AMAZON COM INC, 10-K filed on 1/31/2020
Annual Report
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Cover Page - USD ($)
12 Months Ended
Dec. 31, 2019
Jan. 22, 2020
Jun. 30, 2019
Cover page.      
Document Type 10-K    
Document Annual Report true    
Document Period End Date Dec. 31, 2019    
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    
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 Well-known Seasoned Issuer Yes    
Entity Voluntary Filers No    
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 Public Float     $ 786,284,080,955
Entity Common Stock, Shares Outstanding   497,810,444  
Amendment Flag false    
Document Fiscal Year Focus 2019    
Document Fiscal Period Focus FY    
Entity Central Index Key 0001018724    
Current Fiscal Year End Date --12-31    
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Consolidated Statements of Cash Flows - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Statement of Cash Flows [Abstract]      
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD $ 32,173 $ 21,856 $ 19,934
OPERATING ACTIVITIES:      
Net income 11,588 10,073 3,033
Adjustments to reconcile net income to net cash from operating activities:      
Depreciation and amortization of property and equipment and capitalized content costs, operating lease assets, and other 21,789 15,341 11,478
Stock-based compensation 6,864 5,418 4,215
Other operating expense (income), net 164 274 202
Other expense (income), net (249) 219 (292)
Deferred income taxes 796 441 (29)
Changes in operating assets and liabilities:      
Inventories (3,278) (1,314) (3,583)
Accounts receivable, net and other (7,681) (4,615) (4,780)
Accounts payable 8,193 3,263 7,100
Accrued expenses and other (1,383) 472 283
Unearned revenue 1,711 1,151 738
Net cash provided by (used in) operating activities 38,514 30,723 18,365
INVESTING ACTIVITIES:      
Purchases of property and equipment (16,861) (13,427) (11,955)
Proceeds from property and equipment sales and incentives 4,172 2,104 1,897
Acquisitions, net of cash acquired, and other (2,461) (2,186) (13,972)
Sales and maturities of marketable securities 22,681 8,240 9,677
Purchases of marketable securities (31,812) (7,100) (12,731)
Net cash provided by (used in) investing activities (24,281) (12,369) (27,084)
FINANCING ACTIVITIES:      
Proceeds from long-term debt and other 2,273 768 16,228
Repayments of long-term debt and other (2,684) (668) (1,301)
Principal repayments of finance leases (9,628) (7,449) (4,799)
Principal repayments of financing obligations (27) (337) (200)
Net cash provided by (used in) financing activities (10,066) (7,686) 9,928
Foreign currency effect on cash, cash equivalents, and restricted cash 70 (351) 713
Net increase (decrease) in cash, cash equivalents, and restricted cash 4,237 10,317 1,922
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD 36,410 32,173 21,856
SUPPLEMENTAL CASH FLOW INFORMATION:      
Cash paid for interest on long-term debt 875 854 328
Cash paid for operating leases 3,361 0 0
Cash paid for interest on capital leases   381 200
Cash paid for interest on finance leases 647    
Cash paid for interest on financing obligations 39 194 119
Cash paid for income taxes, net of refunds 881 (1,184) (957)
Assets acquired under operating leases 7,870 0 0
Property and equipment acquired under capital leases   10,615 9,637
Property and equipment acquired under finance leases 13,723    
Property and equipment acquired under build-to-suit arrangements $ 1,362 $ 3,641 $ 3,541
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Consolidated Statements Of Operations - USD ($)
shares in Millions, $ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Total net sales $ 280,522 $ 232,887 $ 177,866
Operating expenses:      
Cost of sales 165,536 139,156 111,934
Fulfillment 40,232 34,027 25,249
Technology and content 35,931 28,837 22,620
Marketing 18,878 13,814 10,069
General and administrative 5,203 4,336 3,674
Other operating expense (income), net 201 296 214
Total operating expenses 265,981 220,466 173,760
Operating income 14,541 12,421 4,106
Interest income 832 440 202
Interest expense (1,600) (1,417) (848)
Other income (expense), net 203 (183) 346
Total non-operating income (expense) (565) (1,160) (300)
Income before income taxes 13,976 11,261 3,806
Provision for income taxes (2,374) (1,197) (769)
Equity-method investment activity, net of tax (14) 9 (4)
Net income $ 11,588 $ 10,073 $ 3,033
Basic earnings per share $ 23.46 $ 20.68 $ 6.32
Diluted earnings per share $ 23.01 $ 20.14 $ 6.15
Weighted-average shares used in computation of earnings per share:      
Basic (in shares) 494 487 480
Diluted (in shares) 504 500 493
Net product sales      
Total net sales $ 160,408 $ 141,915 $ 118,573
Net service sales      
Total net sales $ 120,114 $ 90,972 $ 59,293
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Consolidated Statements of Comprehensive Income - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Statement of Comprehensive Income [Abstract]      
Net income $ 11,588 $ 10,073 $ 3,033
Net change in foreign currency translation adjustments:      
Foreign currency translation adjustments, net of tax of $5, $6, and $(5) 78 (538) 533
Reclassification adjustment for foreign currency translation included in “Other operating expense (income), net,” net of tax of $0, $0, and $29 108 0 0
Net foreign currency translation adjustments (30) (538) 533
Net change in unrealized gains (losses) on available-for-sale debt securities:      
Unrealized gains (losses), net of tax of $5, $0, and $(12) 83 (17) (39)
Reclassification adjustment for losses (gains) included in “Other income (expense), net,” net of tax of $0, $0, and $0 (4) 8 7
Net unrealized gains (losses) on available-for-sale debt securities 79 (9) (32)
Total other comprehensive income (loss) 49 (547) 501
Comprehensive income $ 11,637 $ 9,526 $ 3,534
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Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Statement of Comprehensive Income [Abstract]      
Foreign currency translation adjustments, tax $ (5) $ 6 $ 5
Reclassification adjustment for foreign currency translation included in “Other operating expense (income), net,” tax 29 0 0
Unrealized gains (losses), tax (12) 0 5
Reclassification adjustment for losses (gains) included in other income (expense), net, tax $ 0 $ 0 $ 0
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Consolidated Balance Sheets - USD ($)
$ in Millions
Dec. 31, 2019
Dec. 31, 2018
Current assets:    
Cash and cash equivalents $ 36,092 $ 31,750
Marketable securities 18,929 9,500
Inventories 20,497 17,174
Accounts receivable, net and other 20,816 16,677
Total current assets 96,334 75,101
Property and equipment, net 72,705 61,797
Operating leases 25,141 0
Goodwill 14,754 14,548
Other assets 16,314 11,202
Total assets 225,248 162,648
Current liabilities:    
Accounts payable 47,183 38,192
Accrued expenses and other 32,439 23,663
Unearned revenue 8,190 6,536
Total current liabilities 87,812 68,391
Long-term lease liabilities 39,791 9,650
Long-term debt 23,414 23,495
Other long-term liabilities 12,171 17,563
Commitments and contingencies (Note 7)
Stockholders’ equity:    
Preferred stock, $0.01 par value: Authorized shares - 500 Issued and outstanding shares - none 0 0
Common stock, $0.01 par value: Authorized shares - 5,000 Issued shares - 507 and 514 Outstanding shares - 484 and 491 5 5
Treasury stock, at cost (1,837) (1,837)
Additional paid-in capital 33,658 26,791
Accumulated other comprehensive income (loss) (986) (1,035)
Retained earnings 31,220 19,625
Total stockholders’ equity 62,060 43,549
Total liabilities and stockholders’ equity $ 225,248 $ 162,648
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Consolidated Balance Sheets (Parenthetical) - $ / shares
Dec. 31, 2019
Dec. 31, 2018
Statement of Financial Position [Abstract]    
Preferred stock, par value (in usd per share) $ 0.01 $ 0.01
Preferred stock, authorized shares 500,000,000 500,000,000
Preferred stock, issued shares 0 0
Preferred stock, outstanding shares 0 0
Common stock, par value (in usd per share) $ 0.01 $ 0.01
Common stock, authorized shares 5,000,000,000 5,000,000,000
Common stock, issued shares 521,000,000 514,000,000
Common stock, outstanding shares 498,000,000 491,000,000
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Consolidated Statements of Stockholders' Equity - USD ($)
shares in Millions, $ in Millions
Total
Common Stock
Treasury Stock
Additional Paid-In Capital
Accumulated Other Comprehensive Income (Loss)
Retained Earnings
Beginning Balance (in shares) at Dec. 31, 2016   477        
Beginning Balance at Dec. 31, 2016 $ 19,285 $ 5 $ (1,837) $ 17,186 $ (985) $ 4,916
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Net income 3,033         3,033
Other comprehensive income (loss) 501       501  
Exercise of common stock options   7        
Exercise of common stock options 1     1    
Stock-based compensation and issuance of employee benefit plan stock 4,202     4,202    
Ending Balance (in shares) at Dec. 31, 2017   484        
Ending Balance at Dec. 31, 2017 27,709 $ 5 (1,837) 21,389 (484) 8,636
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Cumulative effect of a change in accounting principle 687         687
Net income 10,073         10,073
Other comprehensive income (loss) (547)       (547)  
Exercise of common stock options   7        
Exercise of common stock options 0     0    
Stock-based compensation and issuance of employee benefit plan stock 5,402     5,402    
Ending Balance (in shares) at Dec. 31, 2018   491        
Ending Balance at Dec. 31, 2018 43,549 $ 5 (1,837) 26,791 (1,035) 19,625
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Cumulative effect of a change in accounting principle 912       (4) 916
Net income 11,588         11,588
Other comprehensive income (loss) 49       49  
Exercise of common stock options   7        
Exercise of common stock options 0     0    
Stock-based compensation and issuance of employee benefit plan stock 6,867     6,867    
Ending Balance (in shares) at Dec. 31, 2019   498        
Ending Balance at Dec. 31, 2019 62,060 $ 5 $ (1,837) $ 33,658 (986) 31,220
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Cumulative effect of a change in accounting principle $ 7       $ 0 $ 7
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Description of Business and Accounting Policies
12 Months Ended
Dec. 31, 2019
Accounting Policies [Abstract]  
Description of Business and Accounting Policies DESCRIPTION OF BUSINESS AND ACCOUNTING POLICIES
Description of Business
We seek to be Earth’s most customer-centric company. In each of our segments, we serve our primary customer sets, consisting of consumers, sellers, developers, enterprises, and content creators. We serve consumers through our online and physical stores and focus on selection, price, and convenience. We offer programs that enable sellers to sell their products in our stores and fulfill orders through us, and programs that allow authors, musicians, filmmakers, skill and app developers, and others to publish and sell content. We serve developers and enterprises of all sizes through our AWS segment, which offers a broad set of global compute, storage, database, and other service offerings. We also manufacture and sell electronic devices. In addition, we provide services, such as advertising to sellers, vendors, publishers, and authors, through programs such as sponsored ads, display, and video advertising.
We have organized our operations into three segments: North America, International, and AWS. See “Note 10 — Segment Information.”
Prior Period Reclassifications
Certain prior period amounts have been reclassified to conform to the current period presentation, including the addition of restricted cash to cash and cash equivalents on our consolidated statements of cash flows and the reclassification of long-term capital lease obligations that existed at December 31, 2018 from “Other long-term liabilities” to “Long-term lease liabilities” within the consolidated balance sheets, as a result of the adoption of new accounting guidance. See “Accounting Pronouncements Recently Adopted.”
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. The financial results of Whole Foods Market, Inc. (“Whole Foods Market”) have been included in our consolidated financial statements from the date of acquisition on August 28, 2017.
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, and inventory valuation. Actual results could differ materially from those estimates. For example, in Q4 2019 we completed a useful life study for our servers and are increasing the useful life from three years to four years for servers in January 2020, which, based on servers that are included in “Property and equipment, net” as of December 31, 2019, will have an anticipated impact to our 2020 operating income of $2.3 billion.
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):
  
