purposes of Section 22(e)(3) of the Code.

2.8Early Retirement

“Early Retirement” means early retirement as that term is defined by the Plan Administrator from time to time for purposes of the Plan.

2.9Exchange Act

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

2.10Fair Market Value

The “Fair Market Value” shall be as established in good faith by the Plan Administrator or (a) if the Common Stock is listed on the Nasdaq National Market, the average of the high and low per share sales prices for the Common Stock as reported by the Nasdaq National Market for a single trading day or (b) if the Common Stock is listed on the New York Stock Exchange or the American Stock Exchange, the average of the high and low per share sales prices for the Common Stock as such price is officially quoted in the composite tape of transactions on such exchange for a single trading day. If there is no such reported price for the Common Stock for the date in question, then such price on the last preceding date for which such price exists shall be determinative of the Fair Market Value.

2.11Grant Date

“Grant Date” means the date the Plan Administrator adopted the granting resolution and all conditions precedent to the grant have been satisfied; provided that conditions to the exercisability or vesting of Awards shall not defer the Grant Date. If, however, the Plan

-2-

Administrator designates in a resolution a later date as the date an Award is to be granted, then such later date shall be the “Grant Date.”

2.12Incentive Stock Option

“Incentive Stock Option” means an Option to purchase Common Stock granted under Section 7 with the intention that it qualify as an “incentive stock option” as that term is defined in Section 422 of the Code.

2.13Nonqualified Stock Option

“Nonqualified Stock Option” means an Option to purchase Common Stock granted under Section 7 other than an Incentive Stock Option.

2.14Option

“Option” means the right to purchase Common Stock granted under Section 7.

2.15Participant

“Participant” means (a) the person to whom an Award is granted; (b) for a Participant who has died, the personal representative of the Participant’s estate, the person(s) to whom the Participant’s rights under the Award have passed by will or by the applicable laws of descent and distribution, or the beneficiary designated in accordance with Section 10; or (c) person(s) to whom an Award has been transferred in accordance with Section 10.

2.16Plan Administrator

“Plan Administrator” means the Board or any committee of the Board designated to administer the Plan under Section 3.1.

2.17Retirement

“Retirement” means retirement on or after the individual’s normal retirement date under the Company’s 401(k) plan or other similar successor plan applicable to salaried employees, unless otherwise defined by the Plan Administrator from time to time for purposes of the Plan.

2.18Securities Act

“Securities Act” means the Securities Act of 1933, as amended.

2.19Stock Award

“Stock Award” means shares of Common Stock or units denominated in Common Stock granted under Section 9, the rights of ownership of which may be subject to restrictions prescribed by the Plan Administrator.

2.20Subsidiary

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“Subsidiary,” except as provided in Section 8.3 in connection with Incentive Stock Options, means any entity that is directly or indirectly controlled by the Company or in which the Company has a significant ownership interest, as determined by the Plan Administrator, and any entity that may become a direct or indirect parent of the Company.

SECTION 3. ADMINISTRATION

3.1Plan Administrator

The Plan shall be administered by the Board or a committee or committees (which term includes subcommittees) appointed by, and consisting of two or more members of, the Board. If and so long as the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, the Board shall consider in selecting the Plan Administrator and the membership of any committee acting as Plan Administrator, with respect to any persons subject or likely to become subject to Section 16 of the Exchange Act, the provisions regarding (a) “outside directors” as contemplated by Section 162(m) of the Code and (b) “nonemployee directors” as contemplated by Rule 16b-3 under the Exchange Act. The Board may delegate the responsibility for administering the Plan with respect to designated classes of eligible persons to different committees consisting of one or more members of the Board, subject to such limitations as the Board deems appropriate. Committee members shall serve for such term as the Board may determine, subject to removal by the Board at any time. To the extent consistent with applicable law, the Plan Administrator may authorize one or more officers of the Company to grant Awards to designated classes of eligible persons, within the limits specifically prescribed by the Plan Administrator.

3.2Administration and Interpretation by the Plan Administrator

Except for the terms and conditions explicitly set forth in the Plan, the Plan Administrator shall have exclusive authority, in its discretion, to determine all matters relating to Awards under the Plan, including the selection of individuals to be granted Awards, the type of Awards, the number of shares of Common Stock subject to an Award, all terms, conditions, restrictions and limitations, if any, of an Award and the terms of any instrument that evidences the Award. The Plan Administrator shall also have exclusive authority to interpret the Plan and may from time to time adopt, and change, rules and regulations of general application for the Plan’s administration. The Plan Administrator’s interpretation of the Plan and its rules and regulations, and all actions taken and determinations made by the Plan Administrator pursuant to the Plan, shall be conclusive and binding on all parties involved or affected. The Plan Administrator may delegate administrative duties to such of the Company’s officers as it so determines.

SECTION 4. STOCK SUBJECT TO THE PLAN1

4.1Authorized Number of Shares

Subject to adjustment from time to time as provided in Section 11.1, the number of shares of Common Stock that shall be available for issuance under the Plan shall be:

1    Share amounts reflect 20-for-1 stock split effective May 2022.

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(a)1,600 million shares plus;

(b)an annual increase to be added as of the first day of the Company’s fiscal year beginning in 2001 and ending with a final increase on January 1, 2010, equal to (i) the lesser of (a) 4% of the outstanding common shares of the Company as of the end of the immediately preceding fiscal year and (b) 300 million shares, or (ii) a lesser amount determined by the Plan Administrator; provided that any shares from any such increases in previous years that are not actually issued shall be added to the aggregate number of shares available for issuance under the Plan; plus

(c)any authorized shares of Common Stock that, as of February 26, 1997, were available for issuance under the Company’s 1994 Stock Option Plan (the “Prior Plan”) (or that thereafter become available for issuance under the Prior Plan in accordance with its terms as in effect on such date), up to an aggregate maximum of 420,501,500 shares.

(d)Notwithstanding the foregoing, the maximum number of shares that may be issued pursuant to Options intended to qualify as Incentive Stock Options shall be 5,020,501,500.

Shares issued under the Plan shall be drawn from authorized and unissued shares or shares now held or subsequently acquired by the Company as treasury shares.

4.2Limitations

Subject to adjustment from time to time as provided in Section 11.1, not more than 90,000,000 shares of Common Stock may be made subject to Awards under the Plan to any individual in the aggregate in any one fiscal year of the Company, except that the Company may make additional one-time grants of up to 360 million shares to newly hired or newly promoted individuals, such limitation to be applied in a manner consistent with the requirements of, and only to the extent required for compliance with, the exclusion from the limitation on deductibility of compensation under Section 162(m) of the Code.

4.3Reuse of Shares

Any shares of Common Stock that have been made subject to an Award that cease to be subject to the Award (other than by reason of exercise or payment of the Award to the extent it is exercised for or settled in shares), and/or shares of Common Stock subject to repurchase or forfeiture which are subsequently reacquired by the Company, shall again be available for issuance in connection with future grants of Awards under the Plan; provided, however, that for purposes of Section 4.2, any such shares shall be counted in accordance with the requirements of Section 162(m) of the Code.

SECTION 5. ELIGIBILITY

Awards may be granted under the Plan to those officers, directors and employees of the Company and its Subsidiaries as the Plan Administrator from time to time selects. Awards may

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also be granted to consultants, agents, advisors and independent contractors who provide services to the Company and its Subsidiaries.

SECTION 6. AWARDS

6.1Form and Grant of Awards

The Plan Administrator shall have the authority, in its sole discretion, to determine the type or types of Awards to be made under the Plan. Such Awards may include, but are not limited to, Incentive Stock Options, Nonqualified Stock Options and Stock Awards. Awards may be granted singly or in combination.

6.2Settlement of Awards

The Company may settle Awards through the delivery of shares of Common Stock, cash payments, the granting of replacement Awards or any combination thereof as the Plan Administrator shall determine. Any Award settlement, including payment deferrals, may be subject to such conditions, restrictions and contingencies as the Plan Administrator shall determine. The Plan Administrator may permit or require the deferral of any Award payment, subject to such rules and procedures as it may establish, which may include provisions for the payment or crediting of interest, or dividend equivalents, including converting such credits into deferred stock equivalents.

6.3Acquired Company Option Awards

Notwithstanding anything in the Plan to the contrary, the Plan Administrator may grant Awards under the Plan in substitution for awards issued under other plans, or assume under the Plan awards issued under other plans, if the other plans are or were plans of other acquired entities (“Acquired Entities”) (or the parent of an Acquired Entity) and the new Award is substituted, or the old award is assumed, by reason of a merger, consolidation, acquisition of property or of stock, reorganization or liquidation (the “Acquisition Transaction”). In the event that a written agreement pursuant to which the Acquisition Transaction is completed is approved by the Board and said agreement sets forth the terms and conditions of the substitution for or assumption of outstanding awards of the Acquired Entity, said terms and conditions shall be deemed to be the action of the Plan Administrator without any further action by the Plan Administrator, except as may be required for compliance with Rule 16b-3 under the Exchange Act, and the persons holding such awards shall be deemed to be Participants.

6.4Prohibition on Option Repricing

Except for adjustments made pursuant to Section 11 hereof, unless approved by the Company’s stockholders the exercise price of any outstanding Option granted under the Plan may not be decreased after the Grant Date nor may any outstanding Option with an exercise price that is at the time in excess of Fair Market Value be surrendered to the Company in exchange for the grant of a new Option with a lower exercise price, the grant of another Award, or cash.

SECTION 7. TERMS AND CONDITIONS OF OPTIONS

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7.1Grant of Options

The Plan Administrator is authorized under the Plan, in its sole discretion, to issue Options as Incentive Stock Options or as Nonqualified Stock Options, which shall be appropriately designated.

7.2Option Exercise Price

The exercise price for shares purchased under an Option shall be as determined by the Plan Administrator, but shall not be less than 100% of the Fair Market Value of the Common Stock on the Grant Date with respect to Incentive Stock Options.

7.3Term of Options

The term of each Option shall be as established by the Plan Administrator or, if not so established, shall be 10 years from the Grant Date.

7.4Exercise and Vesting of Options

The Plan Administrator shall establish and set forth in each instrument that evidences an Option the time at which, or the installments in which, the Option shall vest and become exercisable, which provisions may be waived or modified by the Plan Administrator at any time. If not otherwise established in the instrument evidencing the Option, the Option will vest and become exercisable according to the following schedule, which may be waived or modified by the Plan Administrator at any time:

Period of Participant’s Continuous Employment or Service With the Company or Its Subsidiaries From the Grant Date	Percent of Total Option That Is Vested and Exercisable
After 1 year	20%
After 2 years	40%
Each three-month period completed thereafter	An additional 5%
After 5 years	100%

To the extent that an Option has become exercisable, the Option may be exercised from time to time by written notice to the Company, in accordance with procedures established by the Plan Administrator, setting forth the number of shares with respect to which the Option is being exercised and accompanied by payment in full as described in Section 7.5. The Plan Administrator may determine at any time that an Option may not be exercised as to less than 100 shares at any one time for vested shares and any number in its discretion for unvested shares (or the lesser number of remaining shares covered by the Option).

7.5Payment of Exercise Price

The exercise price for shares purchased under an Option shall be paid in full to the Company by delivery of consideration equal to the product of the Option exercise price and the number of shares purchased. Such consideration must be paid in cash or by check or, unless the

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Plan Administrator in its sole discretion determines otherwise, either at the time the Option is granted or at any time before it is exercised, a combination of cash and/or check (if any) and one or both of the following alternative forms: (a) tendering (either actually or, if and so long as the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, by attestation) Common Stock already owned by the Participant for at least six months (or any shorter period necessary to avoid a charge to the Company’s earnings for financial reporting purposes) having a Fair Market Value on the day prior to the exercise date equal to the aggregate Option exercise price or (b) if and so long as the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, delivery of a properly executed exercise notice, together with irrevocable instructions, to (i) a brokerage firm designated by the Company to deliver promptly to the Company the aggregate amount of sale or loan proceeds to pay the Option exercise price and any withholding tax obligations that may arise in connection with the exercise and (ii) the Company to deliver the certificates for such purchased shares directly to such brokerage firm, all in accordance with the regulations of the Federal Reserve Board. In addition, the exercise price for shares purchased under an Option may be paid, either singly or in combination with one or more of the alternative forms of payment authorized by this Section 7.5, by (y) a promissory note delivered pursuant to Section 13 or (z) such other consideration as the Plan Administrator may permit.

7.6Post-Termination Exercises

The Plan Administrator shall establish and set forth in each instrument that evidences an Option whether the Option will continue to be exercisable, and the terms and conditions of such exercise, if a Participant ceases to be employed by, or to provide services to, the Company or its Subsidiaries, which provisions may be waived or modified by the Plan Administrator at any time. If not so established in the instrument evidencing the Option, the Option will be exercisable according to the following terms and conditions, which may be waived or modified by the Plan Administrator at any time.

In case of termination of the Participant’s employment or services other than by reason of death or Cause, the Option shall be exercisable, to the extent of the number of shares vested at the date of such termination, only (a) within one year if the termination of the Participant’s employment or services is coincident with Retirement, Early Retirement at the Company’s request or Disability or (b) within three months after the date the Participant ceases to be an employee, director, officer, consultant, agent, advisor or independent contractor of the Company or a Subsidiary if termination of the Participant’s employment or services is for any reason other than Retirement, Early Retirement at the Company’s request or Disability, but in no event later than the remaining term of the Option. Any Option exercisable at the time of the Participant’s death may be exercised, to the extent of the number of shares vested at the date of the Participant’s death, by the personal representative of the Participant’s estate, the person(s) to whom the Participant’s rights under the Option have passed by will or the applicable laws of descent and distribution or the beneficiary designated pursuant to Section 10 at any time or from time to time within one year after the date of death, but in no event later than the remaining term of the Option. Any portion of an Option that is not vested on the date of termination of the Participant’s employment or services shall terminate on such date, unless the Plan Administrator determines otherwise. In case of termination of the Participant’s employment or services for Cause, the Option shall automatically terminate upon first notification to the Participant of such

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termination, unless the Plan Administrator determines otherwise. If a Participant’s employment or services with the Company are suspended pending an investigation of whether the Participant shall be terminated for Cause, all the Participant’s rights under any Option likewise shall be suspended during the period of investigation.

With respect to employees, unless the Plan Administrator at any time determines otherwise, “termination of the Participant’s employment or services” for purposes of the Plan (including without limitation this Section 7 and Section 14) shall mean any reduction in the Participant’s regular hours of employment to less than thirty (30) hours per week. A transfer of employment or services between or among the Company and its Subsidiaries shall not be considered a termination of employment or services. The effect of a Company-approved leave of absence on the terms and conditions of an Option shall be determined by the Plan Administrator, in its sole discretion.

SECTION 8. INCENTIVE STOCK OPTION LIMITATIONS

To the extent required by Section 422 of the Code, Incentive Stock Options shall be subject to the following additional terms and conditions:

8.1Dollar Limitation

To the extent the aggregate Fair Market Value (determined as of the Grant Date) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time during any calendar year (under the Plan and all other stock option plans of the Company) exceeds $100,000, such portion in excess of $100,000 shall be subject to delayed exercisability or treated as a Nonqualified Stock Option as set forth by the Plan Administrator in the agreement(s) evidencing the Option. In the event the Participant holds two or more such Options that become exercisable for the first time in the same calendar year, such limitation shall be applied on the basis of the order in which such Options are granted.

8.210% Stockholders

If an individual owns more than 10% of the total voting power of all classes of the Company’s stock, then the exercise price per share of an Incentive Stock Option shall not be less than 110% of the Fair Market Value of the Common Stock on the Grant Date and the Option term shall not exceed five years. The determination of 10% ownership shall be made in accordance with Section 422 of the Code.

8.3Eligible Employees

Individuals who are not employees of the Company or one of its parent corporations or subsidiary corporations may not be granted Incentive Stock Options. For purposes of this Section 8.3, “parent corporation” and “subsidiary corporation” shall have the meanings attributed to those terms for purposes of Section 422 of the Code.

8.4Term

The term of an Incentive Stock Option shall not exceed 10 years.

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8.5Exercisability

To qualify for Incentive Stock Option tax treatment, an Option designated as an Incentive Stock Option must be exercised within three months after termination of employment for reasons other than death, except that, in the case of termination of employment due to Disability, such Option must be exercised within one year after such termination. Disability shall be deemed to have occurred on the first day after the Company has furnished its opinion of Disability to the Plan Administrator. Employment shall not be deemed to continue beyond the first 90 days of a leave of absence unless the Participant’s reemployment rights are guaranteed by statute or contract.

8.6Taxation of Incentive Stock Options

In order to obtain certain tax benefits afforded to Incentive Stock Options under Section 422 of the Code, the Participant must hold the shares issued upon the exercise of an Incentive Stock Option for two years after the Grant Date of the Incentive Stock Option and one year from the date of exercise. A Participant may be subject to the alternative minimum tax at the time of exercise of an Incentive Stock Option. The Plan Administrator may require a Participant to give the Company prompt notice of any disposition of shares acquired by the exercise of an Incentive Stock Option prior to the expiration of such holding periods.

8.7Promissory Notes

The amount of any promissory note delivered pursuant to Section 13 in connection with an Incentive Stock Option shall bear interest at a rate specified by the Plan Administrator but in no case less than the rate required to avoid imputation of interest (taking into account any exceptions to the imputed interest rules) for federal income tax purposes.

SECTION 9. STOCK AWARDS

9.1Grant of Stock Awards

The Plan Administrator is authorized to make Awards of Common Stock or Awards denominated in units of Common Stock on such terms and conditions and subject to such restrictions, if any (which may be based on (a) continuous service with the Company or (b) the achievement of performance goals stated in absolute terms or relative to comparison companies related to (i) profits or loss, revenue or profit growth or loss reduction, profit or loss related return ratios, or other balance sheet or income statement targets or ratios; (ii) market share, including targets, ratios or other objective measures of sessions, units, orders, customers, sales, and other comparable metrics related to the various businesses conducted by the Company; or (iii) cash flow, share price appreciation, dilution or total stockholder return), as the Plan Administrator shall determine, in its sole discretion, which terms, conditions and restrictions shall be set forth in the instrument evidencing the Award. The terms, conditions and restrictions that the Plan Administrator shall have the power to determine shall include, without limitation, the manner in which shares subject to Stock Awards are held during the periods they are subject to restrictions and the circumstances under which forfeiture of the Stock Award shall occur by reason of termination of the Participant’s employment or service relationship.

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9.2Issuance of Shares

Upon the satisfaction of any terms, conditions and restrictions prescribed in respect to a Stock Award, or upon the Participant’s release from any terms, conditions and restrictions of a Stock Award, as determined by the Plan Administrator, the Company shall release, as soon as practicable, to the Participant or, in the case of the Participant’s death, to the personal representative of the Participant’s estate or as the appropriate court directs, the appropriate number of shares of Common Stock.

9.3Waiver of Restrictions

Notwithstanding any other provisions of the Plan, the Plan Administrator may, in its sole discretion, waive the forfeiture period and any other terms, conditions or restrictions on any Stock Award under such circumstances and subject to such terms and conditions as the Plan Administrator shall deem appropriate; provided, however, that the Plan Administrator may not adjust performance goals for any Stock Award intended to be exempt under Section 162(m) of the Code for the year in which the Stock Award is settled in such a manner as would increase the amount otherwise payable to a Participant.

SECTION 10. ASSIGNABILITY

No Awards granted under the Plan or any interest therein may be assigned, pledged or transferred by the Participant other than by will or by the applicable laws of descent and distribution, and, during the Participant’s lifetime, such Award may be exercised only by the Participant or a permitted assignee or transferee of the Participant (as provided below). Notwithstanding the foregoing, and to the extent permitted by Section 422 of the Code, the Plan Administrator, in its sole discretion, may permit such assignment, transfer and exercisability and may permit a Participant to designate a beneficiary who may exercise the Award or receive payment under the Award after the Participant’s death; provided, however, that any Award so assigned or transferred shall be subject to all the same terms and conditions contained in the instrument evidencing the Award.