Year Ended December 31,
 
2017
 
2018
 
2019
Shares used in computation of basic earnings per share
480

 
487

 
494

Total dilutive effect of outstanding stock awards
13

 
13

 
10

Shares used in computation of diluted earnings per share
493

 
500

 
504


Revenue
Revenue is measured based on the amount of consideration that we expect to receive, reduced by estimates for return allowances, promotional discounts, and rebates. Revenue also excludes any amounts collected on behalf of third parties, including sales and indirect taxes. In arrangements where we have multiple performance obligations, the transaction price is allocated to each performance obligation using the relative stand-alone selling price. We generally determine stand-alone selling prices based on the prices charged to customers or using expected cost plus a margin.
A description of our principal revenue generating activities is as follows:
Retail sales - We offer consumer products through our online and physical stores. Revenue is recognized when control of the goods is transferred to the customer, which generally occurs upon our delivery to a third-party carrier or, in the case of an Amazon delivery, to the customer.
Third-party seller services - We offer programs that enable sellers to sell their products in our stores, and fulfill orders through us. We are not the seller of record in these transactions. The commissions and any related fulfillment and shipping fees we earn from these arrangements are recognized when the services are rendered, which generally occurs upon delivery of the related products to a third-party carrier or, in the case of an Amazon delivery, to the customer.
Subscription services - Our subscription sales include fees associated with Amazon Prime memberships and access to content including audiobooks, digital video, digital music, e-books, and other non-AWS subscription services. Prime memberships provide our customers with access to an evolving suite of benefits that represent a single stand-ready obligation. Subscriptions are paid for at the time of or in advance of delivering the services. Revenue from such arrangements is recognized over the subscription period.
AWS - Our AWS arrangements include global sales of compute, storage, database, and other services. Revenue is allocated to services using stand-alone selling prices and is primarily recognized when the customer uses these services, based on the quantity of services rendered, such as compute or storage capacity delivered on-demand. Certain services, including compute and database, are also offered as a fixed quantity over a specified term, for which revenue is recognized ratably. Sales commissions we pay in connection with contracts that exceed one year are capitalized and amortized over the contract term.
Other - Other revenue primarily includes sales of advertising services, which are recognized as ads are delivered based on the number of clicks or impressions.
Return Allowances
Return allowances, which reduce revenue and cost of sales, are estimated using historical experience. Liabilities for return allowances are included in “Accrued expenses and other” and were $468 million, $623 million, and $712 million as of December 31, 2017, 2018, and 2019. Additions to the allowance were $1.8 billion, $2.3 billion, and $2.5 billion and deductions from the allowance were $1.9 billion, $2.3 billion, and $2.5 billion in 2017, 2018, and 2019. Included in “Inventories” on our consolidated balance sheets are assets totaling $406 million, $519 million, and $629 million as of December 31, 2017, 2018, and 2019, for the rights to recover products from customers associated with our liabilities for return allowances.
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. 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. Payment processing and related transaction costs, including those associated with seller transactions, are classified in “Fulfillment” on our consolidated statements of operations.
Vendor Agreements
We have agreements with our vendors to receive funds primarily for cooperative marketing efforts, promotions, incentives, and volume rebates. We generally consider these amounts received from vendors to be a reduction of the prices we pay for their goods, including property and equipment, or services, and are recorded as a reduction of the cost of inventory, cost of services, or cost of property and equipment. Volume rebates typically depend on reaching minimum purchase thresholds. We evaluate the likelihood of reaching purchase thresholds using past experience and current year forecasts. When volume rebates can be reasonably estimated, we record a portion of the rebate as we make progress towards the purchase threshold.
Fulfillment
Fulfillment costs primarily consist of those costs incurred in operating and staffing our North America and International segments’ fulfillment centers, physical stores, and customer service centers, including costs attributable to buying, receiving, inspecting, and warehousing inventories; picking, packaging, and preparing customer orders for shipment; payment processing and related transaction costs, including costs associated with our guarantee for certain seller transactions; responding to inquiries from customers; and supply chain management for our manufactured electronic devices. Fulfillment costs also include amounts paid to third parties that assist us in fulfillment and customer service operations.
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. Technology and content costs are generally expensed as incurred.
Marketing
Marketing costs primarily consist of advertising and payroll and related expenses for personnel engaged in marketing and selling activities, including sales commissions related to AWS. We pay commissions to third parties when their customer referrals result in sales. We also participate in cooperative advertising arrangements with certain of our vendors, and other third parties.
Advertising and other promotional costs to market our products and services are expensed as incurred and were $6.3 billion, $8.2 billion, and $11.0 billion in 2017, 2018, and 2019.
General and Administrative
General and administrative expenses primarily consist of costs for corporate functions, including payroll and related expenses; facilities and equipment expenses, such as depreciation and amortization expense and rent; and professional fees and litigation costs.
Stock-Based Compensation
Compensation cost for all stock awards expected to vest is measured at fair value on the date of grant and recognized over the service period. The fair value of restricted stock units is determined based on the number of shares granted and the quoted price of our common stock. Such value is recognized as expense over the service period, net of estimated forfeitures, using the accelerated method. The estimated number of stock awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from our current estimates, such amounts will be recorded as a cumulative adjustment in the period estimates are revised. We consider many factors when estimating expected forfeitures, including historical forfeiture experience and employee level.
Other Operating Expense (Income), Net
Other operating expense (income), net, consists primarily of marketing-related, contract-based, and customer-related intangible asset amortization expense, and expenses related to legal settlements.
Other Income (Expense), Net
Other income (expense), net, consists primarily of adjustments to and gains on equity securities of $18 million, $145 million, and $231 million in 2017, 2018, and 2019, equity warrant valuation gains (losses) of $109 million, $(131) million, and $11 million in 2017, 2018, and 2019, and foreign currency gains (losses) of $247 million, $(206) million, and $(20) million in 2017, 2018, and 2019.
Income Taxes
Income tax expense includes U.S. (federal and state) and foreign income taxes. Certain foreign subsidiary earnings are subject to U.S. taxation under the U.S. Tax Act, which also repeals U.S. taxation on the subsequent repatriation of those earnings. 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.
Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered.
Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the extent we believe they will not be realized. We consider many factors when assessing the likelihood of future realization of our deferred tax assets, including our recent cumulative loss experience and expectations of future earnings, capital gains and investment in such jurisdiction, the carry-forward periods available to us for tax reporting purposes, and other relevant factors.
We utilize a two-step approach to recognizing and measuring uncertain income tax positions (tax contingencies). The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not the position will be sustained on audit, including resolution of related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. We consider many factors when evaluating our tax positions and estimating our tax benefits, which may require periodic adjustments and which may not accurately forecast actual outcomes. We include interest and penalties related to our tax contingencies in income tax expense.
Fair Value of Financial Instruments
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.
For our cash, cash equivalents, or marketable securities, 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 cash, cash equivalents, restricted cash, or marketable securities categorized as Level 3 assets as of December 31, 2018 and 2019.
We hold equity warrants giving us the right to acquire stock of other companies. As of December 31, 2018 and 2019, these warrants had a fair value of $440 million and $669 million, and are recorded within “Other assets” on our consolidated balance sheets. These assets are primarily classified as Level 2 assets.
Cash and Cash Equivalents
We classify all highly liquid instruments with an original maturity of three months or less as cash equivalents.
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.
We provide Fulfillment by Amazon services in connection with certain of our sellers’ programs. Third-party sellers maintain ownership of their inventory, regardless of whether fulfillment is provided by us or the third-party sellers, and therefore these products are not included in our inventories.
We also purchase electronic device components from a variety of suppliers and use several contract manufacturers to provide manufacturing services for our products. During the normal course of business, in order to manage manufacturing lead times and help ensure adequate supply, we enter into agreements with contract manufacturers and suppliers for certain electronic device components. A portion of our reported purchase commitments arising from these agreements consists of firm, non-cancellable commitments. These commitments are based on forecasted customer demand. If we reduce these commitments, we may incur additional costs. We also have firm, non-cancellable commitments for certain products offered in our Whole Foods Market stores.
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, 2018 and 2019, customer receivables, net, were $9.4 billion and $12.6 billion, vendor receivables, net, were $3.2 billion and $4.2 billion, and seller receivables, net, were $710 million and $863 million. 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 known troubled accounts and historical experience of losses incurred. Receivables are considered impaired and written-off when it is probable that all contractual payments due will not be collected in accordance with the terms of the agreement. The allowance for doubtful accounts was $348 million, $495 million, and $718 million as of December 31, 2017, 2018, and 2019. Additions to the allowance were $626 million, $878 million, and $1.0 billion, and deductions to the allowance were $515 million, $731 million, and $793 million in 2017, 2018, and 2019.
Software Development Costs
We incur software development costs related to products to be sold, leased, or marketed to external users, internal-use software, and our websites. Software development costs capitalized were not significant for the years presented. All other costs, including those related to design or maintenance, are expensed as incurred.
Property and Equipment, Net
Property and equipment are stated at cost less accumulated depreciation and amortization. Incentives that we receive from property and equipment vendors are recorded as a reduction in our costs. Property includes buildings and land that we own, along with property we have acquired under build-to-suit lease arrangements when we have control over the building during the construction period and finance lease arrangements. Equipment includes assets such as servers and networking equipment, heavy equipment, and other fulfillment equipment. Depreciation and amortization is recorded on a straight-line basis over the estimated useful lives of the assets (generally the lesser of 40 years or the remaining life of the underlying building, three years for our servers, five years for networking equipment, ten years for heavy equipment, and three to seven years for other fulfillment equipment). Depreciation and amortization expense is classified within the corresponding operating expense categories on our consolidated statements of operations.
Leases
We categorize leases with contractual terms longer than twelve months as either operating or finance. Finance leases are generally those leases that allow us to substantially utilize or pay for the entire asset over its estimated life. Assets acquired under finance leases are recorded in property and equipment, net. All other leases are categorized as operating leases. Our leases generally have terms that range from one to ten years for equipment and one to twenty years for property.
Certain lease contracts include obligations to pay for other services, such as operations and maintenance. For leases of property, we account for these other services as a component of the lease. For substantially all other leases, the services are accounted for separately and we allocate payments to the lease and other services components based on estimated stand-alone prices.
Lease liabilities are recognized at the present value of the fixed lease payments, reduced by landlord incentives using a discount rate based on similarly secured borrowings available to us. Lease assets are recognized based on the initial present value of the fixed lease payments, reduced by landlord incentives, plus any direct costs from executing the leases or lease prepayments reclassified from “Other assets” upon lease commencement. Leasehold improvements are capitalized at cost and amortized over the lesser of their expected useful life or the lease term.
When we have the option to extend the lease term, terminate the lease before the contractual expiration date, or purchase the leased asset, and it is reasonably certain that we will exercise the option, we consider these options in determining the classification and measurement of the lease. Our leases may include variable payments based on measures that include changes in price indices, market interest rates, or the level of sales at a physical store, which are expensed as incurred.
Costs associated with operating lease assets are recognized on a straight-line basis within operating expenses over the term of the lease. Finance lease assets are amortized within operating expenses on a straight-line basis over the shorter of the estimated useful lives of the assets or, in the instance where title does not transfer at the end of the lease term, the lease term. The interest component of a finance lease is included in interest expense and recognized using the effective interest method over the lease term.
We establish assets and liabilities for the present value of estimated future costs to retire long-lived assets at the termination or expiration of a lease. Such assets are depreciated over the lease period into operating expense, and the recorded liabilities are accreted to the future value of the estimated retirement costs.
Financing Obligations
We record assets and liabilities for estimated construction costs under build-to-suit lease arrangements when we have control over the building during the construction period. If we continue to control the building after the construction period, the arrangement is classified as a financing obligation instead of a lease. The building is depreciated over the shorter of its useful life or the term of the obligation.
If we do not control the building after the construction period ends, the assets and liabilities for construction costs are derecognized, and we classify the lease as either operating or finance.
Goodwill
We evaluate goodwill for impairment annually or more frequently when an event occurs or circumstances change that indicate the carrying value may not be recoverable. In testing goodwill for impairment, we may elect to utilize a qualitative assessment to evaluate whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If our qualitative assessment indicates that goodwill impairment is more likely than not, we perform a two-step impairment test. We test goodwill for impairment under the two-step impairment test by first comparing the book value of net assets to the fair value of the reporting units. If the fair value is determined to be less than the book value or qualitative factors indicate that it is more likely than not that goodwill is impaired, a second step is performed to compute the amount of impairment as the difference between the estimated fair value of goodwill and the carrying value. We estimate the fair value of the reporting units using discounted cash flows. Forecasts of future cash flows are based on our best estimate of future net sales and operating expenses, based primarily on expected category expansion, pricing, market segment share, and general economic conditions.
We completed the required annual testing of goodwill for impairment for all reporting units as of April 1, 2019, and determined that goodwill is not impaired as the fair value of our reporting units substantially exceeded their book value. There were no events that caused us to update our annual impairment test. See “Note 5 — Acquisitions, Goodwill, and Acquired Intangible Assets.”
Other Assets
Included in “Other assets” on our consolidated balance sheets are amounts primarily related to acquired intangible assets, net of accumulated amortization; video and music content, net of accumulated amortization; long-term deferred tax assets; certain equity investments; marketable securities restricted for longer than one year, the majority of which are attributable to collateralization of bank guarantees and debt related to our international operations; lease prepayments made prior to lease commencement; and equity warrant assets.
Digital Video and Music Content
We obtain video content, inclusive of episodic television and movies, and music content for customers through licensing agreements that have a wide range of licensing provisions including both fixed and variable payment schedules. When the license fee for a specific video or music title is determinable or reasonably estimable and the content is available to us, we recognize an asset and a corresponding liability for the amounts owed. We reduce the liability as payments are made and we
amortize the asset to “Cost of sales” on an accelerated basis, based on estimated usage or viewing patterns, or on a straight-line basis. If the licensing fee is not determinable or reasonably estimable, no asset or liability is recorded and licensing costs are expensed as incurred. We also develop original video content for which the production costs are capitalized and amortized to “Cost of sales” predominantly on an accelerated basis that follows the viewing patterns associated with the content. The weighted average remaining life of our capitalized video content is 2.7 years.
Our produced and licensed video content is primarily monetized together as a unit, referred to as a film group, in each major geography where we offer Amazon Prime memberships. These film groups are evaluated for impairment whenever an event occurs or circumstances change indicating the fair value is less than the carrying value. The total capitalized costs of video, which is primarily released content, and music as of December 31, 2018 and 2019 were $3.8 billion and $5.8 billion. Total video and music expense was $6.7 billion and $7.8 billion for the year ended December 31, 2018 and 2019. Total video and music expense includes licensing and production costs associated with content offered within Amazon Prime memberships, and costs associated with digital subscriptions and sold or rented content.
Investments
We generally invest our excess cash in AAA-rated money market funds and investment grade short- to intermediate-term fixed income securities. Such investments are included in “Cash and cash equivalents” or “Marketable securities” on the accompanying consolidated balance sheets. Marketable debt securities are classified as available-for-sale and reported at fair value with unrealized gains and losses included in “Accumulated other comprehensive income (loss).”
Equity investments are accounted for using the equity method of accounting if the investment gives us the ability to exercise significant influence, but not control, over an investee. Equity-method investments are included within “Other assets” on our consolidated balance sheets. Our share of the earnings or losses as reported by equity-method investees, amortization of basis differences, and related gains or losses, if any, are classified as “Equity-method investment activity, net of tax” on our consolidated statements of operations.
Equity investments without readily determinable fair values and for which we do not have the ability to exercise significant influence are accounted for at cost with adjustments for observable changes in prices or impairments and are classified as “Other assets” on our consolidated balance sheets with adjustments recognized in “Other income (expense), net” on our consolidated statements of operations. As of December 31, 2018 and 2019, these investments had a carrying value of $282 million and $1.5 billion.
Equity investments that have readily determinable fair values are included in “Marketable securities” on our consolidated balance sheets and measured at fair value with changes recognized in “Other income (expense), net” on our consolidated statement of operations.
We periodically evaluate whether declines in fair values of our investments indicate impairment. For debt securities and equity-method investments, we also evaluate whether declines in fair value of our investments below their book value are other-than-temporary. This evaluation consists of several qualitative and quantitative factors regarding the severity and duration of the unrealized loss as well as our ability and intent to hold the investment until a forecasted recovery occurs. Additionally, we assess whether we have plans to sell the security or it is more likely than not we will be required to sell any investment before recovery of its amortized cost basis. Factors considered include: quoted market prices; recent financial results and operating trends; implied values from any recent transactions or offers of investee securities; credit quality of debt instrument issuers; other publicly available information that may affect the value of our investments; duration and severity of the decline in value; and our strategy and intentions for holding the investment.
Long-Lived Assets
Long-lived assets, other than goodwill, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or any other significant adverse change that would indicate that the carrying amount of an asset or group of assets may not be recoverable.
For long-lived assets used in operations, including lease assets, impairment losses are only recorded if the asset’s carrying amount is not recoverable through its undiscounted, probability-weighted future cash flows. We measure the impairment loss based on the difference between the carrying amount and estimated fair value. Long-lived assets are considered held for sale when certain criteria are met, including when management has committed to a plan to sell the asset, the asset is available for sale in its immediate condition, and the sale is probable within one year of the reporting date. Assets held for sale are reported at the lower of cost or fair value less costs to sell. Assets held for sale were not significant as of December 31, 2018 and 2019.
Accrued Expenses and Other
Included in “Accrued expenses and other” on our consolidated balance sheets are liabilities primarily related to leases and asset retirement obligations, payroll and related expenses, unredeemed gift cards, customer liabilities, current debt, acquired digital media content, and other operating expenses.
As of December 31, 2018 and 2019, our liabilities for payroll related expenses were $3.4 billion and $4.3 billion and our liabilities for unredeemed gift cards were $2.8 billion and $3.3 billion. We reduce the liability for a gift card when redeemed by a customer. The portion of gift cards that we do not expect to be redeemed is recognized based on customer usage patterns.
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, 2018 was $7.9 billion, of which $6.3 billion was recognized as revenue during the year ended December 31, 2019 and our total unearned revenue as of December 31, 2019 was $10.2 billion. Included in “Other long-term liabilities” on our consolidated balance sheets was $1.4 billion and $2.0 billion of unearned revenue as of December 31, 2018 and 2019.
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 financial statements. For contracts with original terms that exceed one year, those commitments not yet recognized were $29.8 billion as of December 31, 2019. The weighted average remaining life of our long-term contracts is 3.3 years. However, the amount and timing of revenue recognition is largely driven by customer usage, which can extend beyond the original contractual term.
Other Long-Term Liabilities
Included in “Other long-term liabilities” on our consolidated balance sheets are liabilities primarily related to deferred tax liabilities, financing obligations, asset retirement obligations, tax contingencies, and digital video and music content.
Foreign Currency
We have internationally-focused stores for which the net sales generated, as well as most of the related expenses directly incurred from those operations, are denominated in local functional currencies. The functional currency of our subsidiaries that either operate or support these stores is generally the same as the local currency. Assets and liabilities of these subsidiaries are translated into U.S. Dollars at period-end foreign exchange rates, and revenues and expenses are translated at average rates prevailing throughout the period. Translation adjustments are included in “Accumulated other comprehensive income (loss),” a separate component of stockholders’ equity, and in the “Foreign currency effect on cash, cash equivalents, and restricted cash,” on our consolidated statements of cash flows. Transaction gains and losses including intercompany transactions denominated in a currency other than the functional currency of the entity involved are included in “Other income (expense), net” on our consolidated statements of operations. In connection with the settlement and remeasurement of intercompany balances, we recorded gains (losses) of $202 million, $(186) million, and $95 million in 2017, 2018, and 2019.
Accounting Pronouncements Recently Adopted
In May 2014, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) amending revenue recognition guidance and requiring more detailed disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. We adopted this ASU on January 1, 2018 for all revenue contracts with our customers using the modified retrospective approach and increased retained earnings by approximately $650 million. The adjustment primarily relates to the unredeemed portion of our gift cards, which are now recognized over the expected customer usage period rather than waiting until gift cards expire or when the likelihood of redemption becomes remote. We changed the recognition and classification of Amazon Prime memberships, which are now accounted for as a single performance obligation and recognized ratably over the membership period as service sales. Previously, Prime memberships were considered to be arrangements with multiple deliverables and were allocated among product sales and service sales. Other changes relate primarily to the presentation of revenue. Certain advertising services are now classified as revenue rather than a reduction in cost of sales, and sales of apps, in-app content, and certain digital media content are presented on a net basis. Prior year amounts have not been adjusted and continue to be reported in accordance with our historic accounting policy.
The impact of applying this ASU for the year ended December 31, 2018 primarily resulted in a decrease in product sales and an increase in service sales driven by the reclassification of Prime membership fees of approximately $3.8 billion. Service sales also increased by approximately $3.0 billion for the year ended December 31, 2018 due to the reclassification of certain advertising services.
In January 2016, the FASB issued an ASU that updates certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Under this ASU, certain equity investments are measured at fair value with changes recognized in net income. We adopted this ASU in Q1 2018 with no material impact to our consolidated financial statements.
In February 2016, the FASB issued an ASU amending the accounting for leases, primarily requiring the recognition of lease assets and liabilities for operating leases with terms of more than twelve months on our consolidated balance sheets. Under the new guidance, leases previously described as capital lease obligations and finance lease obligations are now referred to as finance leases and financing obligations, respectively. We adopted this ASU on January 1, 2019 by recording an immaterial cumulative adjustment to retained earnings rather than retrospectively adjusting prior periods. Prior period amounts were not adjusted and continue to be reported in accordance with our historic accounting policies resulting in a balance sheet presentation that is not comparable to the prior period in the first year of adoption. The adoption of this ASU resulted in the recognition of operating lease assets and liabilities of approximately $21 billion, which included the reclassification of finance lease obligations to operating leases of $1.2 billion. As of December 31, 2018, amounts related to finance lease obligations and construction liabilities totaled $9.6 billion, of which $1.5 billion was derecognized for buildings that we do not control during the construction period and $5.4 billion and $1.5 billion were reclassified to finance leases and operating leases, respectively.
In October 2016, the FASB issued an ASU amending the accounting for income taxes. The new guidance requires the recognition of the income tax consequences of an intercompany asset transfer, other than transfers of inventory, when the transfer occurs. For intercompany transfers of inventory, the income tax effects will continue to be deferred until the inventory has been sold to a third party. We adopted this ASU in Q1 2018 with an increase of approximately $250 million to retained earnings and deferred tax assets net of valuation allowances.
In November 2016, the FASB issued an ASU amending the presentation of restricted cash within the consolidated statements of cash flows. The new guidance requires that restricted cash be added to cash and cash equivalents on the consolidated statements of cash flows. We adopted this ASU in Q1 2018 on a retrospective basis with the following impacts to our consolidated statements of cash flows (in millions):
Year Ended December 31, 2017
Previously Reported
 
Adjustments
 
As Revised
Operating activities
$
18,434

 
$
(69
)
 
$
18,365

Investing activities
(27,819
)
 
735

 
(27,084
)
Financing activities
9,860

 
68

 
9,928

Net change in cash, cash equivalents, and restricted cash
$
475

 
$
734

 
$
1,209


In March 2019, the FASB issued an ASU amending the accounting for film costs, inclusive of episodic television and movie costs. The new guidance aligns the accounting for production costs of episodic television with that of movies by requiring production costs to be capitalized. Previously, we only capitalized a portion of the production costs related to our produced episodic television content. We adopted this ASU as of January 1, 2019 and began capitalizing substantially all of our production costs. Adoption of this ASU resulted in approximately $1.0 billion of incremental capitalized film costs classified in “Other Assets” as of December 31, 2019.
v3.19.3.a.u2
Financial Instruments
12 Months Ended
Dec. 31, 2019
Investments, Debt and Equity Securities [Abstract]  
Financial Instruments
As of December 31, 2018 and 2019, 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, and other investment grade securities. Cash equivalents and marketable securities are recorded at fair value. 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, 2018
  
Cost or
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Total
Estimated
Fair Value
Cash
$
10,406

 
$

 
$

 
$
10,406

Level 1 securities:
 
 
 
 
 
 
 
Money market funds
12,515

 

 

 
12,515

Equity securities
 
 
 
 
 
 
170

Level 2 securities:
 
 
 
 
 
 
 
Foreign government and agency securities
815

 

 

 
815

U.S. government and agency securities
11,686

 
1

 
(20
)
 
11,667

Corporate debt securities
5,008

 
1

 
(19
)
 
4,990

Asset-backed securities
896

 

 
(4
)
 
892

Other fixed income securities
190

 

 
(2
)
 
188

Equity securities
 
 
 
 
 
 
33

 
$
41,516


$
2


$
(45
)

$
41,676

Less: Restricted cash, cash equivalents, and marketable securities (2)
 
 
 
 
 
 
(426
)
Total cash, cash equivalents, and marketable securities
 
 
 
 
 
 
$
41,250

 
December 31, 2019
  
Cost or
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Total
Estimated
Fair Value
Cash
$
9,776

 
$

 
$

 
$
9,776

Level 1 securities:
 
 
 
 
 
 
 
Money market funds
18,850

 

 

 
18,850

Equity securities (1)
 
 
 
 
 
 
202

Level 2 securities:
 
 
 
 
 
 
 
Foreign government and agency securities
4,794

 

 

 
4,794

U.S. government and agency securities
7,070

 
11

 
(1
)
 
7,080

Corporate debt securities
11,845

 
37

 
(1
)
 
11,881

Asset-backed securities
2,355

 
6

 
(1
)
 
2,360

Other fixed income securities
393

 
1

 

 
394

Equity securities (1)
 
 
 
 
 
 
5

 
$
55,083

 
$
55

 
$
(3
)
 
$
55,342

Less: Restricted cash, cash equivalents, and marketable securities (2)
 
 
 
 
 
 
(321
)
Total cash, cash equivalents, and marketable securities
 
 
 
 
 
 
$
55,021

___________________
(1)
The related unrealized gain (loss) recorded in “Other income (expense), net” was $4 million for the year ended December 31, 2019.
(2)
We are required to pledge or otherwise restrict a portion of our cash, cash equivalents, and marketable securities as collateral for real estate leases, amounts due to third-party sellers in certain jurisdictions, debt, and standby and trade letters of credit. We classify cash, cash equivalents, and marketable 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 7 — Commitments and Contingencies.”
The following table summarizes gross gains and gross losses realized on sales of available-for-sale fixed income marketable securities (in millions):
 
Year Ended December 31,
 
2017
 
2018
 
2019
Realized gains
$
5

 
$
2

 
$
11

Realized losses
11

 
9

 
7


The following table summarizes the remaining contractual maturities of our cash equivalents and marketable fixed income securities as of December 31, 2019 (in millions):
 
Amortized
Cost
 
Estimated
Fair Value
Due within one year
$
35,064

 
$
35,071

Due after one year through five years
9,262

 
9,304

Due after five years through ten years
301

 
302

Due after ten years
680

 
682

Total
$
45,307

 
$
45,359


Actual maturities may differ from the contractual maturities because borrowers may have certain prepayment conditions.
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, 2018
 
December 31, 2019
Cash and cash equivalents
$
31,750

 
$
36,092

Restricted cash included in accounts receivable, net and other
418

 
276

Restricted cash included in other assets
5

 
42

Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows
$
32,173

 
$
36,410


v3.19.3.a.u2
Property and Equipment
12 Months Ended
Dec. 31, 2019
Property, Plant and Equipment [Abstract]  
Property and Equipment PROPERTY AND EQUIPMENT
Property and equipment, at cost, consisted of the following (in millions):
 
 
December 31,
 
2018
 
2019
Gross property and equipment (1):
 
 
 
Land and buildings
$
31,741

 
$
39,223

Equipment
54,591

 
71,310

Other assets
2,577

 
3,111

Construction in progress
6,861

 
6,036

Gross property and equipment
95,770

 
119,680

Total accumulated depreciation and amortization (1)
33,973

 
46,975

Total property and equipment, net
$
61,797

 
$
72,705


__________________
(1)
Includes the original cost and accumulated depreciation of fully-depreciated assets.
Depreciation and amortization expense on property and equipment was $8.8 billion, $12.1 billion, and $15.1 billion which includes amortization of property and equipment acquired under finance leases of $5.4 billion, $7.3 billion, and $10.1 billion for 2017, 2018, and 2019.
v3.19.3.a.u2
Leases Leases
12 Months Ended
Dec. 31, 2019
Leases [Abstract]  
Leases
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 $36.1 billion and $57.4 billion as of December 31, 2018 and 2019. Accumulated amortization associated with finance leases was $19.8 billion and $30.0 billion as of December 31, 2018 and 2019.
Lease cost recognized in our consolidated statements of operations is summarized as follows (in millions):
 
Year Ended
December 31, 2019
 
 
Operating lease cost (1)
$
3,669

Finance lease cost:
 
Amortization of lease assets
10,094

Interest on lease liabilities
695

Finance lease cost
10,789

Variable lease cost
966

Total lease cost
$
15,424

__________________
(1)
Rental expense under operating lease agreements was $2.2 billion and $3.4 billion for 2017 and 2018.
Other information about lease amounts recognized in our consolidated financial statements is summarized as follows:
 
December 31, 2019
 
 
Weighted-average remaining lease term – operating leases
11.5

Weighted-average remaining lease term – finance leases
5.5

Weighted-average discount rate – operating leases
3.1
%
Weighted-average discount rate – finance leases
2.7
%

As of December 31, 2019, our lease liabilities were as follows (in millions):
 
Operating Leases
 
Finance Leases
 
Total
 
 
 
 
 
 
Gross lease liabilities
$
31,963

 
$
28,875

 
$
60,838

Less: imputed interest
(6,128
)
 
(1,896
)
 
(8,024
)
Present value of lease liabilities
25,835

 
26,979

 
52,814

Less: current portion of lease liabilities
(3,139
)
 
(9,884
)
 
(13,023
)
Total long-term lease liabilities
$
22,696

 
$
17,095

 
$
39,791


v3.19.3.a.u2
Acquisitions, Goodwill, and Acquired Intangible Assets
12 Months Ended
Dec. 31, 2019
Business Combinations [Abstract]  
Acquisitions, Goodwill, and Acquired Intangible Assets ACQUISITIONS, GOODWILL, AND ACQUIRED INTANGIBLE ASSETS
2017 Acquisition Activity
On May 12, 2017, we acquired Souq Group Ltd., an e-commerce company, for approximately $583 million, net of cash acquired, and on August 28, 2017, we acquired Whole Foods Market, a grocery store chain, for approximately $13.2 billion, net of cash acquired. Both acquisitions are intended to expand our retail presence. During 2017, we also acquired certain other companies for an aggregate purchase price of $204 million. The primary reason for our other 2017 acquisitions was to acquire technologies and know-how to enable Amazon to serve customers more effectively.
2018 Acquisition Activity
On April 12, 2018, we acquired Ring Inc. (“Ring”) for cash consideration of approximately $839 million, net of cash acquired, and on September 11, 2018, we acquired PillPack, Inc. (“PillPack”) for cash consideration of approximately $753 million, net of cash acquired, to expand our product and service offerings. During 2018, we also acquired certain other companies for an aggregate purchase price of $57 million. The primary reason for our other 2018 acquisitions was to acquire technologies and know-how to enable Amazon to serve customers more effectively.
2019 Acquisition Activity
During 2019, we acquired certain companies for an aggregate purchase price of $315 million. The primary reason for these acquisitions, none of which were individually material to our consolidated financial statements, was to acquire technologies and know-how to enable Amazon to serve customers more effectively.
Acquisition-related costs were expensed as incurred and were not significant.
Pro forma results of operations have not been presented because the effects of 2019 acquisitions, individually and in the aggregate, were not material to our consolidated results of operations.
Purchase Price Allocation
The aggregate purchase price of these acquisitions was allocated as follows (in millions):
 
December 31,
 
2017
 
2018
 
2019
 
 
 
 
 
 
Purchase Price
 
 
 
 
 
Cash paid, net of cash acquired
$
13,859

 
$
1,618

 
$
276

Indemnification holdback
104

 
31

 
39

 
$
13,963

 
$
1,649

 
$
315

Allocation
 
 
 
 
 
Goodwill
$
9,501

 
$
1,228

 
$
189

Intangible assets (1):
 
 
 
 
 
Marketing-related
1,987

 
186

 
8

Contract-based
440

 
13

 

Technology-based
166

 
285

 
139

Customer-related
54

 
193

 
14

 
2,647

 
677

 
161

Property and equipment
3,810

 
11

 
3

Deferred tax assets
117

 
174

 
29

Other assets acquired
1,858

 
282

 
41

Long-term debt
(1,165
)
 
(176
)
 
(31
)
Deferred tax liabilities
(961
)
 
(159
)
 
(34
)
Other liabilities assumed
(1,844
)
 
(388
)
 
(43
)
 
$
13,963

 
$
1,649

 
$
315

 ___________________
(1)
Intangible assets acquired in 2017, 2018, and 2019 have estimated useful lives of between one and twenty-five years, two and seven years, and two and seven years, with weighted-average amortization periods of twenty-one years, six years, and five years.
We determined the estimated fair value of identifiable intangible assets acquired primarily by using the income approach. These assets are included within “Other assets” on our consolidated balance sheets and are being amortized to operating expenses on a straight-line basis over their estimated useful lives.
Goodwill
The goodwill of the acquired companies is primarily related to expected improvements in technology performance and functionality, as well as sales growth from future product and service offerings and new customers, together with certain intangible assets that do not qualify for separate recognition. The goodwill of the acquired companies is generally not deductible for tax purposes. The following summarizes our goodwill activity in 2018 and 2019 by segment (in millions):
 
North
America
 
International
 
AWS
 
Consolidated
Goodwill - January 1, 2018
$
11,165

 
$
1,108

 
$
1,077

 
$
13,350

New acquisitions (1)
1,031

 
177

 
20

 
1,228

Other adjustments (2)
(5
)
 
(15
)
 
(10
)
 
(30
)
Goodwill - December 31, 2018
12,191

 
1,270

 
1,087

 
14,548

New acquisitions
71

 
29

 
89

 
189

Other adjustments (2)
2

 
1

 
14

 
17

Goodwill - December 31, 2019
$
12,264

 
$
1,300

 
$
1,190

 
$
14,754

 ___________________
(1)
Primarily includes the acquisitions of Ring and PillPack in the North America segment.
(2)
Primarily includes changes in foreign exchange rates.
Intangible Assets
Acquired intangible assets, included within “Other assets” on our consolidated balance sheets, consist of the following (in millions):
 
 
December 31,
 
 
 
2018
 
2019
 
 
  
Acquired
Intangibles,
Gross (1)
 
Accumulated
Amortization (1)
 
Acquired
Intangibles,
Net
 
Acquired
Intangibles,
Gross (1)
 
Accumulated
Amortization (1)
 
Acquired
Intangibles,
Net
 
Weighted
Average Life
Remaining
Marketing-related
$
2,542

 
$
(431
)
 
$
2,111

 
$
2,303

 
$
(340
)
 
$
1,963

 
20.7
Contract-based
1,430

 
(224
)
 
1,206

 
1,702

 
(302
)
 
1,400

 
10.5
Technology- and content-based
941

 
(377
)
 
564

 
1,011

 
(477
)
 
534

 
3.6
Customer-related
437

 
(208
)
 
229

 
282

 
(130
)
 
152

 
4.3
Acquired intangibles (2)
$
5,350

 
$
(1,240
)
 
$
4,110

 
$
5,298

 
$
(1,249
)
 
$
4,049

 
14.3
 ___________________
(1)
Excludes the original cost and accumulated amortization of fully-amortized intangibles.
(2)
Intangible assets have estimated useful lives of between one and twenty-five years.
Amortization expense for acquired intangibles was $366 million, $475 million, and $565 million in 2017, 2018, and 2019. Expected future amortization expense of acquired intangible assets as of December 31, 2019 is as follows (in millions):
 
Year Ended December 31,
2020
$
486

2021
424

2022
391

2023
334

2024
270

Thereafter
2,116

 
$
4,021


v3.19.3.a.u2
Debt
12 Months Ended
Dec. 31, 2019
Debt Disclosure [Abstract]  
Debt DEBT
As of December 31, 2019, we had $23.3 billion of unsecured senior notes outstanding (the “Notes”). As of December 31, 2018 and 2019, the net unamortized discount and debt issuance costs on the Notes was $101 million. We also have other long-term debt with a carrying amount, including the current portion and borrowings under our credit facility, of $715 million and $1.6 billion as of December 31, 2018 and 2019. The face value of our total long-term debt obligations is as follows (in millions):
 
December 31,
 
2018
 
2019
2.600% Notes due on December 5, 2019
1,000

 

1.900% Notes due on August 21, 2020 (3)
1,000

 
1,000

3.300% Notes due on December 5, 2021 (2)
1,000

 
1,000

2.500% Notes due on November 29, 2022 (1)
1,250

 
1,250

2.400% Notes due on February 22, 2023 (3)
1,000

 
1,000

2.800% Notes due on August 22, 2024 (3)
2,000

 
2,000

3.800% Notes due on December 5, 2024 (2)
1,250

 
1,250

5.200% Notes due on December 3, 2025 (4)
1,000

 
1,000

3.150% Notes due on August 22, 2027 (3)
3,500

 
3,500

4.800% Notes due on December 5, 2034 (2)
1,250

 
1,250

3.875% Notes due on August 22, 2037 (3)
2,750

 
2,750

4.950% Notes due on December 5, 2044 (2)
1,500

 
1,500

4.050% Notes due on August 22, 2047 (3)
3,500

 
3,500

4.250% Notes due on August 22, 2057 (3)
2,250

 
2,250

Credit Facility
594

 
740

Other long-term debt
121

 
830

Total debt
24,965

 
24,820

Less current portion of long-term debt
(1,371
)
 
(1,307
)
Face value of long-term debt
$
23,594

 
$
23,513


_____________________________
(1)
Issued in November 2012, effective interest rate of the 2022 Notes was 2.66%.
(2)
Issued in December 2014, effective interest rates of the 2021, 2024, 2034, and 2044 Notes were 3.43%, 3.90%, 4.92%, and 5.11%.
(3)
Issued in August 2017, effective interest rates of the 2020, 2023, 2024, 2027, 2037, 2047, and 2057 Notes were 2.16%, 2.56%, 2.95%, 3.25%, 3.94%, 4.13%, and 4.33%.
(4)
Consists of $872 million of 2025 Notes issued in December 2017 in exchange for notes assumed in connection with the acquisition of Whole Foods Market and $128 million of 2025 Notes issued by Whole Foods Market that did not participate in our December 2017 exchange offer. The effective interest rate of the 2025 Notes was 3.02%.
Interest on the Notes issued in 2012 is payable semi-annually in arrears in May and November. Interest on the Notes issued in 2014 is payable semi-annually in arrears in June and December. Interest on the Notes issued in 2017 is payable semi-annually in arrears in February and August. Interest on the 2025 Notes is payable semi-annually in arrears in June and December. 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 proceeds from the November 2012 and the December 2014 Notes were used for general corporate purposes. The proceeds from the August 2017 Notes were used to fund the consideration for the acquisition of Whole Foods Market, to repay notes due in 2017, and for general corporate purposes. The estimated fair value of the Notes was approximately $24.3 billion and $26.2 billion as of December 31, 2018 and 2019, which is based on quoted prices for our debt as of those dates.
In October 2016, we entered into a $500 million secured revolving credit facility with a lender that is secured by certain seller receivables, which we subsequently increased to $740 million and 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 $594 million and $740 million of borrowings outstanding under the Credit Facility as of December 31, 2018 and 2019, which had a weighted-average interest rate of 3.2% and 3.4% as of December 31, 2018 and 2019. As of December 31, 2018 and 2019, we
have pledged $686 million and $852 million 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, 2018 and 2019.
The other debt, including the current portion, had a weighted-average interest rate of 6.0% and 4.1% as of December 31, 2018 and 2019. We used the net proceeds from the issuance of this debt primarily to fund certain business operations. The estimated fair value of the other long-term debt, which is based on Level 2 inputs, approximated its carrying value as of December 31, 2018 and 2019.
As of December 31, 2019, future principal payments for our total debt were as follows (in millions):
Year Ended December 31,
2020
$
1,307

2021
1,141

2022
1,773

2023
1,510

2024
3,339

Thereafter
15,750

 
$
24,820


In April 2018, we established a commercial paper program (the “Commercial Paper Program”) under which we may from time to time issue unsecured commercial paper up to a total of $7.0 billion at any time, with individual maturities that may vary but will not exceed 397 days from the date of issue. There were no borrowings outstanding under the Commercial Paper Program as of December 31, 2018 and 2019.
In April 2018, in connection with our Commercial Paper Program, we amended and restated our unsecured revolving credit facility (the “Credit Agreement”) with a syndicate of lenders to increase our borrowing capacity thereunder to $7.0 billion. As amended and restated, the Credit Agreement has a term of three years, but 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 amended and restated Credit Agreement is LIBOR plus 0.50%, with a commitment fee of 0.04% on the undrawn portion of the credit facility. There were no borrowings outstanding under the Credit Agreement as of December 31, 2018 and 2019.
v3.19.3.a.u2
Commitments and Contingencies
12 Months Ended
Dec. 31, 2019
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies COMMITMENTS AND CONTINGENCIES
Commitments
We have entered into non-cancellable operating and finance leases and financing obligations for equipment and office, fulfillment, sortation, delivery, data center, physical store, and renewable energy facilities.
The following summarizes our principal contractual commitments, excluding open orders for purchases that support normal operations and are generally cancellable, as of December 31, 2019 (in millions):
 
Year Ended December 31,
 
 
 
 
 