SECTION 11. ADJUSTMENTS

11.1Adjustment of Shares

In the event that, at any time or from time to time, a stock dividend, stock split, spin-off, combination or exchange of shares, recapitalization, merger, consolidation, distribution to stockholders other than a normal cash dividend, or other change in the Company’s corporate or capital structure results in (a) the outstanding shares, or any securities exchanged therefor or received in their place, being exchanged for a different number or class of securities of the Company or of any other corporation or (b) new, different or additional securities of the Company or of any other corporation being received by the holders of shares of Common Stock of the Company, then the Plan Administrator shall make proportional adjustments in (i) the maximum number and kind of securities subject to the Plan as set forth in Sections 4.1(a), (b) and (c); (ii) the maximum number and kind of securities that may be issued as ISOs under the Plan as set forth in Section 4.1(d); (iii) the maximum number and kind of securities that may be made subject to Awards to any individual as set forth in Section 4.2, and (iv) the number and

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kind of securities that are subject to any outstanding Award and the per share price of such securities, without any change in the aggregate price to be paid therefor. The determination by the Plan Administrator as to the terms of any of the foregoing adjustments shall be conclusive and binding.

11.2Corporate Transaction

11.2.1Options

Except as otherwise provided in the instrument that evidences the Option, in the event of a Corporate Transaction, the Plan Administrator shall determine whether provision will be made in connection with the Corporate Transaction for an appropriate assumption of the Options theretofore granted under the Plan (which assumption may be effected by means of a payment to each Participant (by the Company or any other person or entity involved in the Corporate Transaction), in exchange for the cancellation of the Options held by such Participant, of the difference between the then Fair Market Value of the aggregate number of shares of Common Stock then subject to such Options and the aggregate exercise price that would have to be paid to acquire such shares) or for substitution of appropriate new options covering stock of a successor corporation to the Company or stock of an affiliate of such successor corporation. If the Plan Administrator determines that such an assumption or substitution will be made, the Plan Administrator shall give notice of such determination to the Participants, and the provisions of such assumption or substitution, and any adjustments made (i) to the number and kind of shares subject to the outstanding Options (or to the options in substitution therefor), (ii) to the exercise prices, and/or (iii) to the terms and conditions of the stock options, shall be binding on the Participants. Any such determination shall be made in the sole discretion of the Plan Administrator and shall be final, conclusive and binding on all Participants. If the Plan Administrator determines that no such assumption or substitution will be made, the Plan Administrator shall give notice of such determination to the Participants, and each Option that is at the time outstanding shall automatically accelerate so that each such Option shall, immediately prior to the specified effective date for the Corporate Transaction, become 100% vested and exercisable, except that such acceleration will not occur if, in the opinion of the Company’s outside accountants, it would render unavailable “pooling of interest” accounting for a Corporate Transaction that would otherwise qualify for such accounting treatment. All such Options shall terminate and cease to remain outstanding immediately following the consummation of the Corporate Transaction, except to the extent assumed by the successor corporation or an affiliate thereof.

11.2.2Stock Awards

Except as otherwise provided in the instrument that evidences the Award, in the event of a Corporate Transaction, the vesting of shares subject to Stock Awards shall accelerate, and the forfeiture provisions to which such shares are subject shall lapse, in the same circumstances and to the same extent that the vesting of outstanding Options would accelerate in connection with a Corporate Transaction. If the Plan Administrator determines that unvested Stock Awards are to be assumed, continued or substituted by a successor corporation without acceleration upon the occurrence of a Corporate Transaction, the Plan Administrator shall give notice of such determination to the Participants, and the provisions of such assumption or substitution, and any

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adjustments made (i) to the number and kind of shares subject to the outstanding Stock Awards (or to the awards in substitution therefor) and/or (ii) to the terms and conditions of the Stock Awards, shall be binding on the Participants. The forfeiture provisions to which such Stock Awards are subject will continue with respect to shares of the successor corporation that may be issued in exchange for such shares subject to Stock Awards.

11.3Further Adjustment of Awards

Subject to Section 11.2, the Plan Administrator shall have the discretion, exercisable at any time before a sale, merger, consolidation, reorganization, liquidation or change in control of the Company, as defined by the Plan Administrator, to take such further action as it determines to be necessary or advisable, and fair and equitable to Participants, with respect to Awards. Such authorized action may include (but shall not be limited to) establishing, amending or waiving the type, terms, conditions or duration of, or restrictions on, Awards so as to provide for earlier, later, extended or additional time for exercise and other modifications, and the Plan Administrator may take such actions with respect to all Participants, to certain categories of Participants or only to individual Participants. The Plan Administrator may take such action before or after granting Awards to which the action relates and before or after any public announcement with respect to such sale, merger, consolidation, reorganization, liquidation or change in control that is the reason for such action.

11.4Limitations

The grant of Awards will in no way affect the Company’s right to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

11.5Fractional Shares

In the event of any adjustment in the number of shares covered by any Award, each such Award shall cover only the number of full shares resulting from such adjustment.

SECTION 12. WITHHOLDING

The Company may require the Participant to pay to the Company the amount of any withholding taxes that the Company is required to withhold with respect to the grant, vesting or exercise of any Award. Subject to the Plan and applicable law, the Plan Administrator may, in its sole discretion, permit the Participant to satisfy withholding obligations, in whole or in part, (a) by paying cash, (b) by electing to have the Company withhold shares of Common Stock (up to the minimum required federal withholding rate), or (c) by transferring shares of Common Stock to the Company (already owned by the Participant for the period necessary to avoid a charge to the Company’s earnings for financial reporting purposes), in such amounts as are equivalent to the Fair Market Value of the withholding obligation. The Company shall have the right to withhold from any shares of Common Stock issuable pursuant to an Award or from any cash amounts otherwise due or to become due from the Company to the Participant an amount equal to such taxes. The Company may also deduct from any Award any other amounts due from the Participant to the Company or a Subsidiary.

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SECTION 13. LOANS, INSTALLMENT PAYMENTS AND LOAN
GUARANTEES

To assist a Participant (including a Participant who is an officer or a director of the Company) in acquiring shares of Common Stock pursuant to an Award granted under the Plan, the Plan Administrator, in its sole discretion, may authorize, either at the Grant Date or at any time before the acquisition of Common Stock pursuant to the Award, (a) the extension of a full-recourse loan to the Participant by the Company, (b) the payment by the Participant of the purchase price, if any, of the Common Stock in installments, or (c) the guarantee by the Company of a full-recourse loan obtained by the Participant from a third party. Subject to the foregoing, the terms of any loans, installment payments or loan guarantees, including the interest rate and terms of repayment, will be subject to the Plan Administrator’s discretion. The maximum credit available is the purchase price, if any, of the Common Stock acquired, plus the maximum federal and state income and employment tax liability that may be incurred in connection with the acquisition.

SECTION 14. REPURCHASE RIGHTS; ESCROW

14.1Repurchase Rights

The Plan Administrator shall have the discretion to authorize the issuance of unvested shares of Common Stock pursuant to the exercise of an Option. In the event of termination of the Participant’s employment or services, all shares of Common Stock issued upon exercise of an Option which are unvested at the time of cessation of employment or services shall be subject to repurchase at the exercise price paid for such shares. The terms and conditions upon which such repurchase right shall be exercisable (including the period and procedure for exercise) shall be established by the Plan Administrator and set forth in the agreement evidencing such right.

All of the Company’s outstanding repurchase rights under this Section 14.1 are assignable by the Company at any time and shall remain in full force and effect in the event of a Corporate Transaction; provided that if the vesting of Options is accelerated pursuant to Section 11.2, the repurchase rights under this Section 14.1 shall terminate and all shares subject to such terminated rights shall immediately vest in full.

The Plan Administrator shall have the discretionary authority, exercisable either before or after the Participant’s cessation of employment or services, to cancel the Company’s outstanding repurchase rights with respect to one or more shares purchased or purchasable by the Participant under an Option and thereby accelerate the vesting of such shares in whole or in part at any time.

14.2Escrow

To ensure that shares of Common Stock acquired pursuant to an Award that are subject to any repurchase or forfeiture right and/or security for any promissory note will be available for repurchase or forfeiture, the Plan Administrator may require the Participant to deposit the certificate or certificates evidencing such shares with an agent designated by the Plan Administrator under the terms and conditions of escrow and security agreements approved by the Plan Administrator. If the Plan Administrator does not require such deposit as a condition of exercise of an Option or grant of a Stock Award, the Plan Administrator reserves the right at any

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time to require the Participant to so deposit the certificate or certificates in escrow. The Company shall bear the expenses of the escrow. The Company, at its discretion, may in lieu of issuing a stock certificate for such shares, make a book entry credit in the Company’s stock ledger to evidence the issuance of such shares.

As soon as practicable after the expiration of any repurchase or forfeiture rights, and after full repayment of any promissory note secured by the shares in escrow, the agent shall deliver to the Participant the shares no longer subject to such restrictions and no longer security for any promissory note.

In the event shares held in escrow are subject to the Company’s exercise of a repurchase or forfeiture right, the notices required to be given to the Participant shall be given to the agent and any payment required to be given to the Participant shall be given to the agent. Within 30 days after payment by the Company, the agent shall deliver the shares which the Company has purchased to the Company and shall deliver the payment received from the Company to the Participant.

In the event of any stock dividend, stock split or consolidation of shares or any like capital adjustment of any of the outstanding securities of the Company, any and all new, substituted or additional securities or other property to which the Participant is entitled by reason of ownership of shares acquired upon exercise of an Option or grant of a Stock Award shall be subject to any repurchase or forfeiture rights, and/or security for any promissory note with the same force and effect as the shares subject to such repurchase or forfeiture rights and/or security interest immediately before such event.

SECTION 15. AMENDMENT AND TERMINATION OF PLAN

15.1Amendment of Plan

The Plan may be amended only by the Board in such respects as it shall deem advisable; however, stockholder approval will be required for any amendment that will eliminate the prohibition on repricing Options under Section 6.4, and, to the extent required for compliance with Section 422 of the Code or any applicable law or regulation, stockholder approval will be required for any amendment that will (a) increase the total number of shares available for issuance under the Plan, (b) modify the class of persons eligible to receive Options, or (c) otherwise require stockholder approval under any applicable law or regulation.

15.2Termination of Plan

The Board may suspend or terminate the Plan at any time. The Plan will have no fixed expiration date; provided, however, that no Incentive Stock Options may be granted more than 10 years after the later of (a) the Plan’s adoption by the Board and (b) the adoption by the Board of any amendment to the Plan that constitutes the adoption of a new plan for purposes of Section 422 of the Code.

15.3Consent of Participant

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The amendment or termination of the Plan shall not, without the consent of the Participant, impair or diminish any rights or obligations under any Award theretofore granted under the Plan.

Any change or adjustment to an outstanding Incentive Stock Option shall not, without the consent of the Participant, be made in a manner so as to constitute a “modification” that would cause such Incentive Stock Option to fail to continue to qualify as an Incentive Stock Option.

SECTION 16. GENERAL

16.1Evidence of Awards

Awards granted under the Plan shall be evidenced by a written agreement that shall contain such terms, conditions, limitations and restrictions as the Plan Administrator shall deem advisable and that are not inconsistent with the Plan.

16.2Continued Employment or Services; Rights in Awards

None of the Plan, participation in the Plan or any action of the Plan Administrator taken under the Plan shall be construed as giving any person any right to be retained in the employ of the Company or limit the Company’s right to terminate the employment or services of any person.

16.3Registration

The Company shall be under no obligation to any Participant to register for offering or resale or to qualify for exemption under the Securities Act, or to register or qualify under state or foreign securities or other laws, any shares of Common Stock, security or interest in a security paid or issued under, or created by, the Plan, or to continue in effect any such registrations or qualifications if made. The Company may issue certificates for shares with such legends and subject to such restrictions on transfer and stop-transfer instructions as counsel for the Company deems necessary or desirable for compliance by the Company with federal and state securities laws or any other applicable laws governing the issuance and sale of shares of Common Stock under the Plan.

Inability or impracticability of the Company to obtain, from any regulatory body having jurisdiction, the authority deemed by the Company’s counsel to be necessary for the lawful issuance and sale of any shares hereunder or the unavailability of an exemption from registration for the issuance and sale of any shares hereunder shall relieve the Company of any liability in respect of the nonissuance or sale of such shares as to which such requisite authority shall not have been obtained, and shall constitute circumstances in which the Plan Administrator may determine to amend or cancel Awards pertaining to such shares, with or without consideration to the affected Participants.

As a condition to the exercise of an Award, the Company may require the Participant to represent and warrant at the time of any such exercise or receipt that such shares are being purchased or received only for the Participant’s own account and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such a representation

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is required by any relevant provision of the aforementioned laws. At the option of the Company, a stop-transfer order against any such shares may be placed on the official stock books and records of the Company, and a legend indicating that such shares may not be pledged, sold or otherwise transferred, unless an opinion of counsel is provided (concurred in by counsel for the Company) stating that such transfer is not in violation of any applicable law or regulation, may be stamped on stock certificates to ensure exemption from registration. The Plan Administrator may also require such other action or agreement by the Participant as may from time to time be necessary to comply with the federal and state securities laws.

16.4No Rights as a Stockholder

No Option or Stock Award denominated in units shall entitle the Participant to any dividend, voting or other right of a stockholder unless and until the date of issuance under the Plan of the shares that are the subject of such Award, free of all applicable restrictions.

16.5Compliance With Laws and Regulations

Notwithstanding anything in the Plan to the contrary, the Board, in its sole discretion, may bifurcate the Plan so as to restrict, limit or condition the use of any provision of the Plan to Participants who are officers or directors subject to Section 16 of the Exchange Act without so restricting, limiting or conditioning the Plan with respect to other Participants. Additionally, in interpreting and applying the provisions of the Plan, any Option granted as an Incentive Stock Option pursuant to the Plan shall, to the extent permitted by law, be construed as an “incentive stock option” within the meaning of Section 422 of the Code.

16.6No Trust or Fund

The Plan is intended to constitute an “unfunded” plan. Nothing contained herein shall require the Company to segregate any monies or other property, or shares of Common Stock, or to create any trusts, or to make any special deposits for any immediate or deferred amounts payable to any Participant, and no Participant shall have any rights that are greater than those of a general unsecured creditor of the Company.

16.7Severability

If any provision of the Plan or any Option is determined to be invalid, illegal or unenforceable in any jurisdiction, or as to any person, or would disqualify the Plan or any Option under any law deemed applicable by the Plan Administrator, such provision shall be construed or deemed amended to conform to applicable laws, or, if it cannot be so construed or deemed amended without, in the Plan Administrator’s determination, materially altering the intent of the Plan or the Option, such provision shall be stricken as to such jurisdiction, person or Option, and the remainder of the Plan and any such Option shall remain in full force and effect.

16.8Participants in Foreign Countries

The Plan Administrator shall have the authority to adopt such modifications, procedures and subplans as may be necessary or desirable, after consideration of the provisions of the laws of foreign countries in which the Company or its Subsidiaries may operate, to ensure the viability

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of the benefits from Awards granted to Participants employed in such countries and to meet the objectives of the Plan.

16.9Choice of Law

The Plan and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by the laws of the United States, shall be governed by the laws of the State of Washington without giving effect to principles of conflicts of laws.

SECTION 17. EFFECTIVE DATE

The Plan’s effective date is the date on which it is adopted by the Board, so long as it is approved by the Company’s stockholders at any time within 12 months of such adoption.

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EX-10.2

Exhibit 10.2

AMAZON.COM, INC.

1999 NONOFFICER EMPLOYEE
STOCK OPTION PLAN
(asamended and restated)

SECTION 1. PURPOSE

The purpose of the Amazon.com, Inc. 1999 Nonofficer Employee Stock Option Plan (the “Plan”) is to enhance the long-term stockholder value of Amazon.com, Inc., a Delaware corporation (the “Company”), by offering opportunities to employees, consultants, agents, advisors and independent contractors of the Company and its Subsidiaries (as defined in Section 2) who are not officers of the Company or members of the Board to participate in the Company’s growth and success, and to encourage them to remain in the service of the Company and its Subsidiaries and to acquire and maintain stock ownership in the Company.

SECTION 2. DEFINITIONS

For purposes of the Plan, the following terms shall be defined as set forth below:

2.1Board

“Board” means the Board of Directors of the Company.

2.2Cause

“Cause” means dishonesty, fraud, misconduct, unauthorized use or disclosure of confidential information or trade secrets, or conviction or confession of a crime punishable by law (except minor violations), in each case as determined by the Plan Administrator, and its determination shall be conclusive and binding.

2.3Code

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

2.4Common Stock

“Common Stock” means the common stock, par value $.01 per share, of the Company.

2.5Corporate Transaction

“Corporate Transaction” means any of the following events:

(a)Consummation of any merger or consolidation of the Company in which the Company is not the continuing or surviving corporation, or pursuant to which shares of the Common Stock are converted into cash, securities or other property (other than a merger of the Company in which the holders of Common Stock immediately prior to the

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merger have the same proportionate ownership of capital stock of the surviving corporation immediately after the merger);

(b)Consummation of any sale, lease, exchange or other transfer in one transaction or a series of related transactions of all or substantially all of the Company’s assets other than a transfer of the Company’s assets to a majority-owned subsidiary corporation (as the term “subsidiary corporation” is defined in for purposes of Section 422 of the Code) of the Company; or

(c)Approval by the holders of the Common Stock of any plan or proposal for the liquidation or dissolution of the Company.

2.6Disability

“Disability” means “permanent and total disability” as that term is defined for purposes of Section 22(e)(3) of the Code.

2.7Early Retirement

“Early Retirement” means early retirement as that term is defined by the Plan Administrator from time to time for purposes of the Plan.

2.8Exchange Act

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

2.9Fair Market Value

The “Fair Market Value” shall be as established in good faith by the Plan Administrator or (a) if the Common Stock is listed on the Nasdaq National Market, the average of the high and low per share sales prices for the Common Stock as reported by the Nasdaq National Market for a single trading day or (b) if the Common Stock is listed on the New York Stock Exchange or the American Stock Exchange, the average of the high and low per share sales prices for the Common Stock as such price is officially quoted in the composite tape of transactions on such exchange for a single trading day. If there is no such reported price for the Common Stock for the date in question, then such price on the last preceding date for which such price exists shall be determinative of the Fair Market Value.

2.10Grant Date

“Grant Date” means the date the Plan Administrator adopted the granting resolution. If, however, the Plan Administrator designates in a resolution a later date as the date an Option is to be granted, then such later date shall be the “Grant Date.”

2.11Nonqualified Stock Option

“Nonqualified Stock Option” means an Option that is not intended to qualify as an incentive stock option under Section 422 of the Code.

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2.12Option

“Option” means a Nonqualified Stock Option to purchase Common Stock.

2.13Optionee

“Optionee” means (a) the person to whom an Option is granted; (b) for an Optionee who has died, the personal representative of the Optionee’s estate, the person(s) to whom the Optionee’s rights under the Option have passed by will or by the applicable laws of descent and distribution, or the beneficiary designated in accordance with Section 8; or (c) person(s) to whom an Option has been transferred in accordance with Section 8.

2.14Plan Administrator

“Plan Administrator” means the Board or any committee of the Board designated to administer the Plan under Section 3.1.

2.15Retirement

“Retirement” means retirement on or after the individual’s normal retirement date under the Company’s 401(k) plan or other similar successor plan applicable to salaried employees, unless otherwise defined by the Plan Administrator from time to time for purposes of the Plan.

2.16Securities Act

“Securities Act” means the Securities Act of 1933, as amended.

2.17Subsidiary

“Subsidiary” means any entity that is directly or indirectly controlled by the Company or in which the Company has a significant ownership interest, as determined by the Plan Administrator, and any entity that may become a direct or indirect parent of the Company.

SECTION 3. ADMINISTRATION

3.1Plan Administrator

The Plan shall be administered by the Board or a committee or committees (which term includes subcommittees) appointed by, and consisting of two or more members of, the Board (the “Plan Administrator”). The Board may delegate the responsibility for administering the Plan with respect to designated classes of eligible persons to different committees consisting of one or more members of the Board, subject to such limitations as the Board deems appropriate. Committee members shall serve for such term as the Board may determine, subject to removal by the Board at any time. To the extent consistent with applicable law, the Plan Administrator may authorize one or more officers of the Company to grant Awards to designated classes of eligible persons, within the limits specifically prescribed by the Plan Administrator.