2020
 
2021
 
2022
 
2023
 
2024
 
Thereafter
 
Total
Debt principal and interest
$
2,202

 
$
2,009

 
$
2,603

 
$
2,273

 
$
4,084

 
$
26,019

 
$
39,190

Operating lease liabilities
3,757

 
3,630

 
3,226

 
2,900

 
2,605

 
15,845

 
31,963

Finance lease liabilities, including interest
9,878

 
7,655

 
4,060

 
1,332

 
989

 
4,961

 
28,875

Financing obligations, including interest
142

 
146

 
148

 
150

 
152

 
2,452

 
3,190

Unconditional purchase obligations (1)
4,593

 
3,641

 
3,293

 
3,103

 
3,000

 
2,358

 
19,988

Other commitments (2)(3)
3,837

 
2,274

 
1,770

 
1,439

 
1,389

 
12,186

 
22,895

Total commitments
$
24,409

 
$
19,355

 
$
15,100

 
$
11,197

 
$
12,219

 
$
63,821

 
$
146,101

___________________
(1)
Includes unconditional purchase obligations related to certain products offered in our Whole Foods Market stores and long-term agreements to acquire and license digital media content that are not reflected on the consolidated balance sheets. 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.
(2)
Includes the estimated timing and amounts of payments for rent and tenant improvements associated with build-to-suit lease arrangements and lease arrangements prior to the lease commencement date and digital media content liabilities associated with long-term digital media content assets with initial terms greater than one year.
(3)
Excludes approximately $3.9 billion of accrued tax contingencies for which we cannot make a reasonably reliable estimate of the amount and period of payment, if any.
Pledged Assets
As of December 31, 2018 and 2019, we have pledged or otherwise restricted $575 million and $994 million of our cash, cash equivalents, and marketable securities, and certain property and equipment as collateral for real estate leases, amounts due to third-party sellers in certain jurisdictions, debt, and standby and trade letters of credit. Additionally, we have pledged our cash and seller receivables for debt related to our Credit Facility. See “Note 6 — Debt.”
Suppliers
During 2019, no vendor accounted for 10% or more of our purchases. We generally do not have long-term contracts or arrangements with our vendors to guarantee the availability of merchandise, particular payment terms, or the extension of credit limits.
Other Contingencies
In 2016, we determined that we processed and delivered orders of consumer products for certain individuals and entities located outside Iran covered by the Iran Threat Reduction and Syria Human Rights Act or other United States sanctions and export control laws. The consumer products included books, music, other media, apparel, home and kitchen, health and beauty, jewelry, office, consumer electronics, software, lawn and patio, grocery, and automotive products. Our review is ongoing and we have voluntarily reported these orders to the United States Treasury Department’s Office of Foreign Assets Control and the United States Department of Commerce’s Bureau of Industry and Security. We intend to cooperate fully with OFAC and BIS with respect to their review, which may result in the imposition of penalties. For additional information, see Item 9B of Part II, “Other Information — Disclosure Pursuant to Section 13(r) of the Exchange Act.”
We are subject to claims related to various indirect taxes (such as sales, value added, consumption, service, and similar taxes), including in jurisdictions in which we already collect and remit such taxes. If the relevant taxing authorities were successfully to pursue these claims, we could be subject to significant additional tax liabilities. For example, in June 2017, the State of South Carolina issued an assessment for uncollected sales and use taxes for the period from January 2016 to March 2016, including interest and penalties. South Carolina is alleging that we should have collected sales and use taxes on
transactions by our third-party sellers. In September 2019, the South Carolina Administrative Law Court ruled in favor of the Department of Revenue and we have appealed the decision to the state Court of Appeals. We believe the assessment is without merit and intend to defend ourselves vigorously in this matter. If other tax authorities were successfully to seek additional adjustments of a similar nature, we could be subject to significant additional tax liabilities.
Legal Proceedings
The Company is involved from time to time in claims, proceedings, and litigation, including the following:
Beginning in August 2013, a number of complaints were filed alleging, among other things, that Amazon.com, Inc. and several of its subsidiaries failed to compensate hourly workers for time spent waiting in security lines and otherwise violated federal and state wage and hour statutes and common law. In August 2013, Busk v. Integrity Staffing Solutions, Inc. and Amazon.com, Inc. was filed in the United States District Court for the District of Nevada, and Vance v. Amazon.com, Inc., Zappos.com Inc., another affiliate of Amazon.com, Inc., and Kelly Services, Inc. was filed in the United States District Court for the Western District of Kentucky. In September 2013, Allison v. Amazon.com, Inc. and Integrity Staffing Solutions, Inc. was filed in the United States District Court for the Western District of Washington, and Johnson v. Amazon.com, Inc. and an affiliate of Amazon.com, Inc. was filed in the United States District Court for the Western District of Kentucky. In October 2013, Davis v. Amazon.com, Inc., an affiliate of Amazon.com, Inc., and Integrity Staffing Solutions, Inc. was filed in the United States District Court for the Middle District of Tennessee. The plaintiffs variously purport to represent a nationwide class of certain current and former employees under the Fair Labor Standards Act and/or state-law-based subclasses for certain current and former employees in states including Arizona, California, Pennsylvania, South Carolina, Kentucky, Washington, and Nevada, and one complaint asserts nationwide breach of contract and unjust enrichment claims. The complaints seek an unspecified amount of damages, interest, injunctive relief, and attorneys’ fees. We have been named in several other similar cases. In December 2014, the Supreme Court ruled in Busk that time spent waiting for and undergoing security screening is not compensable working time under the federal wage and hour statute. In February 2015, the courts in those actions alleging only federal law claims entered stipulated orders dismissing those actions without prejudice. In March 2016, the United States District Court for the Western District of Kentucky dismissed the Vance case with prejudice. In April 2016, the plaintiffs appealed the district court’s judgment to the United States Court of Appeals for the Federal Circuit. In March 2017, the court of appeals affirmed the district court’s decision. In June 2017, the United States District Court for the Western District of Kentucky dismissed the Busk and Saldana cases with prejudice. We dispute any remaining allegations of wrongdoing and intend to defend ourselves vigorously in these matters.
In March 2015, Zitovault, LLC filed a complaint against Amazon.com, Inc., Amazon.com, LLC, Amazon Web Services, Inc., and Amazon Web Services, LLC for patent infringement in the United States District Court for the Eastern District of Texas. The complaint alleges that Elastic Compute Cloud, Virtual Private Cloud, Elastic Load Balancing, Auto-Scaling, and Elastic Beanstalk infringe U.S. Patent No. 6,484,257, entitled “System and Method for Maintaining N Number of Simultaneous Cryptographic Sessions Using a Distributed Computing Environment.” The complaint seeks injunctive relief, an unspecified amount of damages, enhanced damages, attorneys’ fees, costs, and interest. In January 2016, the case was transferred to the United States District Court for the Western District of Washington. In June 2016, the case was stayed pending resolution of a review petition we filed with the United States Patent and Trademark Office. In January 2019, the stay of the case was lifted following resolution of the review petition. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter.
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. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter.
In October 2017, SRC Labs, LLC and Saint Regis Mohawk Tribe filed a complaint for patent infringement against Amazon Web Services, Inc., Amazon.com, Inc., and VADATA, Inc. in the United States District Court for the Eastern District of Virginia. The complaint alleges, among other things, that certain AWS EC2 Instances infringe U.S. Patent Nos. 6,434,687, entitled “System and method for accelerating web site access and processing utilizing a computer system incorporating reconfigurable processors operating under a single operating system image”; 7,149,867, entitled “System and method of enhancing efficiency and utilization of memory bandwidth in reconfigurable hardware”; 7,225,324 and 7,620,800, both entitled “Multi-adaptive processing systems and techniques for enhancing parallelism and performance of computational functions”;
and 9,153,311, entitled “System and method for retaining DRAM data when reprogramming reconfigurable devices with DRAM memory controllers.” The complaint seeks an unspecified amount of damages, enhanced damages, interest, and a compulsory on-going royalty. In February 2018, the Virginia district court transferred the case to the United States District Court for the Western District of Washington. In November 2018, the case was stayed pending resolution of eight review petitions filed with the United States Patent and Trademark Office relating to the ‘324, ‘867, and ‘311 patents. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter.
In May 2018, Rensselaer Polytechnic Institute and CF Dynamic Advances LLC filed a complaint against Amazon.com, Inc. in the United States District Court for the Northern District of New York. The complaint alleges, among other things, that “Alexa Voice Software and Alexa enabled devices” infringe U.S. Patent No. 7,177,798, entitled “Natural Language Interface Using Constrained Intermediate Dictionary of Results.” The complaint seeks an injunction, an unspecified amount of damages, enhanced damages, an ongoing royalty, pre- and post-judgment interest, attorneys’ fees, and costs. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter.
In June 2018, VoIP-Pal.com, Inc. filed a complaint against Amazon Technologies, Inc. and Amazon.com, Inc. in the United States District Court for the District of Nevada. The complaint alleges, among other things, that the Alexa calling and messaging system, the Alexa app, and Echo, Tap, and Fire devices with Alexa support infringe U.S. Patent Nos. 9,537,762; 9,813,330; 9,826,002; and 9,948,549, all entitled “Producing Routing Messages For Voice Over IP Communications.” The complaint seeks an unspecified amount of damages, enhanced damages, attorneys’ fees, costs, and interest. In November 2018, the case was transferred to the United States District Court for the Northern District of California. In November 2019, the District Court entered judgment invalidating all asserted claims of U.S. Patent Nos. 9,537,762; 9,813,330; 9,826,002; and 9,948,549. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter.
In December 2018, Kove IO, Inc. filed a complaint against Amazon Web Services, Inc. in the United States District Court for the Northern District of Illinois. The complaint alleges, among other things, that Amazon S3 and DynamoDB infringe U.S. Patent Nos. 7,814,170 and 7,103,640, both entitled “Network Distributed Tracking Wire Transfer Protocol,” and 7,233,978, entitled “Method And Apparatus For Managing Location Information In A Network Separate From The Data To Which The Location Information Pertains.” The complaint seeks an unspecified amount of damages, enhanced damages, attorneys’ fees, costs, interest, and injunctive relief. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter.
In January 2019, Saint Lawrence Communications, LLC filed a complaint against Amazon.com, Inc. and Amazon.com LLC in the United States District Court for the Eastern District of Texas. The complaint alleges, among other things, that voice encoding functionality in Amazon devices infringes U.S. Patent Nos. 6,795,805, entitled “Periodicity Enhancement In Decoding Wideband Signals”; 6,807,524, entitled “Perceptual Weighting Device And Method For Efficient Coding Of Wideband Signals”; 7,151,802, entitled “High Frequency Content Recovering Method And Device For Over-Sampled Synthesized Wideband Signal”; 7,191,123, entitled “Gain-Smoothing In Wideband Speech And Audio Signal Decoder”; and 7,260,521, entitled “Method And Device For Adaptive Bandwidth Pitch Search In Coding Wideband Signals.” The complaint seeks an unspecified amount of damages, enhanced damages, attorneys’ fees, costs, and interest. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter.
In April 2019, Vocalife LLC filed a complaint against Amazon.com, Inc. and Amazon.com LLC in the United States District Court for the Eastern District of Texas. The complaint alleges, among other things, that Amazon Echo devices infringe U.S. Patent No. RE47,049, entitled “Microphone Array System.” The complaint seeks injunctive relief, an unspecified amount of damages, attorneys’ fees, costs, and interest. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter.
In May 2019, Neodron Ltd. filed a petition with the United States International Trade Commission requesting that the International Trade Commission commence an investigation into the sale of Amazon Fire HD 10 tablets and certain Dell, Hewlett Packard, Lenovo, Microsoft, Motorola, and Samsung devices (the “accused devices”). Neodron’s petition alleges that the accused devices infringe at least one of U.S. Patent Nos. 8,422,173, entitled “Capacitive Position Sensor”; 8,791,910, entitled “Capacitive Keyboard With Position-Dependent Reduced Keying Ambiguity”; 9,024,790, entitled “Capacitive Keyboard With Non-Locking Reduced Keying Ambiguity”; and 9,372,580, entitled “Enhanced Touch Detection Methods.” Neodron is seeking a limited exclusion order preventing the importation of the accused devices into the United States. In December 2019, Neodron withdrew its infringement allegations against Amazon with regard to U.S. Patent No. 9,372,580. In May 2019, Neodron also filed a complaint against Amazon.com, Inc. in the United States District Court for the Western District of Texas. The complaint alleges, among other things, that Amazon’s Fire HD 10 tablet infringes U.S. Patent Nos. 8,422,173, entitled “Capacitive Position Sensor,” and 9,372,580, entitled “Enhanced Touch Detection Methods.” The May 2019 complaint seeks an unspecified amount of damages and interest, a permanent injunction, and enhanced damages. In June 2019, Neodron filed a second complaint against Amazon.com, Inc. in the United States District Court for the Western District of Texas. The complaint alleges, among other things, that Amazon’s Fire HD 10 tablet infringes U.S. Patent Nos. 9,823,784, entitled “Capacitive Touch Screen With Noise Suppression”; 9,489,072, entitled “Noise Reduction In Capacitive Touch Sensors”; and
8,502,547, entitled “Capacitive Sensor.” The June 2019 complaint seeks an unspecified amount of damages and interest, a permanent injunction, and enhanced damages. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in these 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. In addition, for the matters disclosed above 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.
See also “Note 9 — Income Taxes.”
v3.19.3.a.u2
Stockholders' Equity
12 Months Ended
Dec. 31, 2019
Share-based Payment Arrangement [Abstract]  
Stockholders' Equity STOCKHOLDERS’ EQUITY
Preferred Stock
We have authorized 500 million shares of $0.01 par value preferred stock. No preferred stock was outstanding for any year presented.
Common Stock
Common shares outstanding plus shares underlying outstanding stock awards totaled 504 million, 507 million, and 512 million, as of December 31, 2017, 2018, and 2019. These totals include all vested and unvested stock awards outstanding, including those awards we estimate will be forfeited.
Stock Repurchase Activity
In February 2016, the Board of Directors authorized a program to repurchase up to $5.0 billion of our common stock, with no fixed expiration. There were no repurchases of common stock in 2017, 2018, or 2019.
Stock Award Plans
Employees vest in restricted stock unit awards and stock options over the corresponding service term, generally between two and five years.
Stock Award Activity
Stock-based compensation expense is as follows (in millions):
 
Year Ended December 31,
 
2017
 
2018
 
2019
Cost of sales
$
47

 
$
73

 
$
149

Fulfillment
911

 
1,121

 
1,182

Technology and content
2,305

 
2,888

 
3,725

Marketing
511

 
769

 
1,135

General and administrative
441

 
567

 
673

Total stock-based compensation expense (1)
$
4,215

 
$
5,418

 
$
6,864


___________________
(1)
The related tax benefits were $860 million, $1.1 billion, and $1.4 billion for 2017, 2018, and 2019.
The following table summarizes our restricted stock unit activity (in millions):
 
Number of Units
 
Weighted Average
Grant-Date
Fair Value
Outstanding as of January 1, 2017
19.8

 
$
506

Units granted
8.9

 
946

Units vested
(6.8
)
 
400

Units forfeited
(1.8
)
 
649

Outstanding as of December 31, 2017
20.1

 
725

Units granted
5.0

 
1,522

Units vested
(7.1
)
 
578

Units forfeited
(2.1
)
 
862

Outstanding as of December 31, 2018
15.9

 
1,024

Units granted
6.7

 
1,808

Units vested
(6.6
)
 
827

Units forfeited
(1.7
)
 
1,223

Outstanding as of December 31, 2019
14.3

 
1,458


Scheduled vesting for outstanding restricted stock units as of December 31, 2019, is as follows (in millions):
 
Year Ended  
 
 
 
 
 
2020
 
2021
 
2022
 
2023
 
2024
 
Thereafter
 
Total
Scheduled vesting — restricted stock units
6.0

 
5.1

 
2.1

 
1.0

 

 
0.1

 
14.3


As of December 31, 2019, there was $8.8 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 weighted-average recognition period of 1.1 years. The estimated forfeiture rate as of December 31, 2017, 2018, and 2019 was 28%, 27%, and 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.
During 2017, 2018, and 2019, the fair value of restricted stock units that vested was $6.8 billion, $11.4 billion, and $11.7 billion.
Common Stock Available for Future Issuance
As of December 31, 2019, common stock available for future issuance to employees is 108 million shares.
v3.19.3.a.u2
Income Taxes
12 Months Ended
Dec. 31, 2019
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
In 2017, 2018, and 2019, we recorded net tax provisions of $769 million, $1.2 billion, and $2.4 billion. Tax benefits relating to excess stock-based compensation deductions and accelerated depreciation deductions are reducing our U.S. taxable income. Cash taxes paid, net of refunds, were $957 million, $1.2 billion, and $881 million for 2017, 2018, and 2019.
The U.S. Tax Act was signed into law on December 22, 2017. The U.S. Tax Act significantly revised the U.S. corporate income tax by, among other things, lowering the statutory corporate tax rate from 35% to 21%, eliminating certain deductions, imposing a mandatory one-time tax on accumulated earnings of foreign subsidiaries, introducing new tax regimes, and changing how foreign earnings are subject to U.S. tax. The U.S. Tax Act also enhanced and extended accelerated depreciation deductions by allowing full expensing of qualified property, primarily equipment, through 2022. We reasonably estimated the effects of the U.S. Tax Act and recorded provisional amounts in our financial statements as of December 31, 2017. We recorded a provisional tax benefit for the impact of the U.S. Tax Act of approximately $789 million. This amount was primarily comprised of the remeasurement of federal net deferred tax liabilities resulting from the permanent reduction in the U.S. statutory corporate tax rate to 21% from 35%, after taking into account the mandatory one-time tax on the accumulated earnings of our foreign subsidiaries. The amount of this one-time tax was not material. In 2018, we completed our determination of the accounting implications of the U.S. Tax Act.

The components of the provision for income taxes, net are as follows (in millions):
 
Year Ended December 31,
 
2017
 
2018
 
2019
U.S. Federal:
 
 
 
 
 
Current
$
(137
)
 
$
(129
)
 
$
162

Deferred
(202
)
 
565

 
914

Total
(339
)
 
436

 
1,076

U.S. State:
 
 
 
 
 
Current
211

 
322

 
276

Deferred
(26
)
 
5

 
8

Total
185

 
327

 
284

International:
 
 
 
 
 
Current
724

 
563

 
1,140

Deferred
199

 
(129
)
 
(126
)
Total
923

 
434

 
1,014

Provision for income taxes, net
$
769

 
$
1,197

 
$
2,374


U.S. and international components of income before income taxes are as follows (in millions):
 
Year Ended December 31,
 
2017
 
2018
 
2019
U.S.
$
5,630

 
$
11,157

 
$
13,285

International
(1,824
)
 
104

 
691

Income before income taxes
$
3,806

 
$
11,261

 
$
13,976


The items accounting for differences between income taxes computed at the federal statutory rate and the provision recorded for income taxes are as follows (in millions):
 
Year Ended December 31,
 
2017
 
2018
 
2019
Income taxes computed at the federal statutory rate (1)
$
1,332

 
$
2,365

 
$
2,935

Effect of:
 
 
 
 
 
Tax impact of foreign earnings
1,178

 
119

 
381

State taxes, net of federal benefits
114

 
263

 
221

Tax credits
(220
)
 
(419
)
 
(466
)
Stock-based compensation (2)
(917
)
 
(1,086
)
 
(850
)
2017 Impact of U.S. Tax Act
(789
)
 
(157
)
 

Other, net
71

 
112

 
153

Total
$
769

 
$
1,197

 
$
2,374


___________________
(1)
The U.S. Tax Act reduced the U.S. federal statutory rate from 35% to 21% beginning in 2018.
(2)
Includes non-deductible stock-based compensation and excess tax benefits from stock-based compensation. Our tax provision includes $1.3 billion, $1.6 billion, and $1.4 billion of excess tax benefits from stock-based compensation for 2017, 2018, and 2019.
Our provision for income taxes in 2018 was higher than in 2017 primarily due to an increase in U.S. pre-tax income and the one-time provisional tax benefit of the U.S. Tax Act recognized in 2017. This was partially offset by the reduction to the U.S. federal statutory tax rate in 2018, a decline in the proportion of foreign losses for which we may not realize a tax benefit and an increase in excess tax benefits from stock-based compensation.
We regularly assess whether it is more likely than not that we will realize our deferred tax assets in each taxing jurisdiction in which we operate. In performing this assessment with respect to each jurisdiction, we review all available evidence, including recent cumulative loss experience and expectations of future earnings, capital gains, and investment in such jurisdiction, the carry-forward periods available to us for tax reporting purposes, and other relevant factors. In Q2 2017, we
recognized an estimated charge to tax expense of $600 million to record a valuation allowance against the net deferred tax assets in Luxembourg.
Our provision for income taxes in 2019 was higher than in 2018 primarily due to an increase in U.S. pre-tax income, a decline in excess tax benefits from stock-based compensation, and the one-time provisional tax benefit of the U.S. Tax Act recognized in 2018.
Certain foreign subsidiary earnings are subject to U.S. taxation under the U.S. Tax Act, which also repeals U.S. taxation on the subsequent repatriation of those earnings. 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.
Deferred income tax assets and liabilities are as follows (in millions):
 
December 31,
 
2018
 
2019
Deferred tax assets (1):
 
 
 
Loss carryforwards U.S. - Federal/States
222

 
188

Loss carryforwards - Foreign
2,551

 
3,232

Accrued liabilities, reserves, and other expenses
1,064

 
1,373

Stock-based compensation
1,293

 
1,585

Depreciation and amortization
2,386

 
2,385

Operating lease liabilities

 
6,648

Other items
484

 
728

Tax credits
734

 
772

Total gross deferred tax assets
8,734

 
16,911

Less valuation allowances (2)
(4,950
)
 
(5,754
)
Deferred tax assets, net of valuation allowances
3,784

 
11,157

Deferred tax liabilities:
 
 
 
Depreciation and amortization
(3,579
)
 
(5,507
)
Operating lease assets

 
(6,331
)
Other items
(749
)
 
(640
)
Net deferred tax assets (liabilities), net of valuation allowances
$
(544
)
 
$
(1,321
)
 ___________________
(1)
Deferred tax assets are presented after tax effects and net of tax contingencies.
(2)
Relates primarily to deferred tax assets that would only be realizable upon the generation of net income in certain foreign taxing jurisdictions.
Our valuation allowances primarily relate to foreign deferred tax assets, including substantially all of our foreign net operating loss carryforwards as of December 31, 2019. Our foreign net operating loss carryforwards for income tax purposes as of December 31, 2019 were approximately $8.6 billion before tax effects and certain of these amounts are subject to annual limitations under applicable tax law. If not utilized, a portion of these losses will begin to expire in 2020. As of December 31, 2019, our federal tax credit carryforwards for income tax purposes were approximately $1.7 billion. If not utilized, a portion of the tax credit carryforwards will begin to expire in 2027.
Tax Contingencies
We are subject to income taxes in the U.S. (federal and state) and numerous foreign jurisdictions. Significant judgment is required in evaluating our tax positions and determining our provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. We establish reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves are established when we believe that certain positions might be challenged despite our belief that our tax return positions are fully supportable. We adjust these reserves in light of changing facts and circumstances, such as the outcome of tax audits. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate.
The reconciliation of our tax contingencies is as follows (in millions):
 