3.2Administration and Interpretation by the Plan Administrator

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Except for the terms and conditions explicitly set forth in the Plan, the Plan Administrator shall have exclusive authority, in its discretion, to determine all matters relating to Options under the Plan, including the selection of individuals to be granted Options, the type of Options, the number of shares of Common Stock subject to an Option, all terms, conditions, restrictions and limitations, if any, of an Option and the terms of any instrument that evidences the Option. The Plan Administrator shall also have exclusive authority to interpret the Plan and may from time to time adopt, and change, rules and regulations of general application for the Plan’s administration. The Plan Administrator’s interpretation of the Plan and its rules and regulations, and all actions taken and determinations made by the Plan Administrator pursuant to the Plan, shall be conclusive and binding on all parties involved or affected. The Plan Administrator may delegate administrative duties to such of the Company’s officers as it so determines.

SECTION 4. STOCK SUBJECT TO THE PLAN1

4.1Authorized Number of Shares

Subject to adjustment from time to time as provided in Section 9.1, a maximum of 800,000,000 shares of Common Stock shall be available for issuance under the Plan. Shares issued under the Plan shall be drawn from authorized and unissued shares or shares now held or subsequently acquired by the Company as treasury shares.

4.2Reuse of Shares

Any shares of Common Stock that have been made subject to an Option that cease to be subject to the Option (other than by reason of exercise of the Option to the extent it is exercised for shares) shall again be available for issuance in connection with future grants of Options under the Plan.

SECTION 5. ELIGIBILITY

An Option may be granted only to an individual who, at the time the Option is granted, is an employee, agent, consultant, advisor or independent contractor of the Company or any Subsidiary who at the time the Option is granted is not an officer of the Company or a member of the Board..

SECTION 6. ACQUIRED COMPANY OPTIONS

Notwithstanding anything in the Plan to the contrary, the Plan Administrator may grant Options under the Plan in substitution for awards issued under other plans, or assume under the Plan awards issued under other plans, if the other plans are or were plans of other acquired entities (“Acquired Entities”) (or the parent of an Acquired Entity) and the new Option is substituted, or the old award is assumed, by reason of a merger, consolidation, acquisition of property or of stock, reorganization or liquidation (the “Acquisition Transaction”). In the event that a written agreement pursuant to which the Acquisition Transaction is completed is approved by the Board and said agreement sets forth the terms and conditions of the substitution for or

1    Share amounts reflect 20-for-1 stock split effective May 2022.

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assumption of outstanding awards of the Acquired Entity, said terms and conditions shall be deemed to be the action of the Plan Administrator without any further action by the Plan Administrator, and the persons holding such awards shall be deemed to be Optionees.

SECTION 7. TERMS AND CONDITIONS OF OPTIONS

7.1Option Exercise Price

The exercise price for shares purchased under an Option shall be as determined by the Plan Administrator.

7.2Term of Options

The term of each Option shall be as established by the Plan Administrator or, if not so established, shall be 10 years from the Grant Date.

7.3Exercise and Vesting of Options

The Plan Administrator shall establish and set forth in each instrument that evidences an Option the time at which or the installments in which the Option shall vest and become exercisable, which provisions may be waived or modified by the Plan Administrator at any time. If not so established in the instrument evidencing the Option, the Option shall vest and become exercisable according to the following schedule, which may be waived or modified by the Plan Administrator at any time:

Period of Optionee’s Continuous Employment or Service With the Company or Its Subsidiaries From the Grant Date	Percent of Total Option That Is Vested and Exercisable
After 1 year	20%
After 2 years	40%
Each three-month period completed thereafter	An additional 5%
After 5 years	100%

To the extent that the right to purchase shares has accrued thereunder, an Option may be exercised from time to time by written notice to the Company, in accordance with procedures established by the Plan Administrator, setting forth the number of shares with respect to which the Option is being exercised and accompanied by payment in full as described in Section 7.4. An Option may not be exercised as to less than a reasonable number of shares at any one time, as determined by the Plan Administrator.

7.4Payment of Exercise Price

The exercise price for shares purchased under an Option shall be paid in full to the Company by delivery of consideration equal to the product of the Option exercise price and the number of shares purchased. Such consideration must be paid in cash or by check or, unless the Plan Administrator in its sole discretion determines otherwise, either at the time the Option is granted or at any time before it is exercised, a combination of cash and/or check (if any) and one

5

or both of the following alternative forms: (a) tendering (either actually or, if and so long as the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, by attestation) Common Stock already owned by the Optionee for at least six months (or any shorter period necessary to avoid a charge to the Company’s earnings for financial reporting purposes) having a Fair Market Value on the day prior to the exercise date equal to the aggregate Option exercise price or (b) if and so long as the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, delivery of a properly executed exercise notice, together with irrevocable instructions, to (i) a brokerage firm designated by the Company to deliver promptly to the Company the aggregate amount of sale or loan proceeds to pay the Option exercise price and any withholding tax obligations that may arise in connection with the exercise and (ii) the Company to deliver the certificates for such purchased shares directly to such brokerage firm, all in accordance with the regulations of the Federal Reserve Board. In addition, to the extent permitted by the Plan Administrator in its sole discretion, the exercise price for shares purchased under an Option may be paid, either singly or in combination with one or more of the alternative forms of payment authorized by this Section 7.4, by (y) a full-recourse promissory note delivered pursuant to Section 11 or (z) such other consideration as the Plan Administrator may permit.

7.5Post-Termination Exercises

The Plan Administrator shall establish and set forth in each instrument that evidences an Option whether the Option will continue to be exercisable, and the terms and conditions of such exercise, if an Optionee ceases to be employed by, or to provide services to, the Company or its Subsidiaries, which provisions may be waived or modified by the Plan Administrator at any time. If not so established in the instrument evidencing the Option, the Option shall be exercisable according to the following terms and conditions, which may be waived or modified by the Plan Administrator at any time.

In the case of termination of the Optionee’s employment or services other than by reason of death or Cause, the Option shall be exercisable, to the extent of the number of shares vested at the date of such termination, only (a) within one year if the termination of the Optionee’s employment or services is coincident with Retirement, Early Retirement at the Company’s request or Disability or (b) within three months after the date the Optionee ceases to be an employee, director, officer, consultant, agent, advisor or independent contractor of the Company or a Subsidiary if termination of the Optionee’s employment or services is for any reason other than Retirement, Early Retirement at the Company’s request or Disability, but in no event later than the remaining term of the Option. Any Option exercisable at the time of the Optionee’s death may be exercised, to the extent of the number of shares vested at the date of the Optionee’s death, by the personal representative of the Optionee’s estate, the person(s) to whom the Optionee’s rights under the Option have passed by will or the applicable laws of descent and distribution or the beneficiary designated pursuant to Section 8 at any time or from time to time within one year after the date of death, but in no event later than the remaining term of the Option. Any portion of an Option that is not vested on the date of termination of the Optionee’s employment or services shall terminate on such date, unless the Plan Administrator determines otherwise. In the case of termination of the Optionee’s employment or services for Cause, the Option shall automatically terminate upon first notification to the Optionee of such termination, unless the Plan Administrator determines otherwise. If an Optionee’s employment or services with the Company are suspended pending an investigation of whether the Optionee shall be

6

terminated for Cause, all the Optionee’s rights under any Option likewise shall be suspended during the period of investigation.

The Plan Administrator shall determine, in its sole discretion, whether a reduction in an Optionee’s regular hours of employment shall constitute a “termination of the Optionee’s employment or services” for purposes of the Plan. A transfer of employment or services between or among the Company and its Subsidiaries shall not be considered a termination of employment or services. The effect of a Company-approved leave of absence on the terms and conditions of an Option shall be determined by the Plan Administrator, in its sole discretion.

SECTION 8. ASSIGNABILITY

No Option granted under the Plan may be assigned, pledged or transferred by the Optionee other than by will or by the applicable laws of descent and distribution, and, during the Optionee’s lifetime, such Option may be exercised only by the Optionee or a permitted assignee or transferee of the Optionee (as provided below). Notwithstanding the foregoing, the Plan Administrator, in its sole discretion, may permit such assignment, transfer and exercisability and may permit an Optionee to designate a beneficiary who may exercise the Option after the Optionee’s death; provided, however, that any Option so assigned or transferred shall be subject to all the same terms and conditions contained in the instrument evidencing the Option.

SECTION 9. ADJUSTMENTS

9.1Adjustment of Shares

In the event that, at any time or from time to time, a stock dividend, stock split, spin-off, combination or exchange of shares, recapitalization, merger, consolidation, distribution to stockholders other than a normal cash dividend, or other change in the Company’s corporate or capital structure results in (a) the outstanding shares, or any securities exchanged therefor or received in their place, being exchanged for a different number or class of securities of the Company or of any other corporation or (b) new, different or additional securities of the Company or of any other corporation being received by the holders of shares of Common Stock of the Company, then the Plan Administrator shall make proportional adjustments in (i) the maximum number and kind of securities subject to the Plan as set forth in Section 4.1 and (ii) the number and kind of securities that are subject to any outstanding Option and the per share price of such securities, without any change in the aggregate price to be paid therefor. In the event of any adjustment in the number of shares covered by any Option, each such Option shall cover only the number of full shares resulting from such adjustment. The determination by the Plan Administrator as to the terms of any of the foregoing adjustments shall be conclusive and binding.

9.2Corporate Transaction

Except as otherwise provided in the instrument that evidences the Option, in the event of a Corporate Transaction, the Plan Administrator shall determine whether provision will be made in connection with the Corporate Transaction for an appropriate assumption of the Options theretofore granted under the Plan (which assumption may be effected by means of a payment to each Optionee (by the Company or any other person or entity involved in the Corporate

7

Transaction), in exchange for the cancellation of the Options held by such Optionee, of the difference between the then Fair Market Value of the aggregate number of shares of Common Stock then subject to such Options and the aggregate exercise price that would have to be paid to acquire such shares) or for substitution of appropriate new options covering stock of a successor corporation to the Company or stock of an affiliate of such successor corporation. If the Plan Administrator determines that such an assumption or substitution will be made, the Plan Administrator shall give notice of such determination to the Optionees, and the provisions of such assumption or substitution, and any adjustments made (a) to the number and kind of shares subject to the outstanding Options (or to the options in substitution therefor), (b) to the exercise prices, and/or (c) to the terms and conditions of the stock options, shall be binding on the Optionees. Any such determination shall be made in the sole discretion of the Plan Administrator and shall be final, conclusive and binding on all Optionees. If the Plan Administrator, in its sole discretion, determines that no such assumption or substitution will be made, the Plan Administrator shall give notice of such determination to the Optionees, and each Option that is at the time outstanding shall automatically accelerate so that each such Option shall, immediately prior to the specified effective date for the Corporate Transaction, become 100% vested and exercisable, except that such acceleration will not occur if, in the opinion of the Company’s outside accountants, it would render unavailable “pooling of interest” accounting for a Corporate Transaction that would otherwise qualify for such accounting treatment. All such Options shall terminate and cease to remain outstanding immediately following the consummation of the Corporate Transaction, except to the extent assumed by the successor corporation or an affiliate thereof.

9.3Further Adjustment of Options

Subject to Section 9.2, the Plan Administrator shall have the discretion, exercisable at any time before a sale, merger, consolidation, reorganization, liquidation or change in control of the Company, as defined by the Plan Administrator, to take such further action as it determines to be necessary or advisable, and fair and equitable to Optionees, with respect to Options. Such authorized action may include (but shall not be limited to) establishing, amending or waiving the type, terms, conditions or duration of, or restrictions on, Options so as to provide for earlier, later, extended or additional time for exercise and other modifications, and the Plan Administrator may take such actions with respect to all Optionees, to certain categories of Optionees or only to individual Optionees. The Plan Administrator may take such action before or after granting Options to which the action relates and before or after any public announcement with respect to such sale, merger, consolidation, reorganization, liquidation or change in control that is the reason for such action.

9.4Limitations

The grant of Options shall in no way affect the Company’s right to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

9.5Prohibition on Option Repricing

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Except for adjustments made pursuant to Sections 9.1 and 9.2 hereof, unless approved by the Company’s stockholders the exercise price of any outstanding Option granted under the Plan may not be decreased after the Grant Date nor may any outstanding Option with an exercise price that is at the time in excess of Fair Market Value be surrendered to the Company in exchange for the grant of a new Option with a lower exercise price, the grant of another Option, or cash.

SECTION 10. WITHHOLDING

The Company may require the Optionee to pay to the Company the amount of any withholding taxes that the Company is required to withhold with respect to the grant or exercise of any Option. Subject to the Plan and applicable law, the Plan Administrator may, in its sole discretion, permit the Optionee to satisfy withholding obligations, in whole or in part, by paying cash, by electing to have the Company withhold shares of Common Stock (up to the minimum required federal withholding rate), or by transferring shares of Common Stock to the Company (already owned by the Participant for the period necessary to avoid a charge to the Company’s earnings for financial reporting purposes), in such amounts as are equivalent to the Fair Market Value of the withholding obligation. The Company shall have the right to withhold from any shares of Common Stock issuable pursuant to an Option or from any cash amounts otherwise due or to become due from the Company to the Optionee an amount equal to such taxes. The Company may also deduct from any Option any other amounts due from the Optionee to the Company or a Subsidiary.

SECTION 11. LOANS, INSTALLMENT PAYMENTS AND LOAN GUARANTEES

To assist an Optionee in acquiring shares of Common Stock pursuant to an Option granted under the Plan, the Plan Administrator, in its sole discretion, may authorize, either at the Grant Date or at any time before the acquisition of Common Stock pursuant to the Option, (a) the extension of a loan to the Optionee by the Company, (b) the payment by the Optionee of the purchase price, if any, of the Common Stock in installments, or (c) the guarantee by the Company of a loan obtained by the Optionee from a third party. The terms of any loans, installment payments or loan guarantees, including the interest rate and terms of repayment, will be subject to the Plan Administrator’s discretion; provided, however, that repayment of any Company loan to the Optionee shall be secured by delivery of a full-recourse promissory note for the loan amount executed by the Optionee, together with any other form of security determined by the Plan Administrator. The maximum credit available is the purchase price, if any, of the Common Stock acquired, plus the maximum federal and state income and employment tax liability that may be incurred in connection with the acquisition.

SECTION 12. AMENDMENT AND TERMINATION OF PLAN

12.1Amendment of Plan

The Plan may be amended only by the Board in such respects as it shall deem advisable; however, stockholder approval will be required for any amendment that will eliminate the prohibition on repricing Options under Section 9.5.

12.2Termination of Plan

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The Board may suspend or terminate the Plan at any time. The Plan shall have no fixed expiration date.

12.3Consent of Optionee

The amendment or termination of the Plan shall not, without the consent of the Optionee, impair or diminish any rights or obligations under any Option theretofore granted under the Plan.

SECTION 13. GENERAL

13.1Option Agreements

Options granted under the Plan shall be evidenced by a written agreement that shall contain such terms, conditions, limitations and restrictions as the Plan Administrator shall deem advisable and that are not inconsistent with the Plan.

13.2Continued Employment or Services; Rights in Options

None of the Plan, participation in the Plan or any action of the Plan Administrator taken under the Plan shall be construed as giving any person any right to be retained in the employ of the Company or limit the Company’s right to terminate the employment or services of any person.

13.3Registration

The Company shall be under no obligation to any Optionee to register for offering or resale or to qualify for exemption under the Securities Act, or to register or qualify under state or foreign securities or other laws, any shares of Common Stock, security or interest in a security paid or issued under, or created by, the Plan, or to continue in effect any such registrations or qualifications if made. The Company may issue certificates for shares with such legends and subject to such restrictions on transfer and stop-transfer instructions as counsel for the Company deems necessary or desirable for compliance by the Company with federal and state securities laws or any other applicable laws governing the issuance and sale of shares of Common Stock under the Plan.

Inability or impracticability of the Company to obtain, from any regulatory body having jurisdiction, the authority deemed by the Company’s counsel to be necessary for the lawful issuance and sale of any shares hereunder or the unavailability of an exemption from registration for the issuance and sale of any shares hereunder shall relieve the Company of any liability in respect of the nonissuance or sale of such shares as to which such requisite authority shall not have been obtained, and shall constitute circumstances in which the Plan Administrator may determine to amend or cancel Options pertaining to such shares, with or without consideration to the affected Optionees.

13.4No Rights as a Stockholder

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No Option shall entitle the Optionee to any dividend, voting or other right of a stockholder unless and until the date of issuance under the Plan of the shares that are the subject of such Option, free of all applicable restrictions.

13.5Participants in Foreign Countries

The Plan Administrator shall have the authority to adopt such modifications, procedures and subplans as may be necessary or desirable, after consideration of the provisions of the laws of foreign countries in which the Company or its Subsidiaries may operate, to assure the viability of the benefits from Options granted to Optionees employed in such countries and to meet the objectives of the Plan.

13.6No Trust

The Plan is intended to constitute an “unfunded” plan. Nothing contained herein shall require the Company to segregate any monies or other property, or shares of Common Stock, or to create any trusts, or to make any special deposits for any immediate or deferred amounts payable to any Optionee, and no Optionee shall have any rights that are greater than those of a general unsecured creditor of the Company.

13.7Severability

If any provision of the Plan or any Option is determined to be invalid, illegal or unenforceable in any jurisdiction, or as to any person, or would disqualify the Plan or any Option under any law deemed applicable by the Plan Administrator, such provision shall be construed or deemed amended to conform to applicable laws, or, if it cannot be so construed or deemed amended without, in the Plan Administrator’s determination, materially altering the intent of the Plan or the Option, such provision shall be stricken as to such jurisdiction, person or Option, and the remainder of the Plan and any such Option shall remain in full force and effect.

13.8Choice of Law

The Plan and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by the laws of the United States, shall be governed by the laws of the State of Washington without giving effect to principles of conflicts of laws.

SECTION 14. EFFECTIVE DATE

The Plan’s effective date is the date on which it is adopted by the Board.

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EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Andrew R. Jassy, certify that:

1. I have reviewed this Form 10-Q of Amazon.com, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Andrew R. Jassy

Andrew R. Jassy

President and Chief Executive Officer

(Principal Executive Officer)

Date: July 28, 2022

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Brian T. Olsavsky, certify that:

1. I have reviewed this Form 10-Q of Amazon.com, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Brian T. Olsavsky

Brian T. Olsavsky

Senior Vice President and
Chief Financial Officer

(Principal Financial Officer)

Date: July 28, 2022

EX-32.1

Exhibit 32.1

Certification Pursuant to 18 U.S.C. Section 1350

In connection with the Quarterly Report of Amazon.com, Inc. (the “Company”) on Form 10-Q for the three months ended June 30, 2022, as filed with the Securities and Exchange Commission (the “SEC”) on or about the date hereof (the “Report”), I, Andrew R. Jassy, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

/s/ Andrew R. Jassy

Andrew R. Jassy

President and Chief Executive Officer

(Principal Executive Officer)

Date: July 28, 2022

EX-32.2

Exhibit 32.2

Certification Pursuant to 18 U.S.C. Section 1350

In connection with the Quarterly Report of Amazon.com, Inc. (the “Company”) on Form 10-Q for the three months ended June 30, 2022, as filed with the Securities and Exchange Commission (the “SEC”) on or about the date hereof (the “Report”), I, Brian T. Olsavsky, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

/s/ Brian T. Olsavsky

Brian T. Olsavsky

Senior Vice President and
Chief Financial Officer

(Principal Financial Officer)

Date: July 28, 2022

XML

Cover - shares	6 Months Ended
	Jun. 30, 2022	Jul. 20, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2022
Document Transition Report	false
Entity File Number	000-22513
Entity Registrant Name	AMAZON.COM, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	91-1646860
Entity Address, Address Line One	410 Terry Avenue North
Entity Address, City or Town	Seattle,
Entity Address, State or Province	WA
Entity Address, Postal Zip Code	98109-5210
City Area Code	206
Local Phone Number	266-1000
Title of 12(b) Security	Common Stock, par value $.01 per share
Trading Symbol	AMZN
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		10,187,554,818
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Central Index Key	0001018724

XML

Consolidated Statements of Cash Flows - USD ($) $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Statement of Cash Flows [Abstract]
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD	$ 36,599	$ 34,155	$ 36,477	$ 42,377	$ 40,667	$ 37,842
OPERATING ACTIVITIES:
Net income (loss)	(2,028)	7,778	(5,872)	15,885	11,607	29,438
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation and amortization of property and equipment and capitalized content costs, operating lease assets, and other	9,594	8,038	18,572	15,546	37,322	29,687
Stock-based compensation	5,209	3,591	8,459	5,897	15,319	10,747
Other operating expense (income), net	122	18	337	48	426	(372)
Other expense (income), net	6,104	(1,258)	14,793	(2,714)	3,201	(5,092)
Deferred income taxes	(1,955)	701	(3,956)	2,404	(6,670)	1,063
Changes in operating assets and liabilities:
Inventories	(3,890)	(209)	(6,504)	(513)	(15,478)	(4,082)
Accounts receivable, net and other	(6,799)	(4,462)	(8,315)	(6,717)	(19,761)	(13,294)
Accounts payable	3,699	47	(5,681)	(8,219)	6,140	8,689
Accrued expenses and other	(1,412)	(1,685)	(7,315)	(5,745)	553	1,071
Unearned revenue	321	156	1,657	1,056	2,915	1,467
Net cash provided by (used in) operating activities	8,965	12,715	6,175	16,928	35,574	59,322
INVESTING ACTIVITIES:
Purchases of property and equipment	(15,724)	(14,288)	(30,675)	(26,370)	(65,358)	(52,256)
Proceeds from property and equipment sales and incentives	1,626	1,300	2,835	2,195	6,297	5,080
Acquisitions, net of cash acquired, and other	(259)	(320)	(6,600)	(950)	(7,635)	(3,066)
Sales and maturities of marketable securities	2,608	13,213	25,361	31,039	53,706	61,512
Purchases of marketable securities	(329)	(21,985)	(2,093)	(36,660)	(25,590)	(74,929)
Net cash provided by (used in) investing activities	(12,078)	(22,080)	(11,172)	(30,746)	(38,580)	(63,659)
FINANCING ACTIVITIES:
Common stock repurchased	(3,334)	0	(6,000)	0	(6,000)	0
Proceeds from short-term debt, and other	4,865	1,176	18,608	3,102	23,462	6,848
Repayments of short-term debt, and other	(7,610)	(1,176)	(13,841)	(3,177)	(18,417)	(6,817)
Proceeds from long-term debt	12,824	18,516	12,824	18,627	13,200	19,158
Repayments of long-term debt	(1)	(41)	(1)	(80)	(1,511)	(1,392)
Principal repayments of finance leases	(2,059)	(2,804)	(4,836)	(6,210)	(9,789)	(11,435)
Principal repayments of financing obligations	(59)	(28)	(138)	(95)	(205)	(116)
Net cash provided by (used in) financing activities	4,626	15,643	6,616	12,167	740	6,246
Foreign currency effect on cash, cash equivalents, and restricted cash	(412)	234	(396)	(59)	(701)	916
Net increase (decrease) in cash, cash equivalents, and restricted cash	1,101	6,512	1,223	(1,710)	(2,967)	2,825
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD	$ 37,700	$ 40,667	$ 37,700	$ 40,667	$ 37,700	$ 40,667

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Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Total net sales	$ 121,234	$ 113,080	$ 237,678	$ 221,598
Operating expenses:
Cost of sales	66,424	64,176	132,923	126,579
Fulfillment	20,342	17,638	40,613	34,168
Technology and content	18,072	13,871	32,914	26,359
Sales and marketing	10,086	7,524	18,406	13,731
General and administrative	2,903	2,158	5,497	4,145
Other operating expense (income), net	90	11	339	49
Total operating expenses	117,917	105,378	230,692	205,031
Operating income	3,317	7,702	6,986	16,567
Interest income	159	106	267	211
Interest expense	(584)	(435)	(1,056)	(834)
Other income (expense), net	(5,545)	1,261	(14,115)	2,958
Total non-operating income (expense)	(5,970)	932	(14,904)	2,335
Income (loss) before income taxes	(2,653)	8,634	(7,918)	18,902
Benefit (provision) for income taxes	637	(868)	2,059	(3,024)
Equity-method investment activity, net of tax	(12)	12	(13)	7
Net income (loss)	$ (2,028)	$ 7,778	$ (5,872)	$ 15,885
Basic earnings per share (in usd per share)	$ (0.20)	$ 0.77	$ (0.58)	$ 1.57
Diluted earnings per share (in usd per share)	$ (0.20)	$ 0.76	$ (0.58)	$ 1.55
Weighted-average shares used in computation of earnings per share:
Basic (in shares)	10,175	10,103	10,173	10,089
Diluted (in shares)	10,175	10,286	10,173	10,276
Product
Total net sales	$ 56,575	$ 58,004	$ 113,030	$ 115,495
Service
Total net sales	$ 64,659	$ 55,076	$ 124,648	$ 106,103

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ (2,028)	$ 7,778	$ (5,872)	$ 15,885
Other comprehensive income (loss):
Foreign currency translation adjustments, net of tax of $(17), $76, $(4), and $60	(2,186)	159	(2,519)	(215)
Net change in unrealized gains (losses) on available-for-sale debt securities:
Unrealized gains (losses), net of tax of $(2), $0, $28, and $1	(238)	(6)	(900)	(104)
Reclassification adjustment for losses (gains) included in “Other income (expense), net,” net of tax of $4, $0, $8, and $0	7	(12)	13	(26)
Net unrealized gains (losses) on available-for-sale debt securities	(231)	(18)	(887)	(130)
Total other comprehensive income (loss)	(2,417)	141	(3,406)	(345)
Comprehensive income (loss)	$ (4,445)	$ 7,919	$ (9,278)	$ 15,540

XML

Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Statement of Comprehensive Income [Abstract]
Foreign currency translation adjustments, tax	$ 76	$ (17)	$ 60	$ (4)
Unrealized gains (losses), tax	0	(2)	1	28
Reclassification adjustment for losses (gains) included in “Other income (expense), net,” tax	$ 0	$ 4	$ 0	$ 8

XML

Consolidated Balance Sheets - USD ($) $ in Millions	Jun. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 37,478	$ 36,220
Marketable securities	23,232	59,829
Inventories	38,153	32,640
Accounts receivable, net and other	34,804	32,891
Total current assets	133,667	161,580
Property and equipment, net	173,706	160,281
Operating leases	58,430	56,082
Goodwill	20,195	15,371
Other assets	33,730	27,235
Total assets	419,728	420,549
Current liabilities:
Accounts payable	71,219	78,664
Accrued expenses and other	56,254	51,775
Unearned revenue	12,818	11,827
Total current liabilities	140,291	142,266
Long-term lease liabilities	66,524	67,651
Long-term debt	58,053	48,744
Other long-term liabilities	23,458	23,643
Commitments and contingencies (Note 4)
Stockholders’ equity:
Preferred stock ($0.01 par value; 500 shares authorized; no shares issued or outstanding)	0	0
Common stock ($0.01 par value; 100,000 shares authorized; 10,644 and 10,699 shares issued; 10,175 and 10,183 shares outstanding)	107	106
Treasury stock, at cost	(7,837)	(1,837)
Additional paid-in capital	63,871	55,437
Accumulated other comprehensive income (loss)	(4,782)	(1,376)
Retained earnings	80,043	85,915
Total stockholders’ equity	131,402	138,245
Total liabilities and stockholders’ equity	$ 419,728	$ 420,549

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Preferred stock, par value (in usd per share)	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	500,000,000	500,000,000
Preferred stock, issued (in shares)	0	0
Preferred stock, outstanding (in shares)	0	0
Common stock, par value (in usd per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	100,000,000,000	100,000,000,000
Common stock, issued (in shares)	10,699,000,000	10,644,000,000
Common stock, outstanding (in shares)	10,183,000,000	10,175,000,000

XML

Accounting Policies and Supplemental Disclosures

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Accounting Policies and Supplemental Disclosures

ACCOUNTING POLICIES AND SUPPLEMENTAL DISCLOSURES

Unaudited Interim Financial Information

We have prepared the accompanying consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These consolidated financial statements are unaudited and, in our opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair presentation of our consolidated cash flows, operating results, and balance sheets for the periods presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for 2022 due to seasonal and other factors. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted in accordance with the rules and regulations of the SEC. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in Item 8 of Part II, “Financial Statements and Supplementary Data,” of our 2021 Annual Report on Form 10-K.

Common Stock Split

On May 27, 2022, we effected a 20-for-1 stock split of our common stock and proportionately increased the number of authorized shares of common stock. All share, restricted stock unit (“RSU”), and per share or per RSU information throughout this Quarterly Report on Form 10-Q has been retroactively adjusted to reflect the stock split. The shares of common stock retain a par value of $0.01 per share. Accordingly, an amount equal to the par value of the increased shares resulting from the stock split was reclassified from “Additional paid-in capital” to “Common stock.”

Principles of Consolidation

The consolidated financial statements include the accounts of Amazon.com, Inc. and its consolidated entities (collectively, the “Company”), consisting of its wholly-owned subsidiaries and those entities in which we have a variable interest and of which we are the primary beneficiary, including certain entities in India and certain entities that support our seller lending financing activities. Intercompany balances and transactions between consolidated entities are eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent liabilities in the consolidated financial statements and accompanying notes. Estimates are used for, but not limited to, income taxes, useful lives of equipment, commitments and contingencies, valuation of acquired intangibles and goodwill, stock-based compensation forfeiture rates, vendor funding, inventory valuation, collectability of receivables, impairment of property and equipment and operating leases, and valuation and impairment of investments. Actual results could differ materially from these estimates.

We review the useful lives of equipment on an ongoing basis, and effective January 1, 2022 we changed our estimate of the useful lives for our servers from four to five years and for our networking equipment from five to six years. The longer useful lives are due to continuous improvements in our hardware, software, and data center designs. The effect of this change in estimate for Q2 2022, based on servers and networking equipment that were included in “Property and equipment, net” as of March 31, 2022 and those acquired during the three months ended June 30, 2022, was a reduction in depreciation and amortization expense of $928 million and a benefit to net loss of $728 million, or $0.07 per basic share and $0.07 per diluted share. The effect of this change in estimate for the six months ended June 30, 2022, based on servers and networking equipment that were included in “Property and equipment, net” as of December 31, 2021 and those acquired during the six months ended June 30, 2022, was a reduction in depreciation and amortization expense of $1.9 billion and a benefit to net loss of $1.5 billion, or $0.15 per basic share and $0.15 per diluted share.

Supplemental Cash Flow Information

The following table shows supplemental cash flow information (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,				Twelve Months Ended June 30,
	2021		2022		2021		2022		2021		2022
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest on debt	$	179	$	349	$	455	$	628	$	942	$	1,271
Cash paid for operating leases	1,577		2,088		3,217		4,455		5,577		7,960
Cash paid for interest on finance leases	129		95		286		202		569		437
Cash paid for interest on financing obligations	35		55		68		113		127		198
Cash paid for income taxes, net of refunds	1,803		3,145		2,604		3,598		3,526		4,682
Assets acquired under operating leases	5,578		5,101		9,114		7,276		19,576		23,531
Property and equipment acquired under finance leases, net of remeasurements and modifications	1,642		61		3,709		227		9,976		3,579
Property and equipment recognized during the construction period of build-to-suit lease arrangements	1,193		986		2,080		2,351		3,486		6,117
Property and equipment derecognized after the construction period of build-to-suit lease arrangements, with the associated leases recognized as operating	99		1,079		99		1,112		99		1,243

Earnings Per Share

Basic earnings per share is calculated using our weighted-average outstanding common shares. Diluted earnings per share is calculated using our weighted-average outstanding common shares including the dilutive effect of stock awards as determined under the treasury stock method. In periods when we have a net loss, stock awards are excluded from our calculation of earnings per share as their inclusion would have an antidilutive effect.

The following table shows the calculation of diluted shares (in millions):

	Three Months Ended June 30,		Six Months Ended June 30,
	2021	2022	2021	2022
Shares used in computation of basic earnings per share	10,103	10,175	10,089	10,173
Total dilutive effect of outstanding stock awards	183	—	187	—
Shares used in computation of diluted earnings per share	10,286	10,175	10,276	10,173

Other Income (Expense), Net

Other income (expense), net, is as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2022		2021		2022
Marketable equity securities valuation gains (losses)	$	157	$	(4,322)	$	81	$	(12,567)
Equity warrant valuation gains (losses)	939		(1,124)		1,244		(1,436)
Upward adjustments relating to equity investments in private companies	31		58		1,506		65
Foreign currency gains (losses)	110		(117)		79		(103)
Other, net	24		(40)		48		(74)
Total other income (expense), net	1,261		(5,545)		2,958		(14,115)

Included in other income (expense), net is a marketable equity securities valuation loss of $3.9 billion in Q2 2022, and $11.5 billion for the six months ended June 30, 2022, from our equity investment in Rivian Automotive, Inc. (“Rivian”). Our investment in Rivian’s preferred stock was accounted for at cost, with adjustments for observable changes in prices or impairments, prior to Rivian’s initial public offering in November 2021, which resulted in the conversion of our preferred stock to Class A common stock. As of June 30, 2022, we held 158 million shares of Rivian’s Class A common stock, representing an approximate 18% ownership interest, and an approximate 16% voting interest. We determined that we have the ability to exercise significant influence over Rivian through our equity investment, our commercial arrangement for the purchase of

electric vehicles, and one of our employees serving on Rivian’s board of directors. We elected the fair value option to account for our equity investment in Rivian, which is included in “Marketable securities” on our consolidated balance sheets.

Required summarized financial information of Rivian as disclosed in its most recent SEC filings is as follows (in millions):

	Three Months Ended March 31,
	2021		2022
Revenues	$	—	$	95
Gross profit	—		(502)
Loss from operations	(410)		(1,579)
Net loss	(414)		(1,593)

Inventories

Inventories, consisting of products available for sale, are primarily accounted for using the first-in, first-out method, and are valued at the lower of cost and net realizable value. This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such as through sales to individual customers, returns to product vendors, or liquidations, and expected recoverable values of each disposition category. The inventory valuation allowance, representing a write-down of inventory, was $2.6 billion and $2.4 billion as of December 31, 2021 and June 30, 2022.

Accounts Receivable, Net and Other

Included in “Accounts receivable, net and other” on our consolidated balance sheets are amounts primarily related to customers, vendors, and sellers. As of December 31, 2021 and June 30, 2022, customer receivables, net, were $20.2 billion and $21.6 billion, vendor receivables, net, were $5.3 billion and $4.9 billion, and seller receivables, net, were $1.0 billion and $1.3 billion. Seller receivables are amounts due from sellers related to our seller lending program, which provides funding to sellers primarily to procure inventory.

We estimate losses on receivables based on expected losses, including our historical experience of actual losses. The allowance for doubtful accounts was $1.1 billion and $1.2 billion as of December 31, 2021 and June 30, 2022.

Digital Video and Music Content

The total capitalized costs of video, which is primarily released content, and music as of December 31, 2021 and June 30, 2022 were $10.7 billion and $15.2 billion. Total video and music expense was $3.1 billion and $3.7 billion in Q2 2021 and Q2 2022, and $6.2 billion and $7.3 billion for the six months ended June 30, 2021 and 2022.

Unearned Revenue

Unearned revenue is recorded when payments are received or due in advance of performing our service obligations and is recognized over the service period. Unearned revenue primarily relates to prepayments of AWS services and Amazon Prime memberships. Our total unearned revenue as of December 31, 2021 was $14.0 billion, of which $8.1 billion was recognized as revenue during the six months ended June 30, 2022. Included in “Other long-term liabilities” on our consolidated balance sheets was $2.2 billion and $2.6 billion of unearned revenue as of December 31, 2021 and June 30, 2022.

Additionally, we have performance obligations, primarily related to AWS, associated with commitments in customer contracts for future services that have not yet been recognized in our consolidated financial statements. For contracts with original terms that exceed one year, those commitments not yet recognized were $100.1 billion as of June 30, 2022. The weighted-average remaining life of our long-term contracts is 3.9 years. However, the amount and timing of revenue recognition is largely driven by customer usage, which can extend beyond the original contractual term.

Acquisition Activity

On March 17, 2022, we acquired MGM Holdings Inc. (“MGM”), for cash consideration of approximately $6.1 billion, net of cash acquired, to provide more digital media content options for customers. We also assumed $2.5 billion of debt, which we repaid immediately after closing. The acquired assets primarily consist of $3.4 billion of video content and $4.9 billion of goodwill, the majority of which is allocated to our North America segment. The valuation of certain assets and liabilities is preliminary and subject to change.

Pro forma results of operations have not been presented because the effects of the MGM acquisition were not material to our consolidated results of operations. Acquisition-related costs were expensed as incurred and were not significant.

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Financial Instruments

6 Months Ended

Jun. 30, 2022

Investments, Debt and Equity Securities [Abstract]

Financial Instruments

FINANCIAL INSTRUMENTS

Cash, Cash Equivalents, Restricted Cash, and Marketable Securities

As of December 31, 2021 and June 30, 2022, our cash, cash equivalents, restricted cash, and marketable securities primarily consisted of cash, AAA-rated money market funds, U.S. and foreign government and agency securities, other investment grade securities, and marketable equity securities. Cash equivalents and marketable securities are recorded at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3—Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

We measure the fair value of money market funds and certain marketable equity securities based on quoted prices in active markets for identical assets or liabilities. Other marketable securities were valued either based on recent trades of securities in inactive markets or based on quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data. We did not hold significant amounts of marketable securities categorized as Level 3 assets as of December 31, 2021 and June 30, 2022.

The following table summarizes, by major security type, our cash, cash equivalents, restricted cash, and marketable securities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in millions):

	December 31, 2021		June 30, 2022
	Total Estimated Fair Value		Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Total Estimated Fair Value
Cash	$	10,942	$	9,825	$	—	$	—	$	9,825
Level 1 securities:
Money market funds	20,312		18,816		—		—		18,816
Equity securities (1)(3)	1,646								4,946
Level 2 securities:
Foreign government and agency securities	181		50		—		(1)		49
U.S. government and agency securities	4,300		2,344		—		(122)		2,222
Corporate debt securities	35,764		21,756		—		(673)		21,083
Asset-backed securities	6,738		3,736		—		(164)		3,572
Other fixed income securities	686		407		—		(18)		389
Equity securities (1)(3)	15,740								30
	$	96,309	$	56,934	$	—	$	(978)	$	60,932
Less: Restricted cash, cash equivalents, and marketable securities (2)	(260)								(222)
Total cash, cash equivalents, and marketable securities	$	96,049							$	60,710

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(1)The related unrealized gain (loss) recorded in “Other income (expense), net” was $119 million and $(4.2) billion in Q2 2021 and Q2 2022, and $122 million and $(12.3) billion for the six months ended June 30, 2021 and 2022.

(2)We are required to pledge or otherwise restrict a portion of our cash, cash equivalents, and marketable fixed income securities primarily as collateral for real estate, amounts due to third-party sellers in certain jurisdictions, debt, and standby and trade letters of credit. We classify cash, cash equivalents, and marketable fixed income securities with use restrictions of less than twelve months as “Accounts receivable, net and other” and of twelve months or longer as non-current “Other assets” on our consolidated balance sheets. See “Note 4 — Commitments and Contingencies.”

(3)Our equity investment in Rivian had a fair value of $15.6 billion and $4.1 billion as of December 31, 2021 and June 30, 2022, respectively. The investment was subject to regulatory sales restrictions resulting in a discount for lack of marketability of approximately $800 million as of December 31, 2021, which expired in Q1 2022.

The following table summarizes the remaining contractual maturities of our cash equivalents and marketable fixed income securities as of June 30, 2022 (in millions):

	Amortized Cost		Estimated Fair Value
Due within one year	$	29,370	$	29,344
Due after one year through five years	14,776		13,967
Due after five years through ten years	796		760
Due after ten years	2,167		2,060
Total	$	47,109	$	46,131

Actual maturities may differ from the contractual maturities because borrowers may have certain prepayment conditions.

Equity Warrants and Non-Marketable Equity Investments

We hold equity warrants giving us the right to acquire stock of other companies. As of December 31, 2021 and June 30, 2022, these warrants had a fair value of $3.4 billion and $2.4 billion, and are recorded within “Other assets” on our consolidated balance sheets with gains and losses recognized in “Other income (expense), net” on our consolidated statements of operations. These warrants are primarily classified as Level 2 assets.