December 31,
 
2017
 
2018
 
2019
Gross tax contingencies – January 1
$
1,710

 
$
2,309

 
$
3,414

Gross increases to tax positions in prior periods
223

 
164

 
216

Gross decreases to tax positions in prior periods
(139
)
 
(90
)
 
(181
)
Gross increases to current period tax positions
518

 
1,088

 
707

Settlements with tax authorities

 
(36
)
 
(207
)
Lapse of statute of limitations
(3
)
 
(21
)
 
(26
)
Gross tax contingencies – December 31 (1)
$
2,309

 
$
3,414

 
$
3,923

 ___________________
(1)
As of December 31, 2019, we had approximately $3.9 billion of accrued tax contingencies of which $2.1 billion, if fully recognized, would decrease our effective tax rate.
As of December 31, 2018 and 2019, we had accrued interest and penalties, net of federal income tax benefit, related to tax contingencies of $127 million and $131 million. Interest and penalties, net of federal income tax benefit, recognized for the years ended December 31, 2017, 2018, and 2019 was $40 million, $20 million, and $4 million.
We are under examination, or may be subject to examination, by the Internal Revenue Service (“IRS”) for the calendar year 2007 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.
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, that 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. We believe the European Commission’s decision to be without merit and will continue to defend ourselves vigorously in this matter. We are also subject to taxation in various states and other foreign jurisdictions including China, 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.
Changes in state, federal, and foreign tax laws may increase our tax contingencies. The timing of the resolution of income tax examinations 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 examinations in one or more jurisdictions. These assessments or settlements could result in changes to our contingencies related to positions on tax filings in years through 2019. The actual amount of any change could vary significantly depending on the ultimate timing and nature of any settlements. We cannot currently provide an estimate of the range of possible outcomes.
v3.19.3.a.u2
Segment Information
12 Months Ended
Dec. 31, 2019
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,” “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 service offerings 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):
  
Year Ended December 31,
 
2017
 
2018
 
2019
North America
 
 
 
 
 
Net sales
$
106,110

 
$
141,366

 
$
170,773

Operating expenses
103,273

 
134,099

 
163,740

Operating income
$
2,837

 
$
7,267

 
$
7,033

International
 
 
 
 
 
Net sales
$
54,297

 
$
65,866

 
$
74,723

Operating expenses
57,359

 
68,008

 
76,416

Operating income (loss)
$
(3,062
)
 
$
(2,142
)
 
$
(1,693
)
AWS
 
 
 
 
 
Net sales
$
17,459

 
$
25,655

 
$
35,026

Operating expenses
13,128

 
18,359

 
25,825

Operating income
$
4,331

 
$
7,296

 
$
9,201

Consolidated
 
 
 
 
 
Net sales
$
177,866

 
$
232,887

 
$
280,522

Operating expenses
173,760

 
220,466

 
265,981

Operating income
4,106

 
12,421

 
14,541

Total non-operating income (expense)
(300
)
 
(1,160
)
 
(565
)
Provision for income taxes
(769
)
 
(1,197
)
 
(2,374
)
Equity-method investment activity, net of tax
(4
)
 
9

 
(14
)
Net income
$
3,033

 
$
10,073

 
$
11,588


Net sales by groups of similar products and services, which also have similar economic characteristics, is as follows (in millions):
  
Year Ended December 31,
 
2017
 
2018
 
2019
Net Sales:
 
 
 
 
 
Online stores (1)
$
108,354

 
$
122,987

 
$
141,247

Physical stores (2)
5,798

 
17,224

 
17,192

Third-party seller services (3)
31,881

 
42,745

 
53,762

Subscription services (4)
9,721

 
14,168

 
19,210

AWS
17,459

 
25,655

 
35,026

Other (5)
4,653

 
10,108

 
14,085

Consolidated
$
177,866

 
$
232,887

 
$
280,522

___________________
(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, music, videos, games, 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 from 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 audiobook, digital video, digital music, e-book, and other non-AWS subscription services.
(5)
Primarily includes sales of advertising services, as well as sales related to our other service offerings.
Net sales generated from our internationally-focused online stores are denominated in local functional currencies. Revenues are translated at average rates prevailing throughout the period. Net sales attributed to countries that represent a significant portion of consolidated net sales are as follows (in millions):
 
Year Ended December 31,
 
2017
 
2018
 
2019
United States
$
120,486

 
$
160,146

 
$
193,636

Germany
16,951

 
19,881

 
22,232

United Kingdom
11,372

 
14,524

 
17,527

Japan
11,907

 
13,829

 
16,002

Rest of world
17,150

 
24,507

 
31,125

Consolidated
$
177,866

 
$
232,887

 
$
280,522


Total segment assets exclude corporate assets, such as cash and cash equivalents, marketable securities, other long-term investments, corporate facilities, goodwill and other acquired intangible assets, and tax assets. Technology infrastructure assets are allocated among the segments based on usage, with the majority allocated to the AWS segment. Total segment assets reconciled to consolidated amounts are as follows (in millions):
 
December 31,
 
2017
 
2018
 
2019
North America (1)
$
35,844

 
$
47,251

 
$
72,277

International (1)
18,014

 
19,923

 
30,709

AWS (2)
18,660

 
26,340

 
36,500

Corporate
58,792

 
69,134

 
85,762

Consolidated
$
131,310

 
$
162,648

 
$
225,248

___________________
(1)
North America and International segment assets primarily consist of property and equipment, inventory, and accounts receivable.
(2)
AWS segment assets primarily consist of property and equipment and accounts receivable.
Property and equipment, net by segment is as follows (in millions):
 
December 31,
 
2017
 
2018
 
2019
North America
$
20,401

 
$
27,052

 
$
31,719

International
7,425

 
8,552

 
9,566

AWS
14,885

 
18,851

 
23,481

Corporate
6,155

 
7,342

 
7,939

Consolidated
$
48,866

 
$
61,797

 
$
72,705


Total net additions to property and equipment by segment are as follows (in millions):
 
Year Ended December 31,
 
2017
 
2018
 
2019
North America (1)
$
13,200

 
$
10,749

 
$
11,752

International (1)
5,196

 
2,476

 
3,298

AWS (2)
9,190

 
9,783

 
13,058

Corporate
2,197

 
2,060

 
1,910

Consolidated
$
29,783

 
$
25,068

 
$
30,018

___________________
(1)
Includes property and equipment added under finance leases of $2.9 billion, $2.0 billion, and $3.8 billion in 2017, 2018, and 2019, and under financing obligations of $2.9 billion, $3.0 billion, and $1.3 billion in 2017, 2018, and 2019.
(2)
Includes property and equipment added under finance leases of $7.3 billion, $8.4 billion, and $10.6 billion in 2017, 2018, and 2019, and under financing obligations of $134 million, $245 million, and $0 million in 2017, 2018, and 2019.
U.S. property and equipment, net was $35.5 billion, $45.1 billion, and $53.0 billion, in 2017, 2018, and 2019, and non-U.S. property and equipment, net was $13.4 billion, $16.7 billion, and $19.7 billion in 2017, 2018, and 2019. Except for the U.S., property and equipment, net, in any single country was less than 10% of consolidated property and equipment, net.
Depreciation and amortization expense, including other corporate property and equipment depreciation and amortization expense, are allocated to all segments based on usage. Total depreciation and amortization expense, by segment, is as follows (in millions):
 
Year Ended December 31,
 
2017
 
2018
 
2019
North America
$
3,029

 
$
4,415

 
$
5,106

International
1,278

 
1,628

 
1,886

AWS
4,524

 
6,095

 
8,158

Consolidated
$
8,831

 
$
12,138

 
$
15,150


v3.19.3.a.u2
Quarterly Results (Unaudited)
12 Months Ended
Dec. 31, 2019
Quarterly Financial Information Disclosure [Abstract]  
Quarterly Results (Unaudited) QUARTERLY RESULTS (UNAUDITED)
The following tables contain selected unaudited statement of operations information for each quarter of 2018 and 2019. The following information reflects all normal recurring adjustments necessary for a fair presentation of the information for the periods presented. The operating results for any quarter are not necessarily indicative of results for any future period. Our business is affected by seasonality, which historically has resulted in higher sales volume during our fourth quarter. Unaudited quarterly results are as follows (in millions, except per share data):
 
Year Ended December 31, 2018 (1)
 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
Net sales
$
51,042

 
$
52,886

 
$
56,576

 
$
72,383

Operating income
1,927

 
2,983

 
3,724

 
3,786

Income before income taxes
1,916

 
2,605

 
3,390

 
3,350

Provision for income taxes
(287
)
 
(74
)
 
(508
)
 
(327
)
Net income
1,629

 
2,534

 
2,883

 
3,027

Basic earnings per share
3.36

 
5.21

 
5.91

 
6.18

Diluted earnings per share
3.27

 
5.07

 
5.75

 
6.04

Shares used in computation of earnings per share:
 
 
 
 
 
 
 
Basic
484

 
486

 
488

 
490

Diluted
498

 
500

 
501

 
501

 
Year Ended December 31, 2019 (1)
 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
Net sales
$
59,700

 
$
63,404

 
$
69,981

 
$
87,437

Operating income
4,420

 
3,084

 
3,157

 
3,879

Income before income taxes
4,401

 
2,889

 
2,632

 
4,053

Provision for income taxes
(836
)
 
(257
)
 
(494
)
 
(786
)
Net income
3,561

 
2,625

 
2,134

 
3,268

Basic earnings per share
7.24

 
5.32

 
4.31

 
6.58

Diluted earnings per share
7.09

 
5.22

 
4.23

 
6.47

Shares used in computation of earnings per share:
 
 
 
 
 
 
 