As of December 31, 2021 and June 30, 2022, equity investments not accounted for under the equity-method and without readily determinable fair values had a carrying value of $603 million and $768 million, and are recorded within “Other assets”

on our consolidated balance sheets with adjustments recognized in “Other income (expense), net” on our consolidated statements of operations.

Consolidated Statements of Cash Flows Reconciliation

The following table provides a reconciliation of the amount of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets to the total of the same such amounts shown in the consolidated statements of cash flows (in millions):

	December 31, 2021		June 30, 2022
Cash and cash equivalents	$	36,220	$	37,478
Restricted cash included in accounts receivable, net and other	242		207
Restricted cash included in other assets	15		15
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows	$	36,477	$	37,700

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Leases

6 Months Ended

Jun. 30, 2022

Leases [Abstract]

Leases

LEASES

We have entered into non-cancellable operating and finance leases for fulfillment, delivery, office, physical store, data center, and sortation facilities as well as server and networking equipment, vehicles, and aircraft. Gross assets acquired under finance leases, inclusive of those where title transfers at the end of the lease, are recorded in “Property and equipment, net” and were $72.2 billion and $68.6 billion as of December 31, 2021 and June 30, 2022. Accumulated amortization associated with finance leases was $43.4 billion and $43.5 billion as of December 31, 2021 and June 30, 2022.

Lease cost recognized in our consolidated statements of operations is summarized as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2022		2021		2022
Operating lease cost	$	1,662	$	2,133	$	3,218	$	4,236
Finance lease cost:
Amortization of lease assets	2,489		1,530		4,945		3,090
Interest on lease liabilities	119		92		251		195
Finance lease cost	2,608		1,622		5,196		3,285
Variable lease cost	415		471		763		940
Total lease cost	$	4,685	$	4,226	$	9,177	$	8,461

Other information about lease amounts recognized in our consolidated financial statements is as follows:

	December 31, 2021		June 30, 2022
Weighted-average remaining lease term – operating leases	11.3 years		11.1 years
Weighted-average remaining lease term – finance leases	8.1 years		8.7 years
Weighted-average discount rate – operating leases	2.2	%	2.4	%
Weighted-average discount rate – finance leases	2.0	%	2.1	%

Our lease liabilities were as follows (in millions):

	December 31, 2021
	Operating Leases		Finance Leases		Total
Gross lease liabilities	$	66,269	$	25,866	$	92,135
Less: imputed interest	(7,939)		(2,113)		(10,052)
Present value of lease liabilities	58,330		23,753		82,083
Less: current portion of lease liabilities	(6,349)		(8,083)		(14,432)
Total long-term lease liabilities	$	51,981	$	15,670	$	67,651

	June 30, 2022
	Operating Leases		Finance Leases		Total
Gross lease liabilities	$	69,341	$	20,426	$	89,767
Less: imputed interest	(8,735)		(2,009)		(10,744)
Present value of lease liabilities	60,606		18,417		79,023
Less: current portion of lease liabilities	(6,707)		(5,792)		(12,499)
Total long-term lease liabilities	$	53,899	$	12,625	$	66,524

Leases

LEASES

We have entered into non-cancellable operating and finance leases for fulfillment, delivery, office, physical store, data center, and sortation facilities as well as server and networking equipment, vehicles, and aircraft. Gross assets acquired under finance leases, inclusive of those where title transfers at the end of the lease, are recorded in “Property and equipment, net” and were $72.2 billion and $68.6 billion as of December 31, 2021 and June 30, 2022. Accumulated amortization associated with finance leases was $43.4 billion and $43.5 billion as of December 31, 2021 and June 30, 2022.

Lease cost recognized in our consolidated statements of operations is summarized as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2022		2021		2022
Operating lease cost	$	1,662	$	2,133	$	3,218	$	4,236
Finance lease cost:
Amortization of lease assets	2,489		1,530		4,945		3,090
Interest on lease liabilities	119		92		251		195
Finance lease cost	2,608		1,622		5,196		3,285
Variable lease cost	415		471		763		940
Total lease cost	$	4,685	$	4,226	$	9,177	$	8,461

Other information about lease amounts recognized in our consolidated financial statements is as follows:

	December 31, 2021		June 30, 2022
Weighted-average remaining lease term – operating leases	11.3 years		11.1 years
Weighted-average remaining lease term – finance leases	8.1 years		8.7 years
Weighted-average discount rate – operating leases	2.2	%	2.4	%
Weighted-average discount rate – finance leases	2.0	%	2.1	%

Our lease liabilities were as follows (in millions):

	December 31, 2021
	Operating Leases		Finance Leases		Total
Gross lease liabilities	$	66,269	$	25,866	$	92,135
Less: imputed interest	(7,939)		(2,113)		(10,052)
Present value of lease liabilities	58,330		23,753		82,083
Less: current portion of lease liabilities	(6,349)		(8,083)		(14,432)
Total long-term lease liabilities	$	51,981	$	15,670	$	67,651

	June 30, 2022
	Operating Leases		Finance Leases		Total
Gross lease liabilities	$	69,341	$	20,426	$	89,767
Less: imputed interest	(8,735)		(2,009)		(10,744)
Present value of lease liabilities	60,606		18,417		79,023
Less: current portion of lease liabilities	(6,707)		(5,792)		(12,499)
Total long-term lease liabilities	$	53,899	$	12,625	$	66,524

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

Commitments

The following summarizes our principal contractual commitments, excluding open orders for purchases that support normal operations and are generally cancellable, as of June 30, 2022 (in millions): 

	Six Months Ended December 31,		Year Ended December 31,
	2022		2023		2024		2025		2026		Thereafter		Total
Long-term debt principal and interest	$	2,303	$	5,536	$	8,940	$	5,280	$	4,187	$	67,529	$	93,775
Operating lease liabilities	3,966		7,856		7,360		6,796		6,226		37,137		69,341
Finance lease liabilities, including interest	3,184		4,630		2,226		1,337		1,201		7,848		20,426
Financing obligations, including interest (1)	229		464		463		456		463		7,179		9,254
Leases not yet commenced	545		1,711		2,324		2,350		2,381		22,512		31,823
Unconditional purchase obligations (2)	3,110		7,088		6,208		4,927		4,342		9,404		35,079
Other commitments (3)(4)	1,898		2,229		1,492		1,051		1,132		11,234		19,036
Total commitments	$	15,235	$	29,514	$	29,013	$	22,197	$	19,932	$	162,843	$	278,734

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(1)Includes non-cancellable financing obligations for fulfillment, sortation, and data center facilities. Excluding interest, current financing obligations of $196 million and $251 million are recorded within “Accrued expenses and other” and $6.2 billion and $6.8 billion are recorded within “Other long-term liabilities” as of December 31, 2021 and June 30, 2022. The weighted-average remaining term of the financing obligations was 18.8 years and 18.4 years and the weighted-average imputed interest rate was 3.2% as of December 31, 2021 and June 30, 2022.

(2)Includes unconditional purchase obligations related to long-term agreements to acquire and license digital media content that are not reflected on the consolidated balance sheets and certain products offered in our Whole Foods Market stores. For those digital media content agreements with variable terms, we do not estimate the total obligation beyond any minimum quantities and/or pricing as of the reporting date. Purchase obligations associated with renewal provisions solely at the option of the content provider are included to the extent such commitments are fixed or a minimum amount is specified.

(3)Includes the estimated timing and amounts of payments for rent and tenant improvements associated with build-to-suit lease arrangements that are under construction, asset retirement obligations, and liabilities associated with digital media content agreements with initial terms greater than one year.

(4)Excludes approximately $3.3 billion of accrued tax contingencies for which we cannot make a reasonably reliable estimate of the amount and period of payment, if any.

In addition, we are paying the previously disclosed €1.13 billion fine imposed by the Italian Competition Authority in December 2021, which we will seek to recover pending conclusion of all appeals.

In July 2022, we entered into an agreement to acquire 1Life Healthcare, Inc. (One Medical) for approximately $3.9 billion, including its debt, subject to customary closing conditions. We expect to fund this acquisition with cash on hand.

Other Contingencies

We are disputing claims and denials of refunds or credits related to various non-income taxes (such as sales, value added, consumption, service, and similar taxes), including in jurisdictions in which we already collect and remit these taxes. These non-income tax controversies typically relate to (i) the taxability of products and services, including cross-border intercompany transactions, (ii) collection and withholding on transactions with third parties, and (iii) the adequacy of compliance with reporting obligations, including evolving documentation requirements. Due to the inherent complexity and uncertainty of these matters and the judicial and regulatory processes in certain jurisdictions, the final outcome of any such controversies may be materially different from our expectations.

Legal Proceedings

The Company is involved from time to time in claims, proceedings, and litigation, including the matters described in Item 8 of Part II, “Financial Statements and Supplementary Data — Note 7 — Commitments and Contingencies — Legal Proceedings” of our 2021 Annual Report on Form 10-K and in Item 1 of Part I, “Financial Statements — Note 4 — Commitments and Contingencies — Legal Proceedings” of our Quarterly Report on Form 10-Q for the period ended March 31, 2022, as supplemented by the following:

In November 2015, Eolas Technologies, Inc. filed a complaint against Amazon.com, Inc. in the United States District Court for the Eastern District of Texas. The complaint alleges, among other things, that the use of “interactive features” on www.amazon.com, including “search suggestions and search results,” infringes U.S. Patent No. 9,195,507, entitled “Distributed Hypermedia Method and System for Automatically Invoking External Application Providing Interaction and Display of Embedded Objects Within A Hypermedia Document.” The complaint sought a judgment of infringement together with costs and attorneys’ fees. In February 2016, Eolas filed an amended complaint seeking, among other things, an unspecified amount of damages. In February 2017, Eolas alleged in its damages report that in the event of a finding of liability Amazon could be subject to $130-$250 million in damages. In April 2017, the case was transferred to the United States District Court for the Northern District of California. In May 2022, the district court granted summary judgment holding that the patent is invalid. In June 2022, Eolas filed a notice of appeal. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter.

In October 2020, BroadbandiTV, Inc. filed a complaint against Amazon.com, Inc., Amazon.com Services LLC, and Amazon Web Services, Inc. in the United States District Court for the Western District of Texas. The complaint alleges, among other things, that certain Amazon Prime Video features and services infringe U.S. Patent Nos. 9,648,388, 10,546,750, and 10,536,751, each entitled “Video-On-Demand Content Delivery System For Providing Video-On-Demand Services To TV Services Subscribers”; 10,028,026, entitled “System For Addressing On-Demand TV Program Content On TV Services Platform Of A Digital TV Services Provider”; and 9,973,825, entitled “Dynamic Adjustment Of Electronic Program Guide Displays Based On Viewer Preferences For Minimizing Navigation In VOD Program Selection.” The complaint seeks an unspecified amount of damages. In April 2022, BroadbandiTV alleged in its damages report that, in the event of a finding of liability, Amazon.com, Inc., Amazon.com Services LLC, and Amazon Web Services, Inc. could be subject to $166-$986 million in damages. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter.

In July 2022, Acceleration Bay, LLC filed a complaint against Amazon Web Services, Inc. in the United States District Court for the District of Delaware. The complaint alleges, among other things, that Amazon EC2, Amazon CloudFront, AWS Lambda, Amazon Lumberyard, Luna, Amazon Prime Video, Twitch, Amazon GameLift, GridMate, Amazon EKS, AWS App Mesh, and Amazon VPC infringe U.S. Patent Nos. 6,701,344, entitled “Distributed Game Environment”; 6,714,966, entitled “Information Delivery Service”; 6,732,147, entitled “Leaving A Broadcast Service”; 6,829,634, entitled “Broadcasting Network”; and 6,910,069, entitled “Joining A Broadcast Channel.” The complaint seeks injunctive relief, an unspecified amount of damages, enhanced damages, interest, attorneys’ fees, and costs. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter.

In addition, we are regularly subject to claims, litigation, and other proceedings, including potential regulatory proceedings, involving patent and other intellectual property matters, taxes, labor and employment, competition and antitrust, privacy and data protection, consumer protection, commercial disputes, goods and services offered by us and by third parties, and other matters.

The outcomes of our legal proceedings and other contingencies are inherently unpredictable, subject to significant uncertainties, and could be material to our operating results and cash flows for a particular period. We evaluate, on a regular basis, developments in our legal proceedings and other contingencies that could affect the amount of liability, including amounts in excess of any previous accruals and reasonably possible losses disclosed, and make adjustments and changes to our accruals and disclosures as appropriate. For the matters we disclose that do not include an estimate of the amount of loss or range of losses, such an estimate is not possible or is immaterial, and we may be unable to estimate the possible loss or range of losses that could potentially result from the application of non-monetary remedies. Until the final resolution of such matters, if any of our estimates and assumptions change or prove to have been incorrect, we may experience losses in excess of the amounts recorded, which could have a material effect on our business, consolidated financial position, results of operations, or cash flows.

See also “Note 7 — Income Taxes.”

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Debt

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Debt

DEBT

As of June 30, 2022, we had $62.5 billion of unsecured senior notes outstanding (the “Notes”), including $12.8 billion issued in April 2022 for general corporate purposes, and $935 million of borrowings under our credit facility. Our total long-term debt obligations are as follows (in millions):

	Maturities (1)	Stated Interest Rates	Effective Interest Rates	December 31, 2021		June 30, 2022
2012 Notes issuance of $3.0 billion	2022	2.50%	2.66%	1,250		1,250
2014 Notes issuance of $6.0 billion	2024 - 2044	3.80% - 4.95%	3.90% - 5.11%	4,000		4,000
2017 Notes issuance of $17.0 billion	2023 - 2057	2.40% - 5.20%	2.56% - 4.33%	16,000		16,000
2020 Notes issuance of $10.0 billion	2023 - 2060	0.40% - 2.70%	0.56% - 2.77%	10,000		10,000
2021 Notes issuance of $18.5 billion	2023 - 2061	0.25% - 3.25%	0.35% - 3.31%	18,500		18,500
2022 Notes Issuance of $12.8 billion	2024 - 2062	2.73% - 4.10%	2.83% - 4.15%	—		12,750
Credit Facility				803		935
Total face value of long-term debt				50,553		63,435
Unamortized discount and issuance costs, net				(318)		(384)
Less: current portion of long-term debt				(1,491)		(4,998)
Long-term debt				$	48,744	$	58,053

___________________

(1) The weighted-average remaining lives of the 2012, 2014, 2017, 2020, 2021, and 2022 Notes were 0.4, 13.1, 14.7, 17.2, 13.8, and 13.8 years as of June 30, 2022. The combined weighted-average remaining life of the Notes was 14.3 years as of June 30, 2022.

Interest on the Notes is payable semi-annually in arrears. We may redeem the Notes at any time in whole, or from time to time, in part at specified redemption prices. We are not subject to any financial covenants under the Notes. The estimated fair value of the Notes was approximately $53.3 billion and $57.1 billion as of December 31, 2021 and June 30, 2022, which is based on quoted prices for our debt as of those dates.

We have a $1.0 billion secured revolving credit facility with a lender that is secured by certain seller receivables, which we may from time to time increase in the future subject to lender approval (the “Credit Facility”). The Credit Facility is available until October 2022, bears interest at the London interbank offered rate (“LIBOR”) plus 1.40%, and has a commitment fee of 0.50% on the undrawn portion. There were $803 million and $935 million of borrowings outstanding under the Credit Facility as of December 31, 2021 and June 30, 2022, which had a weighted-average interest rate of 2.7%. As of December 31, 2021 and June 30, 2022, we have pledged $918 million and $1.1 billion of our cash and seller receivables as collateral for debt related to our Credit Facility. The estimated fair value of the Credit Facility, which is based on Level 2 inputs, approximated its carrying value as of December 31, 2021 and June 30, 2022.

We have U.S. Dollar and Euro commercial paper programs (the “Commercial Paper Programs”) under which we may from time to time issue unsecured commercial paper up to a total of $20.0 billion (including up to €3.0 billion) at the date of issue, with individual maturities that may vary but will not exceed 397 days from the date of issue. In March 2022, we increased the size of the Commercial Paper Programs from $10.0 billion to $20.0 billion. There were $725 million and $8.2 billion of borrowings outstanding under the Commercial Paper Programs as of December 31, 2021 and June 30, 2022, which were included in “Accrued expenses and other” on our consolidated balance sheets and had a weighted-average effective

interest rate, including issuance costs, of 0.08% and 0.99%, respectively. We use the net proceeds from the issuance of commercial paper for general corporate purposes.

We also have a $10.0 billion unsecured revolving credit facility with a syndicate of lenders (the “Credit Agreement”), which was amended and restated in March 2022 to increase the borrowing capacity from $7.0 billion to $10.0 billion and to extend the term to March 2025. It may be extended for up to three additional one-year terms if approved by the lenders. The interest rate applicable to outstanding balances under the Credit Agreement is the applicable benchmark rate specified in the Credit Agreement plus 0.45%, with a commitment fee of 0.03% on the undrawn portion of the credit facility. There were no borrowings outstanding under the Credit Agreement as of December 31, 2021 and June 30, 2022.

We also utilize other short-term credit facilities for working capital purposes. There were $318 million and $235 million of borrowings outstanding under these facilities as of December 31, 2021 and June 30, 2022, which were included in “Accrued expenses and other” on our consolidated balance sheets. In addition, we had $10.0 billion of unused letters of credit as of June 30, 2022.

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Stockholders' Equity

6 Months Ended

Jun. 30, 2022

Equity [Abstract]

Stockholders' Equity

STOCKHOLDERS’ EQUITY

Stock Repurchase Activity

In March 2022, the Board of Directors authorized a program to repurchase up to $10.0 billion of our common stock, with no fixed expiration, which replaced the previous $5.0 billion stock repurchase authorization, approved by the Board of Directors in February 2016. We repurchased 46.2 million shares of our common stock for $6.0 billion during the six months ended June 30, 2022 under these programs. As of June 30, 2022, we have $6.1 billion remaining under the repurchase program.

Stock Award Activity

Common shares outstanding plus shares underlying outstanding stock awards totaled 10.5 billion and 10.6 billion as of December 31, 2021 and June 30, 2022. These totals include all vested and unvested stock awards outstanding, including those awards we estimate will be forfeited. Stock-based compensation expense is as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2022		2021		2022
Cost of sales	$	145	$	213	$	235	$	359
Fulfillment	566		763		908		1,261
Technology and content	1,887		2,814		3,115		4,459
Sales and marketing	691		990		1,147		1,655
General and administrative	302		429		492		725
Total stock-based compensation expense	$	3,591	$	5,209	$	5,897	$	8,459

The following table summarizes our restricted stock unit activity for the six months ended June 30, 2022 (in millions):

	Number of Units	Weighted-Average Grant-Date Fair Value
Outstanding as of December 31, 2021	279.9	$	134
Units granted	166.0	159
Units vested	(54.2)	108
Units forfeited	(24.2)	140
Outstanding as of June 30, 2022	367.5	149

Scheduled vesting for outstanding restricted stock units as of June 30, 2022, is as follows (in millions):

	Six Months Ended December 31,	Year Ended December 31,
	2022	2023	2024	2025	2026	Thereafter	Total
Scheduled vesting — restricted stock units	57.7	134.5	123.3	38.0	9.8	4.2	367.5

As of June 30, 2022, there was $26.9 billion of net unrecognized compensation cost related to unvested stock-based compensation arrangements. This compensation is recognized on an accelerated basis with approximately half of the compensation expected to be expensed in the next twelve months, and has a remaining weighted-average recognition period of

1.1 years. The estimated forfeiture rate as of December 31, 2021 and June 30, 2022 was 27%. Changes in our estimates and assumptions relating to forfeitures may cause us to realize material changes in stock-based compensation expense in the future.

Changes in Stockholders’ Equity

The following table shows changes in stockholders’ equity (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2022		2021		2022
Total beginning stockholders’ equity	$	103,320	$	134,001	$	93,404	$	138,245
Beginning common stock	106		107		105		106
Stock-based compensation and issuance of employee benefit plan stock	0		0		1		1
Ending common stock	106		107		106		107
Beginning treasury stock	(1,837)		(4,503)		(1,837)		(1,837)
Common stock repurchased	—		(3,334)		—		(6,000)
Ending treasury stock	(1,837)		(7,837)		(1,837)		(7,837)
Beginning additional paid-in capital	45,060		58,691		42,765		55,437
Stock-based compensation and issuance of employee benefit plan stock	3,563		5,180		5,858		8,434
Ending additional paid-in capital	48,623		63,871		48,623		63,871
Beginning accumulated other comprehensive income (loss)	(666)		(2,365)		(180)		(1,376)
Other comprehensive income (loss)	141		(2,417)		(345)		(3,406)
Ending accumulated other comprehensive income (loss)	(525)		(4,782)		(525)		(4,782)
Beginning retained earnings	60,658		82,071		52,551		85,915
Net income (loss)	7,778		(2,028)		15,885		(5,872)
Ending retained earnings	68,436		80,043		68,436		80,043
Total ending stockholders’ equity	$	114,803	$	131,402	$	114,803	$	131,402

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Income Taxes

6 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Our tax provision or benefit from income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment.

Our quarterly tax provision, and our quarterly estimate of our annual effective tax rate, is subject to significant variation due to several factors, including variability in accurately predicting our pre-tax and taxable income and loss and the mix of jurisdictions to which they relate, intercompany transactions, the applicability of special tax regimes, changes in how we do business, acquisitions, investments, developments in tax controversies, changes in our stock price, changes in our deferred tax assets and liabilities and their valuation, foreign currency gains (losses), changes in statutes, regulations, case law, and administrative practices, principles, and interpretations related to tax, including changes to the global tax framework, competition, and other laws and accounting rules in various jurisdictions, and relative changes of expenses or losses for which tax benefits are not recognized. Our effective tax rate can be more or less volatile based on the amount of pre-tax income or loss. For example, the impact of discrete items and non-deductible expenses on our effective tax rate is greater when our pre-tax income is lower. In addition, we record valuation allowances against deferred tax assets when there is uncertainty about our ability to generate future income in relevant jurisdictions.

For 2022, we estimate that our effective tax rate will be reduced by the U.S. federal research and development credit and increased by state income taxes. In addition, valuation gains and losses from our equity investment in Rivian impact our pre-tax income and may cause variability in our effective tax rate.

Our income tax provision for the six months ended June 30, 2021 was $3.0 billion, which included $1.4 billion of net discrete tax benefits primarily attributable to excess tax benefits from stock-based compensation and audit-related developments. Our income tax benefit for the six months ended June 30, 2022 was $2.1 billion, which included $3.2 billion of net discrete tax benefits primarily attributable to a valuation loss related to our equity investment in Rivian.

Cash paid for income taxes, net of refunds was $1.8 billion and $3.1 billion in Q2 2021 and Q2 2022, and $2.6 billion and $3.6 billion for the six months ended June 30, 2021 and 2022.

As of December 31, 2021 and June 30, 2022, tax contingencies were approximately $3.2 billion and $3.3 billion. Changes in tax laws, regulations, administrative practices, principles, and interpretations may impact our tax contingencies. Due to various factors, including the inherent complexities and uncertainties of the judicial, administrative, and regulatory processes in certain jurisdictions, the timing of the resolution of income tax controversies is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ from the amounts accrued. It is reasonably possible that within the next twelve months we will receive additional assessments by various tax authorities or possibly reach resolution of income tax controversies in one or more jurisdictions. These assessments or settlements could result in changes to our contingencies related to positions on prior years’ tax filings.

We are under examination, or may be subject to examination, by the Internal Revenue Service for the calendar year 2016 and thereafter. These examinations may lead to ordinary course adjustments or proposed adjustments to our taxes or our net operating losses with respect to years under examination as well as subsequent periods.

We are also subject to taxation in various states and other foreign jurisdictions including China, France, Germany, India, Japan, Luxembourg, and the United Kingdom. We are under, or may be subject to, audit or examination and additional assessments by the relevant authorities in respect of these particular jurisdictions primarily for 2009 and thereafter. We are currently disputing tax assessments in multiple jurisdictions, including with respect to the allocation and characterization of income.

In October 2014, the European Commission opened a formal investigation to examine whether decisions by the tax authorities in Luxembourg with regard to the corporate income tax paid by certain of our subsidiaries comply with European Union rules on state aid. On October 4, 2017, the European Commission announced its decision that determinations by the tax authorities in Luxembourg did not comply with European Union rules on state aid. Based on that decision, the European Commission announced an estimated recovery amount of approximately €250 million, plus interest, for the period May 2006 through June 2014, and ordered Luxembourg tax authorities to calculate the actual amount of additional taxes subject to recovery. Luxembourg computed an initial recovery amount, consistent with the European Commission’s decision, which we deposited into escrow in March 2018, subject to adjustment pending conclusion of all appeals. In December 2017, Luxembourg appealed the European Commission’s decision. In May 2018, we appealed. On May 12, 2021, the European Union General Court annulled the European Commission’s state aid decision. In July 2021, the European Commission appealed the decision to the European Court of Justice. We will continue to defend ourselves vigorously in this matter.

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Segment Information

6 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

We have organized our operations into three segments: North America, International, and AWS. We allocate to segment results the operating expenses “Fulfillment,” “Technology and content,” “Sales and marketing,” and “General and administrative” based on usage, which is generally reflected in the segment in which the costs are incurred. The majority of technology infrastructure costs are allocated to the AWS segment based on usage. The majority of the remaining non-infrastructure technology costs are incurred in the U.S. and are allocated to our North America segment. There are no internal revenue transactions between our reportable segments. These segments reflect the way our chief operating decision maker evaluates the Company’s business performance and manages its operations.

North America

The North America segment primarily consists of amounts earned from retail sales of consumer products (including from sellers) and subscriptions through North America-focused online and physical stores. This segment includes export sales from these online stores.

International

The International segment primarily consists of amounts earned from retail sales of consumer products (including from sellers) and subscriptions through internationally-focused online stores. This segment includes export sales from these internationally-focused online stores (including export sales from these online stores to customers in the U.S., Mexico, and Canada), but excludes export sales from our North America-focused online stores.

AWS

The AWS segment consists of amounts earned from global sales of compute, storage, database, and other services for start-ups, enterprises, government agencies, and academic institutions.

Information on reportable segments and reconciliation to consolidated net income (loss) is as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2022		2021		2022
North America
Net sales	$	67,550	$	74,430	$	131,916	$	143,674
Operating expenses	64,403		75,057		125,319		145,869
Operating income (loss)	$	3,147	$	(627)	$	6,597	$	(2,195)
International
Net sales	$	30,721	$	27,065	$	61,370	$	55,824
Operating expenses	30,359		28,836		59,756		58,876
Operating income (loss)	$	362	$	(1,771)	$	1,614	$	(3,052)
AWS
Net sales	$	14,809	$	19,739	$	28,312	$	38,180
Operating expenses	10,616		14,024		19,956		25,947
Operating income	$	4,193	$	5,715	$	8,356	$	12,233
Consolidated
Net sales	$	113,080	$	121,234	$	221,598	$	237,678
Operating expenses	105,378		117,917		205,031		230,692
Operating income	7,702		3,317		16,567		6,986
Total non-operating income (expense)	932		(5,970)		2,335		(14,904)
Benefit (provision) for income taxes	(868)		637		(3,024)		2,059
Equity-method investment activity, net of tax	12		(12)		7		(13)
Net income (loss)	$	7,778	$	(2,028)	$	15,885	$	(5,872)

Net sales by groups of similar products and services, which also have similar economic characteristics, is as follows (in millions):    

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2022		2021		2022
Net Sales:
Online stores (1)	$	53,157	$	50,855	$	106,058	$	101,984
Physical stores (2)	4,198		4,721		8,118		9,312
Third-party seller services (3)	25,085		27,376		48,794		52,711
Subscription services (4)	7,917		8,716		15,497		17,126
Advertising services (5)	7,451		8,757		13,832		16,634
AWS	14,809		19,739		28,312		38,180
Other (6)	463		1,070		987		1,731
Consolidated	$	113,080	$	121,234	$	221,598	$	237,678

____________________________

(1)Includes product sales and digital media content where we record revenue gross. We leverage our retail infrastructure to offer a wide selection of consumable and durable goods that includes media products available in both a physical and digital format, such as books, videos, games, music, and software. These product sales include digital products sold on a transactional basis. Digital product subscriptions that provide unlimited viewing or usage rights are included in “Subscription services.”

(2)Includes product sales where our customers physically select items in a store. Sales to customers who order goods online for delivery or pickup at our physical stores are included in “Online stores.”

(3)Includes commissions and any related fulfillment and shipping fees, and other third-party seller services.

(4)Includes annual and monthly fees associated with Amazon Prime memberships, as well as digital video, audiobook, digital music, e-book, and other non-AWS subscription services.

(5)Includes sales of advertising services to sellers, vendors, publishers, authors, and others, through programs such as sponsored ads, display, and video advertising.

(6)Includes sales related to various other offerings, such as certain licensing and distribution of video content and shipping services, and our co-branded credit card agreements.

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Accounting Policies and Supplemental Disclosures (Policies)

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Unaudited Interim Financial Information

Unaudited Interim Financial Information

We have prepared the accompanying consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These consolidated financial statements are unaudited and, in our opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair presentation of our consolidated cash flows, operating results, and balance sheets for the periods presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for 2022 due to seasonal and other factors. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted in accordance with the rules and regulations of the SEC. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in Item 8 of Part II, “Financial Statements and Supplementary Data,” of our 2021 Annual Report on Form 10-K.

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of Amazon.com, Inc. and its consolidated entities (collectively, the “Company”), consisting of its wholly-owned subsidiaries and those entities in which we have a variable interest and of which we are the primary beneficiary, including certain entities in India and certain entities that support our seller lending financing activities. Intercompany balances and transactions between consolidated entities are eliminated.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent liabilities in the consolidated financial statements and accompanying notes. Estimates are used for, but not limited to, income taxes, useful lives of equipment, commitments and contingencies, valuation of acquired intangibles and goodwill, stock-based compensation forfeiture rates, vendor funding, inventory valuation, collectability of receivables, impairment of property and equipment and operating leases, and valuation and impairment of investments. Actual results could differ materially from these estimates.

Earnings Per Share

Earnings Per Share

Basic earnings per share is calculated using our weighted-average outstanding common shares. Diluted earnings per share is calculated using our weighted-average outstanding common shares including the dilutive effect of stock awards as determined under the treasury stock method. In periods when we have a net loss, stock awards are excluded from our calculation of earnings per share as their inclusion would have an antidilutive effect.

Inventories

Inventories

Inventories, consisting of products available for sale, are primarily accounted for using the first-in, first-out method, and are valued at the lower of cost and net realizable value. This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such as through sales to individual customers, returns to product vendors, or liquidations, and expected recoverable values of each disposition category. The inventory valuation allowance, representing a write-down of inventory, was $2.6 billion and $2.4 billion as of December 31, 2021 and June 30, 2022.

Accounts Receivable, Net and Other

Accounts Receivable, Net and Other

Included in “Accounts receivable, net and other” on our consolidated balance sheets are amounts primarily related to customers, vendors, and sellers. As of December 31, 2021 and June 30, 2022, customer receivables, net, were $20.2 billion and $21.6 billion, vendor receivables, net, were $5.3 billion and $4.9 billion, and seller receivables, net, were $1.0 billion and $1.3 billion. Seller receivables are amounts due from sellers related to our seller lending program, which provides funding to sellers primarily to procure inventory.

We estimate losses on receivables based on expected losses, including our historical experience of actual losses. The allowance for doubtful accounts was $1.1 billion and $1.2 billion as of December 31, 2021 and June 30, 2022.

Digital Video and Music Content

Digital Video and Music Content

The total capitalized costs of video, which is primarily released content, and music as of December 31, 2021 and June 30, 2022 were $10.7 billion and $15.2 billion. Total video and music expense was $3.1 billion and $3.7 billion in Q2 2021 and Q2 2022, and $6.2 billion and $7.3 billion for the six months ended June 30, 2021 and 2022.

Unearned Revenue

Unearned Revenue

Unearned revenue is recorded when payments are received or due in advance of performing our service obligations and is recognized over the service period. Unearned revenue primarily relates to prepayments of AWS services and Amazon Prime memberships. Our total unearned revenue as of December 31, 2021 was $14.0 billion, of which $8.1 billion was recognized as revenue during the six months ended June 30, 2022. Included in “Other long-term liabilities” on our consolidated balance sheets was $2.2 billion and $2.6 billion of unearned revenue as of December 31, 2021 and June 30, 2022.

Additionally, we have performance obligations, primarily related to AWS, associated with commitments in customer contracts for future services that have not yet been recognized in our consolidated financial statements. For contracts with original terms that exceed one year, those commitments not yet recognized were $100.1 billion as of June 30, 2022. The weighted-average remaining life of our long-term contracts is 3.9 years. However, the amount and timing of revenue recognition is largely driven by customer usage, which can extend beyond the original contractual term.

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Accounting Policies and Supplemental Disclosures (Tables)

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Supplemental Cash Flow Information

The following table shows supplemental cash flow information (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,				Twelve Months Ended June 30,
	2021		2022		2021		2022		2021		2022
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest on debt	$	179	$	349	$	455	$	628	$	942	$	1,271
Cash paid for operating leases	1,577		2,088		3,217		4,455		5,577		7,960
Cash paid for interest on finance leases	129		95		286		202		569		437
Cash paid for interest on financing obligations	35		55		68		113		127		198
Cash paid for income taxes, net of refunds	1,803		3,145		2,604		3,598		3,526		4,682
Assets acquired under operating leases	5,578		5,101		9,114		7,276		19,576		23,531
Property and equipment acquired under finance leases, net of remeasurements and modifications	1,642		61		3,709		227		9,976		3,579
Property and equipment recognized during the construction period of build-to-suit lease arrangements	1,193		986		2,080		2,351		3,486		6,117
Property and equipment derecognized after the construction period of build-to-suit lease arrangements, with the associated leases recognized as operating	99		1,079		99		1,112		99		1,243

Calculation of Diluted Shares

The following table shows the calculation of diluted shares (in millions):

	Three Months Ended June 30,		Six Months Ended June 30,
	2021	2022	2021	2022
Shares used in computation of basic earnings per share	10,103	10,175	10,089	10,173
Total dilutive effect of outstanding stock awards	183	—	187	—
Shares used in computation of diluted earnings per share	10,286	10,175	10,276	10,173

Other Income (Expense), Net

Other income (expense), net, is as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2022		2021		2022
Marketable equity securities valuation gains (losses)	$	157	$	(4,322)	$	81	$	(12,567)
Equity warrant valuation gains (losses)	939		(1,124)		1,244		(1,436)
Upward adjustments relating to equity investments in private companies	31		58		1,506		65
Foreign currency gains (losses)	110		(117)		79		(103)
Other, net	24		(40)		48		(74)
Total other income (expense), net	1,261		(5,545)		2,958		(14,115)

Summarized Financial Information of Equity Investment

Required summarized financial information of Rivian as disclosed in its most recent SEC filings is as follows (in millions):

	Three Months Ended March 31,
	2021		2022
Revenues	$	—	$	95
Gross profit	—		(502)
Loss from operations	(410)		(1,579)
Net loss	(414)		(1,593)

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Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2022

Investments, Debt and Equity Securities [Abstract]

Fair Value by Major Security Type

The following table summarizes, by major security type, our cash, cash equivalents, restricted cash, and marketable securities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in millions):

	December 31, 2021		June 30, 2022
	Total Estimated Fair Value		Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Total Estimated Fair Value
Cash	$	10,942	$	9,825	$	—	$	—	$	9,825
Level 1 securities:
Money market funds	20,312		18,816		—		—		18,816
Equity securities (1)(3)	1,646								4,946
Level 2 securities:
Foreign government and agency securities	181		50		—		(1)		49
U.S. government and agency securities	4,300		2,344		—		(122)		2,222
Corporate debt securities	35,764		21,756		—		(673)		21,083
Asset-backed securities	6,738		3,736		—		(164)		3,572
Other fixed income securities	686		407		—		(18)		389
Equity securities (1)(3)	15,740								30
	$	96,309	$	56,934	$	—	$	(978)	$	60,932
Less: Restricted cash, cash equivalents, and marketable securities (2)	(260)								(222)
Total cash, cash equivalents, and marketable securities	$	96,049							$	60,710

___________________

(1)The related unrealized gain (loss) recorded in “Other income (expense), net” was $119 million and $(4.2) billion in Q2 2021 and Q2 2022, and $122 million and $(12.3) billion for the six months ended June 30, 2021 and 2022.

(2)We are required to pledge or otherwise restrict a portion of our cash, cash equivalents, and marketable fixed income securities primarily as collateral for real estate, amounts due to third-party sellers in certain jurisdictions, debt, and standby and trade letters of credit. We classify cash, cash equivalents, and marketable fixed income securities with use restrictions of less than twelve months as “Accounts receivable, net and other” and of twelve months or longer as non-current “Other assets” on our consolidated balance sheets. See “Note 4 — Commitments and Contingencies.”

(3)Our equity investment in Rivian had a fair value of $15.6 billion and $4.1 billion as of December 31, 2021 and June 30, 2022, respectively. The investment was subject to regulatory sales restrictions resulting in a discount for lack of marketability of approximately $800 million as of December 31, 2021, which expired in Q1 2022.

Investments Classified by Contractual Maturity Date

The following table summarizes the remaining contractual maturities of our cash equivalents and marketable fixed income securities as of June 30, 2022 (in millions):

	Amortized Cost		Estimated Fair Value
Due within one year	$	29,370	$	29,344
Due after one year through five years	14,776		13,967
Due after five years through ten years	796		760
Due after ten years	2,167		2,060
Total	$	47,109	$	46,131

Consolidated Statements of Cash Flow Reconciliation - Cash and Cash Equivalents

The following table provides a reconciliation of the amount of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets to the total of the same such amounts shown in the consolidated statements of cash flows (in millions):

	December 31, 2021		June 30, 2022
Cash and cash equivalents	$	36,220	$	37,478
Restricted cash included in accounts receivable, net and other	242		207
Restricted cash included in other assets	15		15
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows	$	36,477	$	37,700

Consolidated Statements of Cash Flow Reconciliation - Restricted Cash

The following table provides a reconciliation of the amount of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets to the total of the same such amounts shown in the consolidated statements of cash flows (in millions):

	December 31, 2021		June 30, 2022
Cash and cash equivalents	$	36,220	$	37,478
Restricted cash included in accounts receivable, net and other	242		207
Restricted cash included in other assets	15		15
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows	$	36,477	$	37,700

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Leases (Tables)

6 Months Ended

Jun. 30, 2022

Leases [Abstract]

Lease Cost

Lease cost recognized in our consolidated statements of operations is summarized as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2022		2021		2022
Operating lease cost	$	1,662	$	2,133	$	3,218	$	4,236
Finance lease cost:
Amortization of lease assets	2,489		1,530		4,945		3,090
Interest on lease liabilities	119		92		251		195
Finance lease cost	2,608		1,622		5,196		3,285
Variable lease cost	415		471		763		940
Total lease cost	$	4,685	$	4,226	$	9,177	$	8,461

Other Information about Lease Amounts Recognized

Other information about lease amounts recognized in our consolidated financial statements is as follows:

	December 31, 2021		June 30, 2022
Weighted-average remaining lease term – operating leases	11.3 years		11.1 years
Weighted-average remaining lease term – finance leases	8.1 years		8.7 years
Weighted-average discount rate – operating leases	2.2	%	2.4	%
Weighted-average discount rate – finance leases	2.0	%	2.1	%

Lease Liabilities

Our lease liabilities were as follows (in millions):

	December 31, 2021
	Operating Leases		Finance Leases		Total
Gross lease liabilities	$	66,269	$	25,866	$	92,135
Less: imputed interest	(7,939)		(2,113)		(10,052)
Present value of lease liabilities	58,330		23,753		82,083
Less: current portion of lease liabilities	(6,349)		(8,083)		(14,432)
Total long-term lease liabilities	$	51,981	$	15,670	$	67,651

	June 30, 2022
	Operating Leases		Finance Leases		Total
Gross lease liabilities	$	69,341	$	20,426	$	89,767
Less: imputed interest	(8,735)		(2,009)		(10,744)
Present value of lease liabilities	60,606		18,417		79,023
Less: current portion of lease liabilities	(6,707)		(5,792)		(12,499)
Total long-term lease liabilities	$	53,899	$	12,625	$	66,524

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Principal Contractual Commitments, Excluding Open Orders for Purchases

The following summarizes our principal contractual commitments, excluding open orders for purchases that support normal operations and are generally cancellable, as of June 30, 2022 (in millions): 

	Six Months Ended December 31,		Year Ended December 31,
	2022		2023		2024		2025		2026		Thereafter		Total
Long-term debt principal and interest	$	2,303	$	5,536	$	8,940	$	5,280	$	4,187	$	67,529	$	93,775
Operating lease liabilities	3,966		7,856		7,360		6,796		6,226		37,137		69,341
Finance lease liabilities, including interest	3,184		4,630		2,226		1,337		1,201		7,848		20,426
Financing obligations, including interest (1)	229		464		463		456		463		7,179		9,254
Leases not yet commenced	545		1,711		2,324		2,350		2,381		22,512		31,823
Unconditional purchase obligations (2)	3,110		7,088		6,208		4,927		4,342		9,404		35,079
Other commitments (3)(4)	1,898		2,229		1,492		1,051		1,132		11,234		19,036
Total commitments	$	15,235	$	29,514	$	29,013	$	22,197	$	19,932	$	162,843	$	278,734

___________________

(1)Includes non-cancellable financing obligations for fulfillment, sortation, and data center facilities. Excluding interest, current financing obligations of $196 million and $251 million are recorded within “Accrued expenses and other” and $6.2 billion and $6.8 billion are recorded within “Other long-term liabilities” as of December 31, 2021 and June 30, 2022. The weighted-average remaining term of the financing obligations was 18.8 years and 18.4 years and the weighted-average imputed interest rate was 3.2% as of December 31, 2021 and June 30, 2022.