Basic
491

 
493

 
495

 
496

Diluted
502

 
503

 
504

 
505

 ___________________
(1)
The sum of quarterly amounts, including per share amounts, may not equal amounts reported for year-to-date periods. This is due to the effects of rounding and changes in the number of weighted-average shares outstanding for each period.
v3.19.3.a.u2
Description of Business and Accounting Policies (Policies)
12 Months Ended
Dec. 31, 2019
Accounting Policies [Abstract]  
Segment Information We have organized our operations into three segments: North America, International, and AWS.
Prior Period Reclassifications
Prior Period Reclassifications
Certain prior period amounts have been reclassified to conform to the current period presentation, including the addition of restricted cash to cash and cash equivalents on our consolidated statements of cash flows and the reclassification of long-term capital lease obligations that existed at December 31, 2018 from “Other long-term liabilities” to “Long-term lease liabilities” within the consolidated balance sheets, as a result of the adoption of new accounting guidance.
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. The financial results of Whole Foods Market, Inc. (“Whole Foods Market”) have been included in our consolidated financial statements from the date of acquisition on August 28, 2017.
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, and inventory valuation. Actual results could differ materially from those 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.
Revenue
Revenue
Revenue is measured based on the amount of consideration that we expect to receive, reduced by estimates for return allowances, promotional discounts, and rebates. Revenue also excludes any amounts collected on behalf of third parties, including sales and indirect taxes. In arrangements where we have multiple performance obligations, the transaction price is allocated to each performance obligation using the relative stand-alone selling price. We generally determine stand-alone selling prices based on the prices charged to customers or using expected cost plus a margin.
A description of our principal revenue generating activities is as follows:
Retail sales - We offer consumer products through our online and physical stores. Revenue is recognized when control of the goods is transferred to the customer, which generally occurs upon our delivery to a third-party carrier or, in the case of an Amazon delivery, to the customer.
Third-party seller services - We offer programs that enable sellers to sell their products in our stores, and fulfill orders through us. We are not the seller of record in these transactions. The commissions and any related fulfillment and shipping fees we earn from these arrangements are recognized when the services are rendered, which generally occurs upon delivery of the related products to a third-party carrier or, in the case of an Amazon delivery, to the customer.
Subscription services - Our subscription sales include fees associated with Amazon Prime memberships and access to content including audiobooks, digital video, digital music, e-books, and other non-AWS subscription services. Prime memberships provide our customers with access to an evolving suite of benefits that represent a single stand-ready obligation. Subscriptions are paid for at the time of or in advance of delivering the services. Revenue from such arrangements is recognized over the subscription period.
AWS - Our AWS arrangements include global sales of compute, storage, database, and other services. Revenue is allocated to services using stand-alone selling prices and is primarily recognized when the customer uses these services, based on the quantity of services rendered, such as compute or storage capacity delivered on-demand. Certain services, including compute and database, are also offered as a fixed quantity over a specified term, for which revenue is recognized ratably. Sales commissions we pay in connection with contracts that exceed one year are capitalized and amortized over the contract term.
Other - Other revenue primarily includes sales of advertising services, which are recognized as ads are delivered based on the number of clicks or impressions.
Return Allowances
Return allowances, which reduce revenue and cost of sales, are estimated using historical experience. Liabilities for return allowances are included in “Accrued expenses and other” and were $468 million, $623 million, and $712 million as of December 31, 2017, 2018, and 2019. Additions to the allowance were $1.8 billion, $2.3 billion, and $2.5 billion and deductions from the allowance were $1.9 billion, $2.3 billion, and $2.5 billion in 2017, 2018, and 2019. Included in “Inventories” on our consolidated balance sheets are assets totaling $406 million, $519 million, and $629 million as of December 31, 2017, 2018, and 2019, for the rights to recover products from customers associated with our liabilities for return allowances.
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. 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. Payment processing and related transaction costs, including those associated with seller transactions, are classified in “Fulfillment” on our consolidated statements of operations.
Vendor Agreements
We have agreements with our vendors to receive funds primarily for cooperative marketing efforts, promotions, incentives, and volume rebates. We generally consider these amounts received from vendors to be a reduction of the prices we pay for their goods, including property and equipment, or services, and are recorded as a reduction of the cost of inventory, cost of services, or cost of property and equipment. Volume rebates typically depend on reaching minimum purchase thresholds. We evaluate the likelihood of reaching purchase thresholds using past experience and current year forecasts. When volume rebates can be reasonably estimated, we record a portion of the rebate as we make progress towards the purchase threshold.
Fulfillment
Fulfillment
Fulfillment costs primarily consist of those costs incurred in operating and staffing our North America and International segments’ fulfillment centers, physical stores, and customer service centers, including costs attributable to buying, receiving, inspecting, and warehousing inventories; picking, packaging, and preparing customer orders for shipment; payment processing and related transaction costs, including costs associated with our guarantee for certain seller transactions; responding to inquiries from customers; and supply chain management for our manufactured electronic devices. Fulfillment costs also include amounts paid to third parties that assist us in fulfillment and customer service operations.
Technology and Content
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. Technology and content costs are generally expensed as incurred.
Marketing
Marketing
Marketing costs primarily consist of advertising and payroll and related expenses for personnel engaged in marketing and selling activities, including sales commissions related to AWS. We pay commissions to third parties when their customer referrals result in sales. We also participate in cooperative advertising arrangements with certain of our vendors, and other third parties.
Advertising and other promotional costs to market our products and services are expensed as incurred
General and Administrative
General and Administrative
General and administrative expenses primarily consist of costs for corporate functions, including payroll and related expenses; facilities and equipment expenses, such as depreciation and amortization expense and rent; and professional fees and litigation costs.
Stock-Based Compensation
Stock-Based Compensation
Compensation cost for all stock awards expected to vest is measured at fair value on the date of grant and recognized over the service period. The fair value of restricted stock units is determined based on the number of shares granted and the quoted price of our common stock. Such value is recognized as expense over the service period, net of estimated forfeitures, using the accelerated method. The estimated number of stock awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from our current estimates, such amounts will be recorded as a cumulative adjustment in the period estimates are revised. We consider many factors when estimating expected forfeitures, including historical forfeiture experience and employee level.
Other Operating Expense, Net
Other Operating Expense (Income), Net
Other operating expense (income), net, consists primarily of marketing-related, contract-based, and customer-related intangible asset amortization expense, and expenses related to legal settlements.
Other Income (Expense), Net
Other Income (Expense), Net
Other income (expense), net, consists primarily of adjustments to and gains on equity securities of $18 million, $145 million, and $231 million in 2017, 2018, and 2019, equity warrant valuation gains (losses) of $109 million, $(131) million, and $11 million in 2017, 2018, and 2019
Income Taxes
Income Taxes
Income tax expense includes U.S. (federal and state) and foreign income taxes. Certain foreign subsidiary earnings are subject to U.S. taxation under the U.S. Tax Act, which also repeals U.S. taxation on the subsequent repatriation of those earnings. 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.
Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered.
Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the extent we believe they will not be realized. We consider many factors when assessing the likelihood of future realization of our deferred tax assets, including our recent cumulative loss experience and expectations of future earnings, capital gains and investment in such jurisdiction, the carry-forward periods available to us for tax reporting purposes, and other relevant factors.
We utilize a two-step approach to recognizing and measuring uncertain income tax positions (tax contingencies). The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not the position will be sustained on audit, including resolution of related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. We consider many factors when evaluating our tax positions and estimating our tax benefits, which may require periodic adjustments and which may not accurately forecast actual outcomes. We include interest and penalties related to our tax contingencies in income tax expense.
Fair Value of Financial Instruments
Fair Value of Financial Instruments
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.
For our cash, cash equivalents, or marketable securities, 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 cash, cash equivalents, restricted cash, or marketable securities categorized as Level 3 assets as of December 31, 2018 and 2019.
We hold equity warrants giving us the right to acquire stock of other companies. As of December 31, 2018 and 2019, these warrants had a fair value of $440 million and $669 million, and are recorded within “Other assets” on our consolidated balance sheets. These assets are primarily classified as Level 2 assets.
Cash and Cash Equivalents
Cash and Cash Equivalents
We classify all highly liquid instruments with an original maturity of three months or less as cash equivalents.
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.
We provide Fulfillment by Amazon services in connection with certain of our sellers’ programs. Third-party sellers maintain ownership of their inventory, regardless of whether fulfillment is provided by us or the third-party sellers, and therefore these products are not included in our inventories.
We also purchase electronic device components from a variety of suppliers and use several contract manufacturers to provide manufacturing services for our products. During the normal course of business, in order to manage manufacturing lead times and help ensure adequate supply, we enter into agreements with contract manufacturers and suppliers for certain electronic device components. A portion of our reported purchase commitments arising from these agreements consists of firm, non-cancellable commitments. These commitments are based on forecasted customer demand. If we reduce these commitments, we may incur additional costs. We also have firm, non-cancellable commitments for certain products offered in our Whole Foods Market stores.
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, 2018 and 2019, customer receivables, net, were $9.4 billion and $12.6 billion, vendor receivables, net, were $3.2 billion and $4.2 billion, and seller receivables, net, were $710 million and $863 million. 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 known troubled accounts and historical experience of losses incurred. Receivables are considered impaired and written-off when it is probable that all contractual payments due will not be collected in accordance with the terms of the agreement.
Software Development Costs
Software Development Costs
We incur software development costs related to products to be sold, leased, or marketed to external users, internal-use software, and our websites. Software development costs capitalized were not significant for the years presented. All other costs, including those related to design or maintenance, are expensed as incurred.
Property and Equipment, Net
Property and Equipment, Net
Property and equipment are stated at cost less accumulated depreciation and amortization. Incentives that we receive from property and equipment vendors are recorded as a reduction in our costs. Property includes buildings and land that we own, along with property we have acquired under build-to-suit lease arrangements when we have control over the building during the construction period and finance lease arrangements. Equipment includes assets such as servers and networking equipment, heavy equipment, and other fulfillment equipment. Depreciation and amortization is recorded on a straight-line basis over the estimated useful lives of the assets (generally the lesser of 40 years or the remaining life of the underlying building, three years for our servers, five years for networking equipment, ten years for heavy equipment, and three to seven years for other fulfillment equipment). Depreciation and amortization expense is classified within the corresponding operating expense categories on our consolidated statements of operations.
Leases
Leases
We categorize leases with contractual terms longer than twelve months as either operating or finance. Finance leases are generally those leases that allow us to substantially utilize or pay for the entire asset over its estimated life. Assets acquired under finance leases are recorded in property and equipment, net. All other leases are categorized as operating leases. Our leases generally have terms that range from one to ten years for equipment and one to twenty years for property.
Certain lease contracts include obligations to pay for other services, such as operations and maintenance. For leases of property, we account for these other services as a component of the lease. For substantially all other leases, the services are accounted for separately and we allocate payments to the lease and other services components based on estimated stand-alone prices.
Lease liabilities are recognized at the present value of the fixed lease payments, reduced by landlord incentives using a discount rate based on similarly secured borrowings available to us. Lease assets are recognized based on the initial present value of the fixed lease payments, reduced by landlord incentives, plus any direct costs from executing the leases or lease prepayments reclassified from “Other assets” upon lease commencement. Leasehold improvements are capitalized at cost and amortized over the lesser of their expected useful life or the lease term.
When we have the option to extend the lease term, terminate the lease before the contractual expiration date, or purchase the leased asset, and it is reasonably certain that we will exercise the option, we consider these options in determining the classification and measurement of the lease. Our leases may include variable payments based on measures that include changes in price indices, market interest rates, or the level of sales at a physical store, which are expensed as incurred.
Costs associated with operating lease assets are recognized on a straight-line basis within operating expenses over the term of the lease. Finance lease assets are amortized within operating expenses on a straight-line basis over the shorter of the estimated useful lives of the assets or, in the instance where title does not transfer at the end of the lease term, the lease term. The interest component of a finance lease is included in interest expense and recognized using the effective interest method over the lease term.
We establish assets and liabilities for the present value of estimated future costs to retire long-lived assets at the termination or expiration of a lease. Such assets are depreciated over the lease period into operating expense, and the recorded liabilities are accreted to the future value of the estimated retirement costs.
Financing Obligations
Financing Obligations
We record assets and liabilities for estimated construction costs under build-to-suit lease arrangements when we have control over the building during the construction period. If we continue to control the building after the construction period, the arrangement is classified as a financing obligation instead of a lease. The building is depreciated over the shorter of its useful life or the term of the obligation.
If we do not control the building after the construction period ends, the assets and liabilities for construction costs are derecognized, and we classify the lease as either operating or finance.
Goodwill
Goodwill
We evaluate goodwill for impairment annually or more frequently when an event occurs or circumstances change that indicate the carrying value may not be recoverable. In testing goodwill for impairment, we may elect to utilize a qualitative assessment to evaluate whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If our qualitative assessment indicates that goodwill impairment is more likely than not, we perform a two-step impairment test. We test goodwill for impairment under the two-step impairment test by first comparing the book value of net assets to the fair value of the reporting units. If the fair value is determined to be less than the book value or qualitative factors indicate that it is more likely than not that goodwill is impaired, a second step is performed to compute the amount of impairment as the difference between the estimated fair value of goodwill and the carrying value. We estimate the fair value of the reporting units using discounted cash flows. Forecasts of future cash flows are based on our best estimate of future net sales and operating expenses, based primarily on expected category expansion, pricing, market segment share, and general economic conditions.
We completed the required annual testing of goodwill for impairment for all reporting units as of April 1, 2019, and determined that goodwill is not impaired as the fair value of our reporting units substantially exceeded their book value. There were no events that caused us to update our annual impairment test.
Other Assets
Other Assets
Included in “Other assets” on our consolidated balance sheets are amounts primarily related to acquired intangible assets, net of accumulated amortization; video and music content, net of accumulated amortization; long-term deferred tax assets; certain equity investments; marketable securities restricted for longer than one year, the majority of which are attributable to collateralization of bank guarantees and debt related to our international operations; lease prepayments made prior to lease commencement; and equity warrant assets.
Video and Music Content
Digital Video and Music Content
We obtain video content, inclusive of episodic television and movies, and music content for customers through licensing agreements that have a wide range of licensing provisions including both fixed and variable payment schedules. When the license fee for a specific video or music title is determinable or reasonably estimable and the content is available to us, we recognize an asset and a corresponding liability for the amounts owed. We reduce the liability as payments are made and we
amortize the asset to “Cost of sales” on an accelerated basis, based on estimated usage or viewing patterns, or on a straight-line basis. If the licensing fee is not determinable or reasonably estimable, no asset or liability is recorded and licensing costs are expensed as incurred. We also develop original video content for which the production costs are capitalized and amortized to “Cost of sales” predominantly on an accelerated basis that follows the viewing patterns associated with the content. The weighted average remaining life of our capitalized video content is 2.7 years.
Our produced and licensed video content is primarily monetized together as a unit, referred to as a film group, in each major geography where we offer Amazon Prime memberships. These film groups are evaluated for impairment whenever an event occurs or circumstances change indicating the fair value is less than the carrying value. The total capitalized costs of video, which is primarily released content, and music as of December 31, 2018 and 2019 were $3.8 billion and $5.8 billion. Total video and music expense was $6.7 billion and $7.8 billion for the year ended December 31, 2018 and 2019. Total video and music expense includes licensing and production costs associated with content offered within Amazon Prime memberships, and costs associated with digital subscriptions and sold or rented content.
Investments
Investments
We generally invest our excess cash in AAA-rated money market funds and investment grade short- to intermediate-term fixed income securities. Such investments are included in “Cash and cash equivalents” or “Marketable securities” on the accompanying consolidated balance sheets. Marketable debt securities are classified as available-for-sale and reported at fair value with unrealized gains and losses included in “Accumulated other comprehensive income (loss).”
Equity investments are accounted for using the equity method of accounting if the investment gives us the ability to exercise significant influence, but not control, over an investee. Equity-method investments are included within “Other assets” on our consolidated balance sheets. Our share of the earnings or losses as reported by equity-method investees, amortization of basis differences, and related gains or losses, if any, are classified as “Equity-method investment activity, net of tax” on our consolidated statements of operations.
Equity investments without readily determinable fair values and for which we do not have the ability to exercise significant influence are accounted for at cost with adjustments for observable changes in prices or impairments and are classified as “Other assets” on our consolidated balance sheets with adjustments recognized in “Other income (expense), net” on our consolidated statements of operations. As of December 31, 2018 and 2019, these investments had a carrying value of $282 million and $1.5 billion.
Equity investments that have readily determinable fair values are included in “Marketable securities” on our consolidated balance sheets and measured at fair value with changes recognized in “Other income (expense), net” on our consolidated statement of operations.
We periodically evaluate whether declines in fair values of our investments indicate impairment. For debt securities and equity-method investments, we also evaluate whether declines in fair value of our investments below their book value are other-than-temporary. This evaluation consists of several qualitative and quantitative factors regarding the severity and duration of the unrealized loss as well as our ability and intent to hold the investment until a forecasted recovery occurs. Additionally, we assess whether we have plans to sell the security or it is more likely than not we will be required to sell any investment before recovery of its amortized cost basis. Factors considered include: quoted market prices; recent financial results and operating trends; implied values from any recent transactions or offers of investee securities; credit quality of debt instrument issuers; other publicly available information that may affect the value of our investments; duration and severity of the decline in value; and our strategy and intentions for holding the investment.
Long-Lived Assets
Long-Lived Assets
Long-lived assets, other than goodwill, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or any other significant adverse change that would indicate that the carrying amount of an asset or group of assets may not be recoverable.
For long-lived assets used in operations, including lease assets, impairment losses are only recorded if the asset’s carrying amount is not recoverable through its undiscounted, probability-weighted future cash flows. We measure the impairment loss based on the difference between the carrying amount and estimated fair value. Long-lived assets are considered held for sale when certain criteria are met, including when management has committed to a plan to sell the asset, the asset is available for sale in its immediate condition, and the sale is probable within one year of the reporting date. Assets held for sale are reported at the lower of cost or fair value less costs to sell.
Accrued Expenses and Other
Accrued Expenses and Other
Included in “Accrued expenses and other” on our consolidated balance sheets are liabilities primarily related to leases and asset retirement obligations, payroll and related expenses, unredeemed gift cards, customer liabilities, current debt, acquired digital media content, and other operating expenses.
As of December 31, 2018 and 2019, our liabilities for payroll related expenses were $3.4 billion and $4.3 billion and our liabilities for unredeemed gift cards were $2.8 billion and $3.3 billion. We reduce the liability for a gift card when redeemed by a customer. The portion of gift cards that we do not expect to be redeemed is recognized based on customer usage patterns.
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, 2018 was $7.9 billion, of which $6.3 billion was recognized as revenue during the year ended December 31, 2019 and our total unearned revenue as of December 31, 2019 was $10.2 billion. Included in “Other long-term liabilities” on our consolidated balance sheets was $1.4 billion and $2.0 billion of unearned revenue as of December 31, 2018 and 2019.
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 financial statements. For contracts with original terms that exceed one year, those commitments not yet recognized were $29.8 billion as of December 31, 2019. The weighted average remaining life of our long-term contracts is 3.3 years. However, the amount and timing of revenue recognition is largely driven by customer usage, which can extend beyond the original contractual term.
Other Long-Term Liabilities
Other Long-Term Liabilities
Included in “Other long-term liabilities” on our consolidated balance sheets are liabilities primarily related to deferred tax liabilities, financing obligations, asset retirement obligations, tax contingencies, and digital video and music content.
Foreign Currency
Foreign Currency
We have internationally-focused stores for which the net sales generated, as well as most of the related expenses directly incurred from those operations, are denominated in local functional currencies. The functional currency of our subsidiaries that either operate or support these stores is generally the same as the local currency. Assets and liabilities of these subsidiaries are translated into U.S. Dollars at period-end foreign exchange rates, and revenues and expenses are translated at average rates prevailing throughout the period. Translation adjustments are included in “Accumulated other comprehensive income (loss),” a separate component of stockholders’ equity, and in the “Foreign currency effect on cash, cash equivalents, and restricted cash,” on our consolidated statements of cash flows. Transaction gains and losses including intercompany transactions denominated in a currency other than the functional currency of the entity involved are included in “Other income (expense), net” on our consolidated statements of operations.
Accounting Pronouncements Recently Adopted and Accounting Pronouncements Not Yet Adopted
Accounting Pronouncements Recently Adopted
In May 2014, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) amending revenue recognition guidance and requiring more detailed disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. We adopted this ASU on January 1, 2018 for all revenue contracts with our customers using the modified retrospective approach and increased retained earnings by approximately $650 million. The adjustment primarily relates to the unredeemed portion of our gift cards, which are now recognized over the expected customer usage period rather than waiting until gift cards expire or when the likelihood of redemption becomes remote. We changed the recognition and classification of Amazon Prime memberships, which are now accounted for as a single performance obligation and recognized ratably over the membership period as service sales. Previously, Prime memberships were considered to be arrangements with multiple deliverables and were allocated among product sales and service sales. Other changes relate primarily to the presentation of revenue. Certain advertising services are now classified as revenue rather than a reduction in cost of sales, and sales of apps, in-app content, and certain digital media content are presented on a net basis. Prior year amounts have not been adjusted and continue to be reported in accordance with our historic accounting policy.
The impact of applying this ASU for the year ended December 31, 2018 primarily resulted in a decrease in product sales and an increase in service sales driven by the reclassification of Prime membership fees of approximately $3.8 billion. Service sales also increased by approximately $3.0 billion for the year ended December 31, 2018 due to the reclassification of certain advertising services.
In January 2016, the FASB issued an ASU that updates certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Under this ASU, certain equity investments are measured at fair value with changes recognized in net income. We adopted this ASU in Q1 2018 with no material impact to our consolidated financial statements.
In February 2016, the FASB issued an ASU amending the accounting for leases, primarily requiring the recognition of lease assets and liabilities for operating leases with terms of more than twelve months on our consolidated balance sheets. Under the new guidance, leases previously described as capital lease obligations and finance lease obligations are now referred to as finance leases and financing obligations, respectively. We adopted this ASU on January 1, 2019 by recording an immaterial cumulative adjustment to retained earnings rather than retrospectively adjusting prior periods. Prior period amounts were not adjusted and continue to be reported in accordance with our historic accounting policies resulting in a balance sheet presentation that is not comparable to the prior period in the first year of adoption. The adoption of this ASU resulted in the recognition of operating lease assets and liabilities of approximately $21 billion, which included the reclassification of finance lease obligations to operating leases of $1.2 billion. As of December 31, 2018, amounts related to finance lease obligations and construction liabilities totaled $9.6 billion, of which $1.5 billion was derecognized for buildings that we do not control during the construction period and $5.4 billion and $1.5 billion were reclassified to finance leases and operating leases, respectively.
In October 2016, the FASB issued an ASU amending the accounting for income taxes. The new guidance requires the recognition of the income tax consequences of an intercompany asset transfer, other than transfers of inventory, when the transfer occurs. For intercompany transfers of inventory, the income tax effects will continue to be deferred until the inventory has been sold to a third party. We adopted this ASU in Q1 2018 with an increase of approximately $250 million to retained earnings and deferred tax assets net of valuation allowances.
In November 2016, the FASB issued an ASU amending the presentation of restricted cash within the consolidated statements of cash flows. The new guidance requires that restricted cash be added to cash and cash equivalents on the consolidated statements of cash flows. We adopted this ASU in Q1 2018 on a retrospective basis with the following impacts to our consolidated statements of cash flows (in millions):
Year Ended December 31, 2017
Previously Reported
 
Adjustments
 
As Revised
Operating activities
$
18,434

 
$
(69
)
 
$
18,365

Investing activities
(27,819
)
 
735

 
(27,084
)
Financing activities
9,860

 
68

 
9,928

Net change in cash, cash equivalents, and restricted cash
$
475

 
$
734

 
$
1,209


In March 2019, the FASB issued an ASU amending the accounting for film costs, inclusive of episodic television and movie costs. The new guidance aligns the accounting for production costs of episodic television with that of movies by requiring production costs to be capitalized. Previously, we only capitalized a portion of the production costs related to our produced episodic television content. We adopted this ASU as of January 1, 2019 and began capitalizing substantially all of our production costs. Adoption of this ASU resulted in approximately $1.0 billion of incremental capitalized film costs classified in “Other Assets” as of December 31, 2019.
v3.19.3.a.u2
Description of Business and Accounting Policies (Tables)
12 Months Ended
Dec. 31, 2019
Accounting Policies [Abstract]  
Schedule of Calculation of Diluted Shares
The following table shows the calculation of diluted shares (in millions):
  
Year Ended December 31,
 
2017
 
2018
 
2019
Shares used in computation of basic earnings per share
480

 
487

 
494

Total dilutive effect of outstanding stock awards
13

 
13

 
10

Shares used in computation of diluted earnings per share
493

 
500

 
504


Schedule of New Accounting Pronouncements and Changes in Accounting Principles We adopted this ASU in Q1 2018 on a retrospective basis with the following impacts to our consolidated statements of cash flows (in millions):
Year Ended December 31, 2017
Previously Reported
 
Adjustments
 
As Revised
Operating activities
$
18,434

 
$
(69
)
 
$
18,365

Investing activities
(27,819
)
 
735

 
(27,084
)
Financing activities
9,860

 
68

 
9,928

Net change in cash, cash equivalents, and restricted cash
$
475

 
$
734

 
$
1,209


In March 2019, the FASB issued an ASU amending the accounting for film costs, inclusive of episodic television and movie costs. The new guidance aligns the accounting for production costs of episodic television with that of movies by requiring production costs to be capitalized. Previously, we only capitalized a portion of the production costs related to our produced episodic television content. We adopted this ASU as of January 1, 2019 and began capitalizing substantially all of our production costs. Adoption of this ASU resulted in approximately $1.0 billion of incremental capitalized film costs classified in “Other Assets” as of December 31, 2019.
v3.19.3.a.u2
Financial Instruments (Tables)
12 Months Ended
Dec. 31, 2019
Investments, Debt and Equity Securities [Abstract]  
Summary of 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, 2018
  
Cost or
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Total
Estimated
Fair Value
Cash
$
10,406

 
$

 
$

 
$
10,406

Level 1 securities:
 
 
 
 
 
 
 
Money market funds
12,515

 

 

 
12,515

Equity securities
 
 
 
 
 
 
170

Level 2 securities:
 
 
 
 
 
 
 
Foreign government and agency securities
815

 

 

 
815

U.S. government and agency securities
11,686

 
1

 
(20
)
 
11,667

Corporate debt securities
5,008

 
1

 
(19
)
 
4,990

Asset-backed securities
896

 

 
(4
)
 
892

Other fixed income securities
190

 

 
(2
)
 
188

Equity securities
 
 
 
 
 
 
33

 
$
41,516


$
2


$
(45
)

$
41,676

Less: Restricted cash, cash equivalents, and marketable securities (2)
 
 
 
 
 
 
(426
)
Total cash, cash equivalents, and marketable securities
 
 
 
 
 
 
$
41,250

 
December 31, 2019
  
Cost or
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Total
Estimated
Fair Value
Cash
$
9,776

 
$

 
$

 
$
9,776

Level 1 securities:
 
 
 
 
 
 
 
Money market funds
18,850

 

 

 
18,850

Equity securities (1)
 
 
 
 
 
 
202

Level 2 securities:
 
 
 
 
 
 
 
Foreign government and agency securities
4,794

 

 

 
4,794

U.S. government and agency securities
7,070

 
11

 
(1
)
 
7,080

Corporate debt securities
11,845

 
37

 
(1
)
 
11,881

Asset-backed securities
2,355

 
6

 
(1
)
 
2,360

Other fixed income securities
393

 
1

 

 
394

Equity securities (1)
 
 
 
 
 
 
5

 
$
55,083

 
$
55

 
$
(3
)
 
$
55,342

Less: Restricted cash, cash equivalents, and marketable securities (2)
 
 
 
 
 
 
(321
)
Total cash, cash equivalents, and marketable securities
 
 
 
 
 
 
$
55,021

___________________
(1)
The related unrealized gain (loss) recorded in “Other income (expense), net” was $4 million for the year ended December 31, 2019.
(2)
We are required to pledge or otherwise restrict a portion of our cash, cash equivalents, and marketable securities as collateral for real estate leases, amounts due to third-party sellers in certain jurisdictions, debt, and standby and trade letters of credit. We classify cash, cash equivalents, and marketable 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 7 — Commitments and Contingencies.”
Summary of Gross Realized Gains (Losses) on Investments
The following table summarizes gross gains and gross losses realized on sales of available-for-sale fixed income marketable securities (in millions):
 
Year Ended December 31,
 
2017
 
2018
 
2019
Realized gains
$
5

 
$
2

 
$
11

Realized losses
11

 
9

 
7


Summary of Contractual Maturities of Investments
The following table summarizes the remaining contractual maturities of our cash equivalents and marketable fixed income securities as of December 31, 2019 (in millions):
 