(2)Includes unconditional purchase obligations related to long-term agreements to acquire and license digital media content that are not reflected on the consolidated balance sheets and certain products offered in our Whole Foods Market stores. For those digital media content agreements with variable terms, we do not estimate the total obligation beyond any minimum quantities and/or pricing as of the reporting date. Purchase obligations associated with renewal provisions solely at the option of the content provider are included to the extent such commitments are fixed or a minimum amount is specified.

(3)Includes the estimated timing and amounts of payments for rent and tenant improvements associated with build-to-suit lease arrangements that are under construction, asset retirement obligations, and liabilities associated with digital media content agreements with initial terms greater than one year.

(4)Excludes approximately $3.3 billion of accrued tax contingencies for which we cannot make a reasonably reliable estimate of the amount and period of payment, if any.

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Debt (Tables)

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Long-Term Debt Obligations

Our total long-term debt obligations are as follows (in millions):

	Maturities (1)	Stated Interest Rates	Effective Interest Rates	December 31, 2021		June 30, 2022
2012 Notes issuance of $3.0 billion	2022	2.50%	2.66%	1,250		1,250
2014 Notes issuance of $6.0 billion	2024 - 2044	3.80% - 4.95%	3.90% - 5.11%	4,000		4,000
2017 Notes issuance of $17.0 billion	2023 - 2057	2.40% - 5.20%	2.56% - 4.33%	16,000		16,000
2020 Notes issuance of $10.0 billion	2023 - 2060	0.40% - 2.70%	0.56% - 2.77%	10,000		10,000
2021 Notes issuance of $18.5 billion	2023 - 2061	0.25% - 3.25%	0.35% - 3.31%	18,500		18,500
2022 Notes Issuance of $12.8 billion	2024 - 2062	2.73% - 4.10%	2.83% - 4.15%	—		12,750
Credit Facility				803		935
Total face value of long-term debt				50,553		63,435
Unamortized discount and issuance costs, net				(318)		(384)
Less: current portion of long-term debt				(1,491)		(4,998)
Long-term debt				$	48,744	$	58,053

___________________

(1) The weighted-average remaining lives of the 2012, 2014, 2017, 2020, 2021, and 2022 Notes were 0.4, 13.1, 14.7, 17.2, 13.8, and 13.8 years as of June 30, 2022. The combined weighted-average remaining life of the Notes was 14.3 years as of June 30, 2022.

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Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2022

Equity [Abstract]

Stock-Based Compensation Expense

Stock-based compensation expense is as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2022		2021		2022
Cost of sales	$	145	$	213	$	235	$	359
Fulfillment	566		763		908		1,261
Technology and content	1,887		2,814		3,115		4,459
Sales and marketing	691		990		1,147		1,655
General and administrative	302		429		492		725
Total stock-based compensation expense	$	3,591	$	5,209	$	5,897	$	8,459

Restricted Stock Unit Activity

The following table summarizes our restricted stock unit activity for the six months ended June 30, 2022 (in millions):

	Number of Units	Weighted-Average Grant-Date Fair Value
Outstanding as of December 31, 2021	279.9	$	134
Units granted	166.0	159
Units vested	(54.2)	108
Units forfeited	(24.2)	140
Outstanding as of June 30, 2022	367.5	149

Scheduled Vesting for Outstanding Restricted Stock Units

Scheduled vesting for outstanding restricted stock units as of June 30, 2022, is as follows (in millions):

	Six Months Ended December 31,	Year Ended December 31,
	2022	2023	2024	2025	2026	Thereafter	Total
Scheduled vesting — restricted stock units	57.7	134.5	123.3	38.0	9.8	4.2	367.5

Changes in Stockholders' Equity

The following table shows changes in stockholders’ equity (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2022		2021		2022
Total beginning stockholders’ equity	$	103,320	$	134,001	$	93,404	$	138,245
Beginning common stock	106		107		105		106
Stock-based compensation and issuance of employee benefit plan stock	0		0		1		1
Ending common stock	106		107		106		107
Beginning treasury stock	(1,837)		(4,503)		(1,837)		(1,837)
Common stock repurchased	—		(3,334)		—		(6,000)
Ending treasury stock	(1,837)		(7,837)		(1,837)		(7,837)
Beginning additional paid-in capital	45,060		58,691		42,765		55,437
Stock-based compensation and issuance of employee benefit plan stock	3,563		5,180		5,858		8,434
Ending additional paid-in capital	48,623		63,871		48,623		63,871
Beginning accumulated other comprehensive income (loss)	(666)		(2,365)		(180)		(1,376)
Other comprehensive income (loss)	141		(2,417)		(345)		(3,406)
Ending accumulated other comprehensive income (loss)	(525)		(4,782)		(525)		(4,782)
Beginning retained earnings	60,658		82,071		52,551		85,915
Net income (loss)	7,778		(2,028)		15,885		(5,872)
Ending retained earnings	68,436		80,043		68,436		80,043
Total ending stockholders’ equity	$	114,803	$	131,402	$	114,803	$	131,402

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

Information on Reportable Segments and Reconciliation to Consolidated Net Income

Information on reportable segments and reconciliation to consolidated net income (loss) is as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2022		2021		2022
North America
Net sales	$	67,550	$	74,430	$	131,916	$	143,674
Operating expenses	64,403		75,057		125,319		145,869
Operating income (loss)	$	3,147	$	(627)	$	6,597	$	(2,195)
International
Net sales	$	30,721	$	27,065	$	61,370	$	55,824
Operating expenses	30,359		28,836		59,756		58,876
Operating income (loss)	$	362	$	(1,771)	$	1,614	$	(3,052)
AWS
Net sales	$	14,809	$	19,739	$	28,312	$	38,180
Operating expenses	10,616		14,024		19,956		25,947
Operating income	$	4,193	$	5,715	$	8,356	$	12,233
Consolidated
Net sales	$	113,080	$	121,234	$	221,598	$	237,678
Operating expenses	105,378		117,917		205,031		230,692
Operating income	7,702		3,317		16,567		6,986
Total non-operating income (expense)	932		(5,970)		2,335		(14,904)
Benefit (provision) for income taxes	(868)		637		(3,024)		2,059
Equity-method investment activity, net of tax	12		(12)		7		(13)
Net income (loss)	$	7,778	$	(2,028)	$	15,885	$	(5,872)

Disaggregation of Revenue

Net sales by groups of similar products and services, which also have similar economic characteristics, is as follows (in millions):    

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2022		2021		2022
Net Sales:
Online stores (1)	$	53,157	$	50,855	$	106,058	$	101,984
Physical stores (2)	4,198		4,721		8,118		9,312
Third-party seller services (3)	25,085		27,376		48,794		52,711
Subscription services (4)	7,917		8,716		15,497		17,126
Advertising services (5)	7,451		8,757		13,832		16,634
AWS	14,809		19,739		28,312		38,180
Other (6)	463		1,070		987		1,731
Consolidated	$	113,080	$	121,234	$	221,598	$	237,678

____________________________

(1)Includes product sales and digital media content where we record revenue gross. We leverage our retail infrastructure to offer a wide selection of consumable and durable goods that includes media products available in both a physical and digital format, such as books, videos, games, music, and software. These product sales include digital products sold on a transactional basis. Digital product subscriptions that provide unlimited viewing or usage rights are included in “Subscription services.”

(2)Includes product sales where our customers physically select items in a store. Sales to customers who order goods online for delivery or pickup at our physical stores are included in “Online stores.”

(3)Includes commissions and any related fulfillment and shipping fees, and other third-party seller services.

(4)Includes annual and monthly fees associated with Amazon Prime memberships, as well as digital video, audiobook, digital music, e-book, and other non-AWS subscription services.

(5)Includes sales of advertising services to sellers, vendors, publishers, authors, and others, through programs such as sponsored ads, display, and video advertising.

(6)Includes sales related to various other offerings, such as certain licensing and distribution of video content and shipping services, and our co-branded credit card agreements.

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Accounting Policies and Supplemental Disclosures - Common Stock Split (Details)	May 27, 2022 $ / shares	Jun. 30, 2022 $ / shares	Dec. 31, 2021 $ / shares
Accounting Policies [Abstract]
Stock split ratio	20
Common stock, par value (in usd per share)	$ 0.01	$ 0.01	$ 0.01

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Accounting Policies and Supplemental Disclosures - Use of Estimates (Details) - USD ($) $ / shares in Units, $ in Millions		3 Months Ended		6 Months Ended		12 Months Ended
	Jan. 01, 2022	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Dec. 31, 2021	Jun. 30, 2021
Property, Plant and Equipment [Line Items]
Depreciation and amortization		$ 9,594	$ 8,038	$ 18,572	$ 15,546	$ 37,322		$ 29,687
Net income (loss)		$ (2,028)	$ 7,778	$ (5,872)	$ 15,885	$ 11,607		$ 29,438
Basic earnings (loss) per share (in usd per share)		$ (0.20)	$ 0.77	$ (0.58)	$ 1.57
Diluted earnings (loss) per share (in usd per share)		$ (0.20)	$ 0.76	$ (0.58)	$ 1.55
Change in useful lives of servers and networking equipment
Property, Plant and Equipment [Line Items]
Depreciation and amortization		$ (928)		$ (1,900)
Net income (loss)		$ (728)		$ (1,500)
Basic earnings (loss) per share (in usd per share)		$ (0.07)		$ (0.15)
Diluted earnings (loss) per share (in usd per share)		$ (0.07)		$ (0.15)
Servers
Property, Plant and Equipment [Line Items]
Estimated useful lives of assets							4 years
Servers | Change in useful lives of servers and networking equipment
Property, Plant and Equipment [Line Items]
Estimated useful lives of assets	5 years
Networking equipment
Property, Plant and Equipment [Line Items]
Estimated useful lives of assets							5 years
Networking equipment | Change in useful lives of servers and networking equipment
Property, Plant and Equipment [Line Items]
Estimated useful lives of assets	6 years

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Accounting Policies and Supplemental Disclosures - Supplemental Cash Flow Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Accounting Policies [Abstract]
Cash paid for interest on debt	$ 349	$ 179	$ 628	$ 455	$ 1,271	$ 942
Cash paid for operating leases	2,088	1,577	4,455	3,217	7,960	5,577
Cash paid for interest on finance leases	95	129	202	286	437	569
Cash paid for interest on financing obligations	55	35	113	68	198	127
Cash paid for income taxes, net of refunds	3,145	1,803	3,598	2,604	4,682	3,526
Assets acquired under operating leases	5,101	5,578	7,276	9,114	23,531	19,576
Property and equipment acquired under finance leases, net of remeasurements and modifications	61	1,642	227	3,709	3,579	9,976
Property and equipment recognized during the construction period of build-to-suit lease arrangements	986	1,193	2,351	2,080	6,117	3,486
Property and equipment derecognized after the construction period of build-to-suit lease arrangements, with the associated leases recognized as operating	$ 1,079	$ 99	$ 1,112	$ 99	$ 1,243	$ 99

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Accounting Policies and Supplemental Disclosures - Calculation of Diluted Shares (Details) - shares shares in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Accounting Policies [Abstract]
Shares used in computation of basic earnings per share (in shares)	10,175	10,103	10,173	10,089
Total dilutive effect of outstanding stock awards (in shares)	0	183	0	187
Shares used in computation of diluted earnings per share (in shares)	10,175	10,286	10,173	10,276

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Accounting Policies and Supplemental Disclosures - Other Income (Expense), Net (Details) - USD ($) shares in Millions, $ in Millions	3 Months Ended				6 Months Ended		12 Months Ended
	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Accounting Policies [Abstract]
Marketable equity securities valuation gains (losses)	$ (4,322)		$ 157		$ (12,567)	$ 81
Equity warrant valuation gains (losses)	(1,124)		939		(1,436)	1,244
Upward adjustments relating to equity investments in private companies	58		31		65	1,506
Foreign currency gains (losses)	(117)		110		(103)	79
Other, net	(40)		24		(74)	48
Total other income (expense), net	(5,545)		1,261		(14,115)	2,958
Schedule of Investments [Line Items]
Marketable equity securities valuation gains (losses)	(4,322)		157		(12,567)	81
Loss from operations	3,317		7,702		6,986	16,567
Net loss	(2,028)		$ 7,778		(5,872)	$ 15,885	$ 11,607	$ 29,438
Equity Method Investment, Nonconsolidated Investee or Group of Investees
Accounting Policies [Abstract]
Marketable equity securities valuation gains (losses)	(3,900)				(11,500)
Schedule of Investments [Line Items]
Marketable equity securities valuation gains (losses)	$ (3,900)				$ (11,500)
Equity investment, shares held (in shares)	158				158		158
Equity investment, ownership percentage	18.00%				18.00%		18.00%
Equity investment, voting interest	16.00%				16.00%		16.00%
Revenues		$ 95		$ 0
Gross profit		(502)		0
Loss from operations		(1,579)		(410)
Net loss		$ (1,593)		$ (414)

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Accounting Policies and Supplemental Disclosures - Inventories (Details) - USD ($) $ in Billions	Jun. 30, 2022	Dec. 31, 2021
Accounting Policies [Abstract]
Inventory valuation allowance	$ 2.4	$ 2.6

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Accounting Policies and Supplemental Disclosures - Accounts Receivable, Net and Other (Details) - USD ($) $ in Millions	Jun. 30, 2022	Dec. 31, 2021
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable, net and other	$ 34,804	$ 32,891
Allowance for doubtful accounts	1,200	1,100
Customer receivables, net
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable, net and other	21,600	20,200
Vendor receivables, net
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable, net and other	4,900	5,300
Seller receivables, net
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable, net and other	$ 1,300	$ 1,000

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Accounting Policies and Supplemental Disclosures - Video and Music Content (Details) - USD ($) $ in Billions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Accounting Policies [Abstract]
Digital video and music content, capitalized costs	$ 15.2		$ 15.2		$ 10.7
Digital video and music content, expense	$ 3.7	$ 3.1	$ 7.3	$ 6.2

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Accounting Policies and Supplemental Disclosures - Unearned Revenue (Details) - USD ($) $ in Billions	6 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Accounting Policies [Abstract]
Unearned revenue		$ 14.0
Unearned revenue, revenue recognized	$ 8.1
Unearned revenue, long-term	2.6	$ 2.2
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-07-01
Accounting Policies [Abstract]
Remaining performance obligation, contracts exceeding one year	$ 100.1
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, weighted average remaining life	3 years 10 months 24 days

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Accounting Policies and Supplemental Disclosures - Acquisition Activity (Details) - USD ($) $ in Millions		3 Months Ended		6 Months Ended		12 Months Ended
	Mar. 17, 2022	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Business Acquisition [Line Items]
Cash consideration		$ 259	$ 320	$ 6,600	$ 950	$ 7,635	$ 3,066
Goodwill		$ 20,195		$ 20,195		$ 20,195		$ 15,371
MGM Holdings Inc.
Business Acquisition [Line Items]
Cash consideration	$ 6,100
Debt assumed	2,500
Video content acquired	3,400
Goodwill	$ 4,900

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Financial Instruments - Fair Values on Recurring Basis (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Equity Securities, FV-NI, Gain (Loss)
Equity securities, unrealized gain (loss)	$ (4,200)	$ 119	$ (12,300)	$ 122
Rivian
Equity Securities, FV-NI, Gain (Loss)
Equity investment, fair value	4,100		4,100		$ 15,600
Equity investment, discount due to lack of marketability					800
Recurring
Schedule of Investments [Line Items]
Cash	9,825		9,825		10,942
Debt Securities, Available-for-sale
Gross unrealized gains	0		0
Gross unrealized losses	(978)		(978)
Cash, Cash Equivalents, and Marketable Securities
Cash, cash equivalents and marketable securities	60,932		60,932		96,309
Cash, cash equivalents and marketable securities, amortized cost	56,934		56,934
Less: Restricted cash, cash equivalents, and marketable securities	(222)		(222)		(260)
Total cash, cash equivalents, and marketable securities	60,710		60,710		96,049
Recurring | Level 1 securities
Schedule of Investments [Line Items]
Equity securities	4,946		4,946		1,646
Recurring | Level 1 securities | Money market funds
Schedule of Investments [Line Items]
Money market funds	18,816		18,816		20,312
Recurring | Level 1 securities | Money market funds | Money market funds
Schedule of Investments [Line Items]
Money market funds	18,816		18,816
Recurring | Level 2 securities
Schedule of Investments [Line Items]
Equity securities	30		30		15,740
Recurring | Level 2 securities | Foreign government and agency securities
Debt Securities, Available-for-sale
Fixed income securities, amortized cost	50		50
Gross unrealized gains	0		0
Gross unrealized losses	(1)		(1)
Fixed income securities	49		49		181
Recurring | Level 2 securities | U.S. government and agency securities
Debt Securities, Available-for-sale
Fixed income securities, amortized cost	2,344		2,344
Gross unrealized gains	0		0
Gross unrealized losses	(122)		(122)
Fixed income securities	2,222		2,222		4,300
Recurring | Level 2 securities | Corporate debt securities
Debt Securities, Available-for-sale
Fixed income securities, amortized cost	21,756		21,756
Gross unrealized gains	0		0
Gross unrealized losses	(673)		(673)
Fixed income securities	21,083		21,083		35,764
Recurring | Level 2 securities | Asset-backed securities
Debt Securities, Available-for-sale
Fixed income securities, amortized cost	3,736		3,736
Gross unrealized gains	0		0
Gross unrealized losses	(164)		(164)
Fixed income securities	3,572		3,572		6,738
Recurring | Level 2 securities | Other fixed income securities
Debt Securities, Available-for-sale
Fixed income securities, amortized cost	407		407
Gross unrealized gains	0		0
Gross unrealized losses	(18)		(18)
Fixed income securities	$ 389		$ 389		$ 686

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Financial Instruments - Contractual Maturities (Details) $ in Millions	Jun. 30, 2022 USD ($)
Amortized Cost
Due within one year	$ 29,370
Due after one year through five years	14,776
Due after five years through ten years	796
Due after ten years	2,167
Amortized cost	47,109
Estimated Fair Value
Due within one year	29,344
Due after one year through five years	13,967
Due after five years through ten years	760
Due after ten years	2,060
Estimated fair value	$ 46,131

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Financial Instruments - Equity Warrants and Non-Marketable Equity Investments (Details) - USD ($) $ in Millions	Jun. 30, 2022	Dec. 31, 2021
Derivative [Line Items]
Equity investments without readily determinable fair values	$ 768	$ 603
Warrant | Level 2 assets
Derivative [Line Items]
Fair value of warrant assets	$ 2,400	$ 3,400