Amortized
Cost
 
Estimated
Fair Value
Due within one year
$
35,064

 
$
35,071

Due after one year through five years
9,262

 
9,304

Due after five years through ten years
301

 
302

Due after ten years
680

 
682

Total
$
45,307

 
$
45,359


Actual maturities may differ from the contractual maturities because borrowers may have certain prepayment conditions.
v3.19.3.a.u2
Financial Instruments Reconciliation to Cash Flow (Tables)
12 Months Ended
Dec. 31, 2019
Cash and Cash Equivalents [Abstract]  
Reconciliation of cash, cash equivalents, and 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, 2018
 
December 31, 2019
Cash and cash equivalents
$
31,750

 
$
36,092

Restricted cash included in accounts receivable, net and other
418

 
276

Restricted cash included in other assets
5

 
42

Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows
$
32,173

 
$
36,410


v3.19.3.a.u2
Property and Equipment (Tables)
12 Months Ended
Dec. 31, 2019
Property, Plant and Equipment [Abstract]  
Property and Equipment, at Cost
Property and equipment, at cost, consisted of the following (in millions):
 
 
December 31,
 
2018
 
2019
Gross property and equipment (1):
 
 
 
Land and buildings
$
31,741

 
$
39,223

Equipment
54,591

 
71,310

Other assets
2,577

 
3,111

Construction in progress
6,861

 
6,036

Gross property and equipment
95,770

 
119,680

Total accumulated depreciation and amortization (1)
33,973

 
46,975

Total property and equipment, net
$
61,797

 
$
72,705


__________________
(1)
Includes the original cost and accumulated depreciation of fully-depreciated assets.
v3.19.3.a.u2
Leases Leases (Tables)
12 Months Ended
Dec. 31, 2019
Leases [Abstract]  
Lease, Cost
Lease cost recognized in our consolidated statements of operations is summarized as follows (in millions):
 
Year Ended
December 31, 2019
 
 
Operating lease cost (1)
$
3,669

Finance lease cost:
 
Amortization of lease assets
10,094

Interest on lease liabilities
695

Finance lease cost
10,789

Variable lease cost
966

Total lease cost
$
15,424

__________________
(1)
Rental expense under operating lease agreements was $2.2 billion and $3.4 billion for 2017 and 2018.
Other Operating and Finance Lease Information
Other information about lease amounts recognized in our consolidated financial statements is summarized as follows:
 
December 31, 2019
 
 
Weighted-average remaining lease term – operating leases
11.5

Weighted-average remaining lease term – finance leases
5.5

Weighted-average discount rate – operating leases
3.1
%
Weighted-average discount rate – finance leases
2.7
%

Operating and Finance Lease Liability Reconciliation
As of December 31, 2019, our lease liabilities were as follows (in millions):
 
Operating Leases
 
Finance Leases
 
Total
 
 
 
 
 
 
Gross lease liabilities
$
31,963

 
$
28,875

 
$
60,838

Less: imputed interest
(6,128
)
 
(1,896
)
 
(8,024
)
Present value of lease liabilities
25,835

 
26,979

 
52,814

Less: current portion of lease liabilities
(3,139
)
 
(9,884
)
 
(13,023
)
Total long-term lease liabilities
$
22,696

 
$
17,095

 
$
39,791


v3.19.3.a.u2
Acquisitions, Goodwill, and Acquired Intangible Assets (Tables)
12 Months Ended
Dec. 31, 2019
Business Combinations [Abstract]  
Allocation of Aggregate Purchase Price of Acquisitions
The aggregate purchase price of these acquisitions was allocated as follows (in millions):
 
December 31,
 
2017
 
2018
 
2019
 
 
 
 
 
 
Purchase Price
 
 
 
 
 
Cash paid, net of cash acquired
$
13,859

 
$
1,618

 
$
276

Indemnification holdback
104

 
31

 
39

 
$
13,963

 
$
1,649

 
$
315

Allocation
 
 
 
 
 
Goodwill
$
9,501

 
$
1,228

 
$
189

Intangible assets (1):
 
 
 
 
 
Marketing-related
1,987

 
186

 
8

Contract-based
440

 
13

 

Technology-based
166

 
285

 
139

Customer-related
54

 
193

 
14

 
2,647

 
677

 
161

Property and equipment
3,810

 
11

 
3

Deferred tax assets
117

 
174

 
29

Other assets acquired
1,858

 
282

 
41

Long-term debt
(1,165
)
 
(176
)
 
(31
)
Deferred tax liabilities
(961
)
 
(159
)
 
(34
)
Other liabilities assumed
(1,844
)
 
(388
)
 
(43
)
 
$
13,963

 
$
1,649

 
$
315

 ___________________
(1)
Intangible assets acquired in 2017, 2018, and 2019 have estimated useful lives of between one and twenty-five years, two and seven years, and two and seven years, with weighted-average amortization periods of twenty-one years, six years, and five years.
Summary of Goodwill Activity The following summarizes our goodwill activity in 2018 and 2019 by segment (in millions):
 
North
America
 
International
 
AWS
 
Consolidated
Goodwill - January 1, 2018
$
11,165

 
$
1,108

 
$
1,077

 
$
13,350

New acquisitions (1)
1,031

 
177

 
20

 
1,228

Other adjustments (2)
(5
)
 
(15
)
 
(10
)
 
(30
)
Goodwill - December 31, 2018
12,191

 
1,270

 
1,087

 
14,548

New acquisitions
71

 
29

 
89

 
189

Other adjustments (2)
2

 
1

 
14

 
17

Goodwill - December 31, 2019
$
12,264

 
$
1,300

 
$
1,190

 
$
14,754

 ___________________
(1)
Primarily includes the acquisitions of Ring and PillPack in the North America segment.
(2)
Primarily includes changes in foreign exchange rates.
Schedule of Acquired Finite-Lived Intangible Assets by Major Class
Acquired intangible assets, included within “Other assets” on our consolidated balance sheets, consist of the following (in millions):
 
 
December 31,
 
 
 
2018
 
2019
 
 
  
Acquired
Intangibles,
Gross (1)
 
Accumulated
Amortization (1)
 
Acquired
Intangibles,
Net
 
Acquired
Intangibles,
Gross (1)
 
Accumulated
Amortization (1)
 
Acquired
Intangibles,
Net
 
Weighted
Average Life
Remaining
Marketing-related
$
2,542

 
$
(431
)
 
$
2,111

 
$
2,303

 
$
(340
)
 
$
1,963

 
20.7
Contract-based
1,430

 
(224
)
 
1,206

 
1,702

 
(302
)
 
1,400

 
10.5
Technology- and content-based
941

 
(377
)
 
564

 
1,011

 
(477
)
 
534

 
3.6
Customer-related
437

 
(208
)
 
229

 
282

 
(130
)
 
152

 
4.3
Acquired intangibles (2)
$
5,350

 
$
(1,240
)
 
$
4,110

 
$
5,298

 
$
(1,249
)
 
$
4,049

 
14.3
 ___________________
(1)
Excludes the original cost and accumulated amortization of fully-amortized intangibles.
(2)
Intangible assets have estimated useful lives of between one and twenty-five years.
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense Expected future amortization expense of acquired intangible assets as of December 31, 2019 is as follows (in millions):
 
Year Ended December 31,
2020
$
486

2021
424

2022
391

2023
334

2024
270

Thereafter
2,116

 
$
4,021


v3.19.3.a.u2
Debt (Tables)
12 Months Ended
Dec. 31, 2019
Debt Disclosure [Abstract]  
Debt Obligations The face value of our total long-term debt obligations is as follows (in millions):
 
December 31,
 
2018
 
2019
2.600% Notes due on December 5, 2019
1,000

 

1.900% Notes due on August 21, 2020 (3)
1,000

 
1,000

3.300% Notes due on December 5, 2021 (2)
1,000

 
1,000

2.500% Notes due on November 29, 2022 (1)
1,250

 
1,250

2.400% Notes due on February 22, 2023 (3)
1,000

 
1,000

2.800% Notes due on August 22, 2024 (3)
2,000

 
2,000

3.800% Notes due on December 5, 2024 (2)
1,250

 
1,250

5.200% Notes due on December 3, 2025 (4)
1,000

 
1,000

3.150% Notes due on August 22, 2027 (3)
3,500

 
3,500

4.800% Notes due on December 5, 2034 (2)
1,250

 
1,250

3.875% Notes due on August 22, 2037 (3)
2,750

 
2,750

4.950% Notes due on December 5, 2044 (2)
1,500

 
1,500

4.050% Notes due on August 22, 2047 (3)
3,500

 
3,500

4.250% Notes due on August 22, 2057 (3)
2,250

 
2,250

Credit Facility
594

 
740

Other long-term debt
121

 
830

Total debt
24,965

 
24,820

Less current portion of long-term debt
(1,371
)
 
(1,307
)
Face value of long-term debt
$
23,594

 
$
23,513


_____________________________
(1)
Issued in November 2012, effective interest rate of the 2022 Notes was 2.66%.
(2)
Issued in December 2014, effective interest rates of the 2021, 2024, 2034, and 2044 Notes were 3.43%, 3.90%, 4.92%, and 5.11%.
(3)
Issued in August 2017, effective interest rates of the 2020, 2023, 2024, 2027, 2037, 2047, and 2057 Notes were 2.16%, 2.56%, 2.95%, 3.25%, 3.94%, 4.13%, and 4.33%.
(4)
Consists of $872 million of 2025 Notes issued in December 2017 in exchange for notes assumed in connection with the acquisition of Whole Foods Market and $128 million of 2025 Notes issued by Whole Foods Market that did not participate in our December 2017 exchange offer. The effective interest rate of the 2025 Notes was 3.02%.
Future Principal Payments for Debt
As of December 31, 2019, future principal payments for our total debt were as follows (in millions):
Year Ended December 31,
2020
$
1,307

2021
1,141

2022
1,773

2023
1,510

2024
3,339

Thereafter
15,750

 
$
24,820


v3.19.3.a.u2
Commitments and Contingencies (Tables)
12 Months Ended
Dec. 31, 2019
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 December 31, 2019 (in millions):
 
Year Ended December 31,
 
 
 
 
 
2020
 
2021
 
2022
 
2023
 
2024
 
Thereafter
 
Total
Debt principal and interest
$
2,202

 
$
2,009

 
$
2,603

 
$
2,273

 
$
4,084

 
$
26,019

 
$
39,190

Operating lease liabilities
3,757

 
3,630

 
3,226

 
2,900

 
2,605

 
15,845

 
31,963

Finance lease liabilities, including interest
9,878

 
7,655

 
4,060

 
1,332

 
989

 
4,961

 
28,875

Financing obligations, including interest
142

 
146

 
148

 
150

 
152

 
2,452

 
3,190

Unconditional purchase obligations (1)
4,593

 
3,641

 
3,293

 
3,103

 
3,000

 
2,358

 
19,988

Other commitments (2)(3)
3,837

 
2,274

 
1,770

 
1,439

 
1,389

 
12,186

 
22,895

Total commitments
$
24,409

 
$
19,355

 
$
15,100

 
$
11,197

 
$
12,219

 
$
63,821

 
$
146,101

___________________
(1)
Includes unconditional purchase obligations related to certain products offered in our Whole Foods Market stores and long-term agreements to acquire and license digital media content that are not reflected on the consolidated balance sheets. 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.
(2)
Includes the estimated timing and amounts of payments for rent and tenant improvements associated with build-to-suit lease arrangements and lease arrangements prior to the lease commencement date and digital media content liabilities associated with long-term digital media content assets with initial terms greater than one year.
(3)
Excludes approximately $3.9 billion of accrued tax contingencies for which we cannot make a reasonably reliable estimate of the amount and period of payment, if any.
v3.19.3.a.u2
Stockholders' Equity (Tables)
12 Months Ended
Dec. 31, 2019
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation Expense
Stock-based compensation expense is as follows (in millions):
 
Year Ended December 31,
 
2017
 
2018
 
2019
Cost of sales
$
47

 
$
73

 
$
149

Fulfillment
911

 
1,121

 
1,182

Technology and content
2,305

 
2,888

 
3,725

Marketing
511

 
769

 
1,135

General and administrative
441

 
567

 
673

Total stock-based compensation expense (1)
$
4,215

 
$
5,418

 
$
6,864


___________________
(1)
The related tax benefits were $860 million, $1.1 billion, and $1.4 billion for 2017, 2018, and 2019.
Summary of Restricted Stock Unit Activity
The following table summarizes our restricted stock unit activity (in millions):
 
Number of Units
 
Weighted Average
Grant-Date
Fair Value
Outstanding as of January 1, 2017
19.8

 
$
506

Units granted
8.9

 
946

Units vested
(6.8
)
 
400

Units forfeited
(1.8
)
 
649

Outstanding as of December 31, 2017
20.1

 
725

Units granted
5.0

 
1,522

Units vested
(7.1
)
 
578

Units forfeited
(2.1
)
 
862

Outstanding as of December 31, 2018
15.9

 
1,024

Units granted
6.7

 
1,808

Units vested
(6.6
)
 
827

Units forfeited
(1.7
)
 
1,223

Outstanding as of December 31, 2019
14.3

 
1,458


Scheduled Vesting of Outstanding Restricted Stock Units
Scheduled vesting for outstanding restricted stock units as of December 31, 2019, is as follows (in millions):
 
Year Ended  
 
 
 
 
 
2020
 
2021
 
2022
 
2023
 
2024
 
Thereafter
 
Total
Scheduled vesting — restricted stock units
6.0

 
5.1

 
2.1

 
1.0

 

 
0.1

 
14.3


v3.19.3.a.u2
Income Taxes (Tables)
12 Months Ended
Dec. 31, 2019
Income Tax Disclosure [Abstract]  
Components of Provision for Income Taxes, Net
The components of the provision for income taxes, net are as follows (in millions):
 
Year Ended December 31,
 
2017
 
2018
 
2019
U.S. Federal:
 
 
 
 
 
Current
$
(137
)
 
$
(129
)
 
$
162

Deferred
(202
)
 
565

 
914

Total
(339
)
 
436

 
1,076

U.S. State:
 
 
 
 
 
Current
211

 
322

 
276

Deferred
(26
)
 
5

 
8

Total
185

 
327

 
284

International:
 
 
 
 
 
Current
724

 
563

 
1,140

Deferred
199

 
(129
)
 
(126
)
Total
923

 
434

 
1,014

Provision for income taxes, net
$
769

 
$
1,197

 
$
2,374


Components of Income Before Income Taxes, Domestic and Foreign
U.S. and international components of income before income taxes are as follows (in millions):
 
Year Ended December 31,
 
2017
 
2018
 
2019
U.S.
$
5,630

 
$
11,157

 
$
13,285

International
(1,824
)
 
104

 
691

Income before income taxes
$
3,806

 
$
11,261

 
$
13,976


Effective Income Tax Rate Reconciliation
The items accounting for differences between income taxes computed at the federal statutory rate and the provision recorded for income taxes are as follows (in millions):
 
Year Ended December 31,
 
2017
 
2018
 
2019
Income taxes computed at the federal statutory rate (1)
$
1,332

 
$
2,365

 
$
2,935

Effect of:
 
 
 
 
 
Tax impact of foreign earnings
1,178

 
119

 
381

State taxes, net of federal benefits
114

 
263

 
221

Tax credits
(220
)
 
(419
)
 
(466
)
Stock-based compensation (2)
(917
)
 
(1,086
)
 
(850
)
2017 Impact of U.S. Tax Act
(789
)
 
(157
)
 

Other, net
71

 
112

 
153

Total
$
769

 
$
1,197

 
$
2,374


___________________
(1)
The U.S. Tax Act reduced the U.S. federal statutory rate from 35% to 21% beginning in 2018.
(2)
Includes non-deductible stock-based compensation and excess tax benefits from stock-based compensation. Our tax provision includes $1.3 billion, $1.6 billion, and $1.4 billion of excess tax benefits from stock-based compensation for 2017, 2018, and 2019.
Deferred Tax Assets and Liabilities
Deferred income tax assets and liabilities are as follows (in millions):
 
December 31,
 
2018
 
2019
Deferred tax assets (1):
 
 
 
Loss carryforwards U.S. - Federal/States
222

 
188

Loss carryforwards - Foreign
2,551

 
3,232

Accrued liabilities, reserves, and other expenses
1,064

 
1,373

Stock-based compensation
1,293

 
1,585

Depreciation and amortization
2,386

 
2,385

Operating lease liabilities

 
6,648

Other items
484

 
728

Tax credits
734

 
772

Total gross deferred tax assets
8,734

 
16,911

Less valuation allowances (2)
(4,950
)
 
(5,754
)
Deferred tax assets, net of valuation allowances
3,784

 
11,157

Deferred tax liabilities:
 
 
 
Depreciation and amortization
(3,579
)
 
(5,507
)
Operating lease assets

 
(6,331
)
Other items
(749
)
 
(640
)
Net deferred tax assets (liabilities), net of valuation allowances
$
(544
)
 
$
(1,321
)
 ___________________
(1)
Deferred tax assets are presented after tax effects and net of tax contingencies.
(2)
Relates primarily to deferred tax assets that would only be realizable upon the generation of net income in certain foreign taxing jurisdictions.
Reconciliation of Tax Contingencies
The reconciliation of our tax contingencies is as follows (in millions):
 
December 31,
 
2017
 
2018
 
2019
Gross tax contingencies – January 1
$
1,710

 
$
2,309

 
$
3,414

Gross increases to tax positions in prior periods
223

 
164

 
216

Gross decreases to tax positions in prior periods
(139
)
 
(90
)
 
(181
)
Gross increases to current period tax positions
518

 
1,088

 
707

Settlements with tax authorities

 
(36
)
 
(207
)
Lapse of statute of limitations
(3
)
 
(21
)
 
(26
)
Gross tax contingencies – December 31 (1)
$
2,309

 
$
3,414

 
$
3,923

 ___________________
(1)
As of December 31, 2019, we had approximately $3.9 billion of accrued tax contingencies of which $2.1 billion, if fully recognized, would decrease our effective tax rate.
v3.19.3.a.u2
Segment Information (Tables)
12 Months Ended
Dec. 31, 2019
Segment Reporting [Abstract]  
Information on Reportable Segments and Reconciliation to Consolidated Net Income (Loss)
Information on reportable segments and reconciliation to consolidated net income (loss) is as follows (in millions):
  
Year Ended December 31,
 
2017
 
2018
 
2019
North America
 
 
 
 
 
Net sales
$
106,110

 
$
141,366

 
$
170,773

Operating expenses
103,273

 
134,099

 
163,740

Operating income
$
2,837

 
$
7,267

 
$
7,033

International
 
 
 
 
 
Net sales
$
54,297

 
$
65,866

 
$
74,723

Operating expenses
57,359

 
68,008

 
76,416

Operating income (loss)
$
(3,062
)
 
$
(2,142
)
 
$
(1,693
)
AWS
 
 
 
 
 
Net sales
$
17,459

 
$
25,655

 
$
35,026

Operating expenses
13,128

 
18,359

 
25,825

Operating income
$
4,331

 
$
7,296

 
$
9,201

Consolidated
 
 
 
 
 
Net sales
$
177,866

 
$
232,887

 
$
280,522

Operating expenses
173,760

 
220,466

 
265,981

Operating income
4,106

 
12,421

 
14,541

Total non-operating income (expense)
(300
)
 
(1,160
)
 
(565
)
Provision for income taxes
(769
)
 