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Financial Instruments - Consolidated Statements of Cash Flows Reconciliation (Details) - USD ($) $ in Millions	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020	Jun. 30, 2020
Investments, Debt and Equity Securities [Abstract]
Cash and cash equivalents	$ 37,478		$ 36,220
Restricted cash included in accounts receivable, net and other	207		242
Restricted cash included in other assets	15		15
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows	$ 37,700	$ 36,599	$ 36,477	$ 40,667	$ 34,155	$ 42,377	$ 37,842

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Leases - Additional Information (Details) - USD ($) $ in Billions	Jun. 30, 2022	Dec. 31, 2021
Leases [Abstract]
Gross assets acquired under finance leases, location	Property and equipment, net	Property and equipment, net
Gross assets acquired under finance leases	$ 68.6	$ 72.2
Accumulated amortization associated with finance leases	$ 43.5	$ 43.4

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Leases - Lease Cost (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Leases [Abstract]
Operating lease cost	$ 2,133	$ 1,662	$ 4,236	$ 3,218
Finance lease cost:
Amortization of lease assets	1,530	2,489	3,090	4,945
Interest on lease liabilities	92	119	195	251
Finance lease cost	1,622	2,608	3,285	5,196
Variable lease cost	471	415	940	763
Total lease cost	$ 4,226	$ 4,685	$ 8,461	$ 9,177

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Leases - Other Operating and Finance Lease Information (Details)	Jun. 30, 2022	Dec. 31, 2021
Leases [Abstract]
Weighted-average remaining lease term – operating leases	11 years 1 month 6 days	11 years 3 months 18 days
Weighted-average remaining lease term – finance leases	8 years 8 months 12 days	8 years 1 month 6 days
Weighted-average discount rate – operating leases	2.40%	2.20%
Weighted-average discount rate – finance leases	2.10%	2.00%

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Leases - Operating and Finance Lease Liability Reconciliation (Details) - USD ($) $ in Millions	Jun. 30, 2022	Dec. 31, 2021
Leases [Abstract]
Total operating lease liabilities	$ 69,341	$ 66,269
Total finance lease liabilities	20,426	25,866
Gross lease liabilities	89,767	92,135
Imputed interest - operating leases	(8,735)	(7,939)
Imputed interest - finance leases	(2,009)	(2,113)
Imputed interest	(10,744)	(10,052)
Present value of operating leases	60,606	58,330
Present value of finance leases	18,417	23,753
Present value of lease liabilities	$ 79,023	$ 82,083
Operating lease liability, current, location	Accrued expenses and other	Accrued expenses and other
Finance lease liability, current location	Accrued expenses and other	Accrued expenses and other
Current portion of operating lease liabilities	$ (6,707)	$ (6,349)
Current portion of finance lease liabilities	(5,792)	(8,083)
Current portion of lease liabilities	$ (12,499)	$ (14,432)
Operating lease liability, long-term, location	Total long-term lease liabilities	Total long-term lease liabilities
Finance lease liability, long-term, location	Total long-term lease liabilities	Total long-term lease liabilities
Total long-term operating lease liabilities	$ 53,899	$ 51,981
Total long-term finance lease liabilities	12,625	15,670
Total long-term lease liabilities	$ 66,524	$ 67,651

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Commitments and Contingencies - Commitments (Details) € in Millions, $ in Millions			1 Months Ended
	Jun. 30, 2022 USD ($)	Dec. 31, 2021 USD ($)	Jul. 31, 2022 USD ($)	Dec. 31, 2021 EUR (€)
Long-term debt principal and interest
2022	$ 2,303
2023	5,536
2024	8,940
2025	5,280
2026	4,187
Thereafter	67,529
Total	93,775
Operating lease liabilities
2022	3,966
2023	7,856
2024	7,360
2025	6,796
2026	6,226
Thereafter	37,137
Total operating lease liabilities	69,341	$ 66,269
Finance lease liabilities, including interest
2022	3,184
2023	4,630
2024	2,226
2025	1,337
2026	1,201
Thereafter	7,848
Total finance lease liabilities	20,426	25,866
Financing obligations, including interest
2022	229
2023	464
2024	463
2025	456
2026	463
Thereafter	7,179
Total	9,254
Leases not yet commenced
2022	545
2023	1,711
2024	2,324
2025	2,350
2026	2,381
Thereafter	22,512
Total	31,823
Unconditional purchase obligations
2022	3,110
2023	7,088
2024	6,208
2025	4,927
2026	4,342
Thereafter	9,404
Total	35,079
Other commitments
2022	1,898
2023	2,229
2024	1,492
2025	1,051
2026	1,132
Thereafter	11,234
Total	19,036
Total commitments
2022	15,235
2023	29,514
2024	29,013
2025	22,197
2026	19,932
Thereafter	162,843
Total	278,734
Financing obligations, current	251	196
Financing obligations, noncurrent	$ 6,800	$ 6,200
Financing obligations, weighted-average remaining term	18 years 4 months 24 days	18 years 9 months 18 days
Financing obligations, weighted-average imputed interest rate	3.20%	3.20%
Accrued tax contingencies	$ 3,300	$ 3,200
Italian Competition Authority Matter
Loss Contingencies [Line Items]
Fine imposed | €				€ 1,130
1Life Healthcare | Subsequent Event
Business Acquisition [Line Items]
Acquisition price			$ 3,900

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Commitments and Contingencies - Legal Proceedings (Details) $ in Millions	1 Months Ended
	Apr. 30, 2022 USD ($)
BroadbandiTV | Minimum
Loss Contingencies [Line Items]
Damages sought	$ 166
BroadbandiTV | Maximum
Loss Contingencies [Line Items]
Damages sought	986
Eolas Technologies | Minimum
Loss Contingencies [Line Items]
Damages sought	130
Eolas Technologies | Maximum
Loss Contingencies [Line Items]
Damages sought	$ 250

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Debt - Additional Information (Details)	6 Months Ended
	Jun. 30, 2022 USD ($) extension	Apr. 30, 2022 USD ($)	Mar. 31, 2022 USD ($)	Mar. 31, 2022 EUR (€)	Feb. 28, 2022 USD ($)	Dec. 31, 2021 USD ($)
Debt Instrument [Line Items]
Total face value of long-term debt	$ 63,435,000,000					$ 50,553,000,000
Short-term credit facilities, borrowings outstanding	$ 235,000,000					318,000,000
Commercial Paper
Debt Instrument [Line Items]
Commercial paper, maximum borrowing capacity			$ 20,000,000,000	€ 3,000,000,000	$ 10,000,000,000
Commercial paper, term (will not exceed)	397 days
Commercial paper	$ 8,200,000,000					$ 725,000,000
Commercial paper, weighted average effective interest rate	0.99%					0.08%
Senior Notes
Debt Instrument [Line Items]
Total face value of long-term debt	$ 62,500,000,000
Estimated fair value of notes	57,100,000,000					$ 53,300,000,000
Issuance amount		$ 12,800,000,000
Credit Facility | Revolving Credit Facility
Debt Instrument [Line Items]
Total face value of long-term debt	935,000,000					803,000,000
Credit Facility | Revolving Credit Facility | October 2016 Revolving Credit Facility
Debt Instrument [Line Items]
Revolving credit facility maximum borrowing capacity	$ 1,000,000,000
Commitment fee percentage	0.50%
Borrowings outstanding	$ 935,000,000					$ 803,000,000
Weighted average interest rate	2.70%					2.70%
Collateral amount	$ 1,100,000,000					$ 918,000,000
Credit Facility | Revolving Credit Facility | October 2016 Revolving Credit Facility | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)	1.40%
Credit Facility | Revolving Credit Facility | April 2018 Revolving Credit Facility
Debt Instrument [Line Items]
Revolving credit facility maximum borrowing capacity			$ 10,000,000,000		$ 7,000,000,000
Commitment fee percentage	0.03%
Borrowings outstanding	$ 0					$ 0
Number of term extensions | extension	3
Additional term	1 year
Credit Facility | Revolving Credit Facility | April 2018 Revolving Credit Facility | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)	0.45%
Credit Facility | Letter of Credit | April 2018 Revolving Credit Facility
Debt Instrument [Line Items]
Unused letters of credit	$ 10,000,000,000

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Debt - Long-Term Debt Obligations (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2022	Apr. 30, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Face value of long-term debt	$ 63,435		$ 50,553
Less: current portion of long-term debt	(4,998)		(1,491)
Long-term debt	58,053		48,744
Senior Notes
Debt Instrument [Line Items]
Issuance amount		$ 12,800
Face value of long-term debt	62,500
Unamortized discount and issuance costs, net	$ (384)		(318)
Weighted average remaining lives term	14 years 3 months 18 days
Senior Notes | 2012 Notes issuance of $3.0 billion
Debt Instrument [Line Items]
Issuance amount	$ 3,000
Stated Interest Rates	2.50%
Effective Interest Rates	2.66%
Face value of long-term debt	$ 1,250		1,250
Weighted average remaining lives term	4 months 24 days
Senior Notes | 2014 Notes issuance of $6.0 billion
Debt Instrument [Line Items]
Issuance amount	$ 6,000
Face value of long-term debt	$ 4,000		4,000
Weighted average remaining lives term	13 years 1 month 6 days
Senior Notes | 2014 Notes issuance of $6.0 billion | Minimum
Debt Instrument [Line Items]
Stated Interest Rates	3.80%
Effective Interest Rates	3.90%
Senior Notes | 2014 Notes issuance of $6.0 billion | Maximum
Debt Instrument [Line Items]
Stated Interest Rates	4.95%
Effective Interest Rates	5.11%
Senior Notes | 2017 Notes issuance of $17.0 billion
Debt Instrument [Line Items]
Issuance amount	$ 17,000
Face value of long-term debt	$ 16,000		16,000
Weighted average remaining lives term	14 years 8 months 12 days
Senior Notes | 2017 Notes issuance of $17.0 billion | Minimum
Debt Instrument [Line Items]
Stated Interest Rates	2.40%
Effective Interest Rates	2.56%
Senior Notes | 2017 Notes issuance of $17.0 billion | Maximum
Debt Instrument [Line Items]
Stated Interest Rates	5.20%
Effective Interest Rates	4.33%
Senior Notes | 2020 Notes issuance of $10.0 billion
Debt Instrument [Line Items]
Issuance amount	$ 10,000
Face value of long-term debt	$ 10,000		10,000
Weighted average remaining lives term	17 years 2 months 12 days
Senior Notes | 2020 Notes issuance of $10.0 billion | Minimum
Debt Instrument [Line Items]
Stated Interest Rates	0.40%
Effective Interest Rates	0.56%
Senior Notes | 2020 Notes issuance of $10.0 billion | Maximum
Debt Instrument [Line Items]
Stated Interest Rates	2.70%
Effective Interest Rates	2.77%
Senior Notes | 2021 Notes issuance of $18.5 billion
Debt Instrument [Line Items]
Issuance amount	$ 18,500
Face value of long-term debt	$ 18,500		18,500
Weighted average remaining lives term	13 years 9 months 18 days
Senior Notes | 2021 Notes issuance of $18.5 billion | Minimum
Debt Instrument [Line Items]
Stated Interest Rates	0.25%
Effective Interest Rates	0.35%
Senior Notes | 2021 Notes issuance of $18.5 billion | Maximum
Debt Instrument [Line Items]
Stated Interest Rates	3.25%
Effective Interest Rates	3.31%
Senior Notes | 2022 Notes Issuance of $12.8 billion
Debt Instrument [Line Items]
Issuance amount	$ 12,800
Face value of long-term debt	$ 12,750		0
Weighted average remaining lives term	13 years 9 months 18 days
Senior Notes | 2022 Notes Issuance of $12.8 billion | Minimum
Debt Instrument [Line Items]
Stated Interest Rates	2.73%
Effective Interest Rates	2.83%
Senior Notes | 2022 Notes Issuance of $12.8 billion | Maximum
Debt Instrument [Line Items]
Stated Interest Rates	4.10%
Effective Interest Rates	4.15%
Credit Facility | Revolving Credit Facility
Debt Instrument [Line Items]
Face value of long-term debt	$ 935		$ 803

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Stockholders' Equity - Additional Information (Details) - USD ($) shares in Millions	6 Months Ended
	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021	Feb. 29, 2016
Class of Stock [Line Items]
Stock repurchases (in shares)	46.2
Stock repurchases	$ 6,000,000,000
Stock repurchase, remaining authorized amount	$ 6,100,000,000
Common shares outstanding plus underlying outstanding stock awards (in shares)	10,600.0		10,500.0
Net unrecognized compensation cost related to unvested stock-based compensation arrangements	$ 26,900,000,000
Compensation cost expected to be expensed in next twelve months, percentage	50.00%
Net unrecognized compensation cost related to unvested stock-based compensation arrangements, weighted average recognition period (in years)	1 year 1 month 6 days
Estimated forfeiture rate	27.00%		27.00%
February 2016 Program
Class of Stock [Line Items]
Stock repurchase, authorized amount				$ 5,000,000,000
March 2022 Program
Class of Stock [Line Items]
Stock repurchase, authorized amount		$ 10,000,000,000

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Stockholders' Equity - Stock-based Compensation Expense (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	$ 5,209	$ 3,591	$ 8,459	$ 5,897
Cost of sales
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	213	145	359	235
Fulfillment
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	763	566	1,261	908
Technology and content
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	2,814	1,887	4,459	3,115
Sales and marketing
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	990	691	1,655	1,147
General and administrative
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	$ 429	$ 302	$ 725	$ 492

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Stockholders' Equity - Restricted Stock Unit Activity (Details) - Restricted Stock Units shares in Millions	6 Months Ended
	Jun. 30, 2022 $ / shares shares
Number of Units
Beginning balance (in shares) | shares	279.9
Units granted (in shares) | shares	166.0
Units vested (in shares) | shares	(54.2)
Units forfeited (in shares) | shares	(24.2)
Ending balance (in shares) | shares	367.5
Weighted-Average Grant-Date Fair Value
Beginning balance (in usd per share) | $ / shares	$ 134
Units granted (in usd per share) | $ / shares	159
Units vested (in usd per share) | $ / shares	108
Units forfeited (in usd per share) | $ / shares	140
Ending balance (in usd per share) | $ / shares	$ 149

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Stockholders' Equity - Scheduled Vesting for Outstanding Restricted Stock Units (Details) - Restricted Stock Units - shares shares in Millions	Jun. 30, 2022	Dec. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
2022 (in shares)	57.7
2023 (in shares)	134.5
2024 (in shares)	123.3
2025 (in shares)	38.0
2026 (in shares)	9.8
Thereafter (in shares)	4.2
Total (in shares)	367.5	279.9

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Stockholders' Equity - Changes in Stockholders Equity (Details) - USD ($) $ in Millions	3 Months Ended				6 Months Ended		12 Months Ended
	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Changes in Stockholders' Equity
Beginning balance	$ 134,001	$ 138,245	$ 103,320	$ 93,404	$ 138,245	$ 93,404	$ 114,803
Common stock repurchased					(6,000)
Other comprehensive income (loss)	(2,417)		141		(3,406)	(345)
Net income (loss)	(2,028)		7,778		(5,872)	15,885	11,607	$ 29,438
Ending balance	131,402	134,001	114,803	103,320	131,402	114,803	131,402	114,803
Common stock
Changes in Stockholders' Equity
Beginning balance	107	106	106	105	106	105	106
Stock-based compensation and issuance of employee benefit plan stock	0		0		1	1
Ending balance	107	107	106	106	107	106	107	106
Treasury stock
Changes in Stockholders' Equity
Beginning balance	(4,503)	(1,837)	(1,837)	(1,837)	(1,837)	(1,837)	(1,837)
Common stock repurchased	(3,334)		0		(6,000)	0
Ending balance	(7,837)	(4,503)	(1,837)	(1,837)	(7,837)	(1,837)	(7,837)	(1,837)
Additional paid-in capital
Changes in Stockholders' Equity
Beginning balance	58,691	55,437	45,060	42,765	55,437	42,765	48,623
Stock-based compensation and issuance of employee benefit plan stock	5,180		3,563		8,434	5,858
Ending balance	63,871	58,691	48,623	45,060	63,871	48,623	63,871	48,623
Accumulated other comprehensive income (loss)
Changes in Stockholders' Equity
Beginning balance	(2,365)	(1,376)	(666)	(180)	(1,376)	(180)	(525)
Other comprehensive income (loss)	(2,417)		141		(3,406)	(345)
Ending balance	(4,782)	(2,365)	(525)	(666)	(4,782)	(525)	(4,782)	(525)
Retained earnings
Changes in Stockholders' Equity
Beginning balance	82,071	85,915	60,658	52,551	85,915	52,551	68,436
Net income (loss)	(2,028)		7,778		(5,872)	15,885
Ending balance	$ 80,043	$ 82,071	$ 68,436	$ 60,658	$ 80,043	$ 68,436	$ 80,043	$ 68,436

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Income Taxes (Details) € in Millions, $ in Millions		3 Months Ended		6 Months Ended		12 Months Ended
	Oct. 04, 2017 EUR (€)	Jun. 30, 2022 USD ($)	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2021 USD ($)	Dec. 31, 2021 USD ($)
Income Tax Disclosure [Abstract]
Provision (benefit) for income taxes		$ (637)	$ 868	$ (2,059)	$ 3,024
Discrete tax benefits				3,200	1,400
Cash paid for income taxes, net of refunds		3,145	$ 1,803	3,598	$ 2,604	$ 4,682	$ 3,526
Tax contingencies		$ 3,300		$ 3,300		$ 3,300		$ 3,200
Luxembourg Tax Administration | Foreign Tax Authority
Income Tax Examination [Line Items]
Tax examination, estimate of additional tax expense | €	€ 250

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Segment Information - Reportable Segments and Reconciliation to Consolidated Net Income (Details) $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2022 USD ($)	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($) segment	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2021 USD ($)
Segment Reporting [Abstract]
Number of operating segments | segment			3
Segment Reporting Disclosure [Line Items]
Net sales	$ 121,234	$ 113,080	$ 237,678	$ 221,598
Operating expenses	117,917	105,378	230,692	205,031
Operating income	3,317	7,702	6,986	16,567
Total non-operating income (expense)	(5,970)	932	(14,904)	2,335
Benefit (provision) for income taxes	637	(868)	2,059	(3,024)
Equity-method investment activity, net of tax	(12)	12	(13)	7
Net income (loss)	(2,028)	7,778	(5,872)	15,885	$ 11,607	$ 29,438
North America
Segment Reporting Disclosure [Line Items]
Net sales	74,430	67,550	143,674	131,916
Operating expenses	75,057	64,403	145,869	125,319
Operating income	(627)	3,147	(2,195)	6,597
International
Segment Reporting Disclosure [Line Items]
Net sales	27,065	30,721	55,824	61,370
Operating expenses	28,836	30,359	58,876	59,756
Operating income	(1,771)	362	(3,052)	1,614
AWS
Segment Reporting Disclosure [Line Items]
Net sales	19,739	14,809	38,180	28,312
Operating expenses	14,024	10,616	25,947	19,956
Operating income	$ 5,715	$ 4,193	$ 12,233	$ 8,356

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Segment Information - Disaggregation of Revenue (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Disaggregation of Revenue [Line Items]
Total net sales	$ 121,234	$ 113,080	$ 237,678	$ 221,598
Online stores
Disaggregation of Revenue [Line Items]
Total net sales	50,855	53,157	101,984	106,058
Physical stores
Disaggregation of Revenue [Line Items]
Total net sales	4,721	4,198	9,312	8,118
Third-party seller services
Disaggregation of Revenue [Line Items]
Total net sales	27,376	25,085	52,711	48,794
Subscription services
Disaggregation of Revenue [Line Items]
Total net sales	8,716	7,917	17,126	15,497
Advertising services
Disaggregation of Revenue [Line Items]
Total net sales	8,757	7,451	16,634	13,832
AWS
Disaggregation of Revenue [Line Items]
Total net sales	19,739	14,809	38,180	28,312
Other
Disaggregation of Revenue [Line Items]
Total net sales	$ 1,070	$ 463	$ 1,731	$ 987