(1,197
)
 
(2,374
)
Equity-method investment activity, net of tax
(4
)
 
9

 
(14
)
Net income
$
3,033

 
$
10,073

 
$
11,588


Disaggregation of Revenue
Net sales by groups of similar products and services, which also have similar economic characteristics, is as follows (in millions):
  
Year Ended December 31,
 
2017
 
2018
 
2019
Net Sales:
 
 
 
 
 
Online stores (1)
$
108,354

 
$
122,987

 
$
141,247

Physical stores (2)
5,798

 
17,224

 
17,192

Third-party seller services (3)
31,881

 
42,745

 
53,762

Subscription services (4)
9,721

 
14,168

 
19,210

AWS
17,459

 
25,655

 
35,026

Other (5)
4,653

 
10,108

 
14,085

Consolidated
$
177,866

 
$
232,887

 
$
280,522

___________________
(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, music, videos, games, 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 from 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 audiobook, digital video, digital music, e-book, and other non-AWS subscription services.
(5)
Primarily includes sales of advertising services, as well as sales related to our other service offerings.
Net Sales Attributed to Countries that Represent a Significant Portion of Consolidated Net Sales Net sales attributed to countries that represent a significant portion of consolidated net sales are as follows (in millions):
 
Year Ended December 31,
 
2017
 
2018
 
2019
United States
$
120,486

 
$
160,146

 
$
193,636

Germany
16,951

 
19,881

 
22,232

United Kingdom
11,372

 
14,524

 
17,527

Japan
11,907

 
13,829

 
16,002

Rest of world
17,150

 
24,507

 
31,125

Consolidated
$
177,866

 
$
232,887

 
$
280,522


Reconciliation of Assets from Segment to Consolidated Total segment assets reconciled to consolidated amounts are as follows (in millions):
 
December 31,
 
2017
 
2018
 
2019
North America (1)
$
35,844

 
$
47,251

 
$
72,277

International (1)
18,014

 
19,923

 
30,709

AWS (2)
18,660

 
26,340

 
36,500

Corporate
58,792

 
69,134

 
85,762

Consolidated
$
131,310

 
$
162,648

 
$
225,248

___________________
(1)
North America and International segment assets primarily consist of property and equipment, inventory, and accounts receivable.
(2)
AWS segment assets primarily consist of property and equipment and accounts receivable.
Reconciliation of Property and Equipment from Segments to Consolidated
Property and equipment, net by segment is as follows (in millions):
 
December 31,
 
2017
 
2018
 
2019
North America
$
20,401

 
$
27,052

 
$
31,719

International
7,425

 
8,552

 
9,566

AWS
14,885

 
18,851

 
23,481

Corporate
6,155

 
7,342

 
7,939

Consolidated
$
48,866

 
$
61,797

 
$
72,705


Reconciliation of Property and Equipment Additions and Depreciation from Segments to Consolidated Total depreciation and amortization expense, by segment, is as follows (in millions):
 
Year Ended December 31,
 
2017
 
2018
 
2019
North America
$
3,029

 
$
4,415

 
$
5,106

International
1,278

 
1,628

 
1,886

AWS
4,524

 
6,095

 
8,158

Consolidated
$
8,831

 
$
12,138

 
$
15,150


Total net additions to property and equipment by segment are as follows (in millions):
 
Year Ended December 31,
 
2017
 
2018
 
2019
North America (1)
$
13,200

 
$
10,749

 
$
11,752

International (1)
5,196

 
2,476

 
3,298

AWS (2)
9,190

 
9,783

 
13,058

Corporate
2,197

 
2,060

 
1,910

Consolidated
$
29,783

 
$
25,068

 
$
30,018

___________________
(1)
Includes property and equipment added under finance leases of $2.9 billion, $2.0 billion, and $3.8 billion in 2017, 2018, and 2019, and under financing obligations of $2.9 billion, $3.0 billion, and $1.3 billion in 2017, 2018, and 2019.
(2)
Includes property and equipment added under finance leases of $7.3 billion, $8.4 billion, and $10.6 billion in 2017, 2018, and 2019, and under financing obligations of $134 million, $245 million, and $0 million in 2017, 2018, and 2019.
v3.19.3.a.u2
Quarterly Results (Unaudited) (Tables)
12 Months Ended
Dec. 31, 2019
Quarterly Financial Information Disclosure [Abstract]  
Quarterly Financial Information Unaudited quarterly results are as follows (in millions, except per share data):
 
Year Ended December 31, 2018 (1)
 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
Net sales
$
51,042

 
$
52,886

 
$
56,576

 
$
72,383

Operating income
1,927

 
2,983

 
3,724

 
3,786

Income before income taxes
1,916

 
2,605

 
3,390

 
3,350

Provision for income taxes
(287
)
 
(74
)
 
(508
)
 
(327
)
Net income
1,629

 
2,534

 
2,883

 
3,027

Basic earnings per share
3.36

 
5.21

 
5.91

 
6.18

Diluted earnings per share
3.27

 
5.07

 
5.75

 
6.04

Shares used in computation of earnings per share:
 
 
 
 
 
 
 
Basic
484

 
486

 
488

 
490

Diluted
498

 
500

 
501

 
501

 
Year Ended December 31, 2019 (1)
 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
Net sales
$
59,700

 
$
63,404

 
$
69,981

 
$
87,437

Operating income
4,420

 
3,084

 
3,157

 
3,879

Income before income taxes
4,401

 
2,889

 
2,632

 
4,053

Provision for income taxes
(836
)
 
(257
)
 
(494
)
 
(786
)
Net income
3,561

 
2,625

 
2,134

 
3,268

Basic earnings per share
7.24

 
5.32

 
4.31

 
6.58

Diluted earnings per share
7.09

 
5.22

 
4.23

 
6.47

Shares used in computation of earnings per share:
 
 
 
 
 
 
 
Basic
491

 
493

 
495

 
496

Diluted
502

 
503

 
504

 
505

 ___________________
(1)
The sum of quarterly amounts, including per share amounts, may not equal amounts reported for year-to-date periods. This is due to the effects of rounding and changes in the number of weighted-average shares outstanding for each period.

v3.19.3.a.u2
Description of Business and Accounting Policies - Description of Business (Details)
12 Months Ended
Dec. 31, 2019
segment
Accounting Policies [Abstract]  
Number of operating segments 3
v3.19.3.a.u2
Description of Business and Accounting Policies - Use of Estimates (Details) - USD ($)
$ in Millions
1 Months Ended 3 Months Ended 12 Months Ended
Jan. 31, 2020
Dec. 31, 2019
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Property, Plant and Equipment [Line Items]                        
Operating income   $ 3,879 $ 3,157 $ 3,084 $ 4,420 $ 3,786 $ 3,724 $ 2,983 $ 1,927 $ 14,541 $ 12,421 $ 4,106
Servers                        
Property, Plant and Equipment [Line Items]                        
Estimated useful lives of assets                   3 years    
Subsequent Event | Servers                        
Property, Plant and Equipment [Line Items]                        
Estimated useful lives of assets 4 years                      
Forecast                        
Property, Plant and Equipment [Line Items]                        
Operating income $ 2,300                      
v3.19.3.a.u2
Description of Business and Accounting Policies - Calculation of Diluted Shares (Details) - shares
shares in Millions
3 Months Ended 12 Months Ended
Dec. 31, 2019
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Accounting Policies [Abstract]                      
Shares used in computation of basic earnings per share 496 495 493 491 490 488 486 484 494 487 480
Total dilutive effect of outstanding stock awards                 10 13 13
Shares used in computation of diluted earnings per share 505 504 503 502 501 501 500 498 504 500 493
v3.19.3.a.u2
Description of Business and Accounting Policies - Revenue (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Accounting Policies [Abstract]      
Contract with Customer, Refund Liability $ 712 $ 623 $ 468
SEC Schedule, 12-09, Valuation and Qualifying Accounts Disclosure [Line Items]      
Contract with Customer, Right to Recover Product 629 519 406
Sales Returns and Allowances      
SEC Schedule, 12-09, Valuation and Qualifying Accounts Disclosure [Line Items]      
Additions to allowance for returns 2,500 2,300 1,800
Deductions to allowance for returns $ 2,500 $ 2,300 $ 1,900
v3.19.3.a.u2
Description of Business and Accounting Policies - Marketing (Details) - USD ($)
$ in Billions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Accounting Policies [Abstract]      
Advertising Expense $ 11.0 $ 8.2 $ 6.3
v3.19.3.a.u2
Description of Business and Accounting Policies - Other Income (Expense), Net (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Accounting Policies [Abstract]      
Foreign currency gains (losses) $ (20) $ (206) $ 247
Derivative [Line Items]      
Equity Securities Gains 231 145 18
Equity Warrant      
Derivative [Line Items]      
Derivative gains (losses) $ 11 $ (131) $ 109
v3.19.3.a.u2
Description of Business and Accounting Policies - Fair Value of Financial Instruments (Details) - Equity Warrant - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]      
Derivative gains (losses) $ 11 $ (131) $ 109
Fair Value, Inputs, Level 2      
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]      
Fair value of warrants $ 669 $ 440  
v3.19.3.a.u2
Description of Business and Accounting Policies - Accounts Receivable, Net and Other (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Accounts receivable, net and other $ 20,816 $ 16,677  
Allowance for doubtful accounts 718 495 $ 348
Additions to allowance for doubtful accounts 1,000 878 626
Deductions to allowance for doubtful accounts 793 731 $ 515
Customer receivables      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Accounts receivable, net and other 12,600 9,400  
Vendor receivables      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Accounts receivable, net and other 4,200 3,200  
Loans Receivable      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Accounts receivable, net and other $ 863 $ 710  
v3.19.3.a.u2
Description of Business and Accounting Policies - Property and Equipment, Net (Details)
12 Months Ended
Dec. 31, 2019
Building  
Property, Plant and Equipment [Line Items]  
Estimated useful lives of assets 40 years
Servers  
Property, Plant and Equipment [Line Items]  
Estimated useful lives of assets 3 years
Networking Equipment  
Property, Plant and Equipment [Line Items]  
Estimated useful lives of assets 5 years
Heavy Equipment  
Property, Plant and Equipment [Line Items]  
Estimated useful lives of assets 10 years
Minimum | Other Fulfillment Equipment  
Property, Plant and Equipment [Line Items]  
Estimated useful lives of assets 3 years
Maximum | Other Fulfillment Equipment  
Property, Plant and Equipment [Line Items]  
Estimated useful lives of assets 7 years
v3.19.3.a.u2
Description of Business and Accounting Policies - Leases (Details)
12 Months Ended
Dec. 31, 2019
Equipment | Minimum  
Lessee, Lease, Description [Line Items]  
Lessee, operating and finance lease, term of contract 1 year
Equipment | Maximum  
Lessee, Lease, Description [Line Items]  
Lessee, operating and finance lease, term of contract 10 years
Property | Minimum  
Lessee, Lease, Description [Line Items]  
Lessee, operating and finance lease, term of contract 1 year
Property | Maximum  
Lessee, Lease, Description [Line Items]  
Lessee, operating and finance lease, term of contract 20 years
v3.19.3.a.u2
Description of Business and Accounting Policies - Goodwill (Details)
Apr. 01, 2019
USD ($)
Accounting Policies [Abstract]  
Goodwill impairment $ 0
v3.19.3.a.u2
Description of Business and Accounting Policies - Video and Music Content (Details) - USD ($)
$ in Billions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Accounting Policies [Abstract]    
Weighted Average Life, Capitalized Video Content 2 years 8 months 12 days  
Video and Music Content, Capitalized Costs $ 5.8 $ 3.8
Video and Music Content, Expense $ 7.8 $ 6.7
v3.19.3.a.u2
Description of Business and Accounting Policies - Investments (Details) - USD ($)
$ in Millions
Dec. 31, 2019
Dec. 31, 2018
Accounting Policies [Abstract]    
Equity Securities without Readily Determinable Fair Value, Amount $ 1,500 $ 282
v3.19.3.a.u2
Description of Business and Accounting Policies - Accrued Expenses and Other (Details) - USD ($)
$ in Billions
Dec. 31, 2019
Dec. 31, 2018
Accounting Policies [Abstract]    
Payroll-related liabilities $ 4.3 $ 3.4
Unredeemed gift certificates $ 3.3 $ 2.8
v3.19.3.a.u2
Description of Business and Accounting Policies - Unearned Revenue (Details) - USD ($)
$ in Billions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Accounting Policies [Abstract]    
Contract with Customer, Liability $ 10.2 $ 7.9
Contract with Customer, Liability, Revenue Recognized 6.3  
Contract with Customer, Liability, Noncurrent 2.0 $ 1.4
Revenue, Remaining Performance Obligation, Amount $ 29.8  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 3 years 3 months 18 days  
v3.19.3.a.u2
Description of Business and Accounting Policies - Foreign Currency (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Accounting Policies [Abstract]      
Transaction gain (loss) arising from intercompany foreign currency transactions $ 95 $ (186) $ 202
v3.19.3.a.u2
Description of Business and Accounting Policies - Accounting Pronouncements Recently Adopted (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Jan. 01, 2019
Mar. 31, 2018
Jan. 01, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]            
Operating leases $ 25,141 $ 0        
Operating Lease, Liability 25,835          
Net cash provided by (used in) operating activities 38,514 30,723 $ 18,365      
Net Cash Provided by (Used in) Investing Activities (24,281) (12,369) (27,084)      
Net cash provided by (used in) financing activities (10,066) (7,686) 9,928      
Net change in cash, cash equivalents, and restricted cash     1,209      
Accounting Standards Update 2014-09            
New Accounting Pronouncements or Change in Accounting Principle [Line Items]            
Change to retained earnings and deferred tax assets net of valuation allowances           $ 650
Accounting Standards Update 2016-02            
New Accounting Pronouncements or Change in Accounting Principle [Line Items]            
Operating leases       $ 21,000    
Operating Lease, Liability       (21,000)    
Financing Obligations Reclassified to Operating Leases   1,500   $ 1,200    
Financing Obligations and Construction Liabilities   9,600        
Build-to-suit liabilities derecognized   (1,500)        
Financing Obligations Reclassified to Finance Leases   5,400        
Accounting Standards Update 2016-16            
New Accounting Pronouncements or Change in Accounting Principle [Line Items]            
Change to retained earnings and deferred tax assets net of valuation allowances         $ 250  
Accounting Standards Update 2019-02            
New Accounting Pronouncements or Change in Accounting Principle [Line Items]            
Capitalized Film Costs $ 1,000          
Previously Reported            
New Accounting Pronouncements or Change in Accounting Principle [Line Items]            
Net cash provided by (used in) operating activities     18,434      
Net Cash Provided by (Used in) Investing Activities     (27,819)      
Net cash provided by (used in) financing activities     9,860      
Net change in cash, cash equivalents, and restricted cash     475      
Restatement Adjustment | Accounting Standards Update 2016-18            
New Accounting Pronouncements or Change in Accounting Principle [Line Items]            
Net cash provided by (used in) operating activities     (69)      
Net Cash Provided by (Used in) Investing Activities     735      
Net cash provided by (used in) financing activities     68      
Net change in cash, cash equivalents, and restricted cash     $ 734      
Difference between Revenue Guidance in Effect before and after Topic 606 | Service, Subscription            
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]            
Net Sales   3,800        
Difference between Revenue Guidance in Effect before and after Topic 606 | Product, Subscription            
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]            
Net Sales   (3,800)        
Difference between Revenue Guidance in Effect before and after Topic 606 | Service, Other            
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]            
Net Sales   $ 3,000        
v3.19.3.a.u2
Financial Instruments - Fair Values on Recurring Basis (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Schedule of Investments [Line Items]    
Equity Securities Gains $ 4  
Recurring    
Schedule of Investments [Line Items]    
Cash 9,776 $ 10,406
Cost or Amortized Cost    
Cash, cash equivalents and short-term investments 55,083 41,516
Gross Unrealized Gains    
Short-term investments 55 2
Gross Unrealized Losses    
Cash equivalents and marketable securities (3) (45)
Total Estimated Fair Value    
Cash, cash equivalents and short-term investments 55,342 41,676
Less: Restricted cash, cash equivalents, and marketable securities (321) (426)
Total cash, cash equivalents, and marketable securities 55,021 41,250
Recurring | Level 1 securities    
Total Estimated Fair Value    
Equity securities 202 170
Recurring | Level 1 securities | Money market funds    
Schedule of Investments [Line Items]    
Money market funds 18,850 12,515
Recurring | Level 1 securities | Money market funds | Money market funds    
Schedule of Investments [Line Items]    
Money market funds 18,850  
Recurring | Level 2 securities    
Total Estimated Fair Value    
Equity securities 5 33
Recurring | Level 2 securities | Foreign government and agency securities    
Cost or Amortized Cost    
Cash equivalents and marketable securities 4,794 815
Gross Unrealized Gains    
Cash equivalents and marketable securities 0 0
Gross Unrealized Losses    
Cash equivalents and marketable securities 0 0
Total Estimated Fair Value    
Cash equivalents and marketable securities 4,794 815
Recurring | Level 2 securities | U.S. government and agency securities    
Cost or Amortized Cost    
Cash equivalents and marketable securities 7,070 11,686
Gross Unrealized Gains    
Cash equivalents and marketable securities 11 1
Gross Unrealized Losses    
Cash equivalents and marketable securities (1) (20)
Total Estimated Fair Value    
Cash equivalents and marketable securities 7,080 11,667
Recurring | Level 2 securities | Corporate debt securities    
Cost or Amortized Cost    
Cash equivalents and marketable securities 11,845 5,008
Gross Unrealized Gains    
Cash equivalents and marketable securities 37 1
Gross Unrealized Losses    
Cash equivalents and marketable securities (1) (19)
Total Estimated Fair Value    
Cash equivalents and marketable securities 11,881 4,990
Recurring | Level 2 securities | Asset-backed securities    
Cost or Amortized Cost    
Cash equivalents and marketable securities 2,355 896
Gross Unrealized Gains    
Cash equivalents and marketable securities 6 0
Gross Unrealized Losses    
Cash equivalents and marketable securities (1) (4)
Total Estimated Fair Value    
Cash equivalents and marketable securities 2,360 892
Recurring | Level 2 securities | Other fixed income securities    
Cost or Amortized Cost    
Cash equivalents and marketable securities 393 190
Gross Unrealized Gains    
Cash equivalents and marketable securities 1 0
Gross Unrealized Losses    
Cash equivalents and marketable securities 0 (2)
Total Estimated Fair Value    
Cash equivalents and marketable securities $ 394 $ 188
v3.19.3.a.u2
Financial Instruments - Gross Gains and Gross Losses Realized on Sales of Available-For-Sale Marketable Securities (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Debt Securities, Available-for-sale, Realized Gain (Loss) [Abstract]      
Realized gains $ 11 $ 2 $ 5
Realized losses $ 7 $ 9 $ 11
v3.19.3.a.u2
Financial Instruments - Contractual Maturities (Details)
$ in Millions
Dec. 31, 2019
USD ($)
Amortized Cost  
Due within one year $ 35,064
Due after one year through five years 9,262
Due after five years through ten years 301
Due after ten years 680
Total 45,307
Estimated Fair Value  
Due within one year 35,071
Due after one year through five years 9,304
Due after five years through ten years 302
Due after ten years 682
Total $ 45,359
v3.19.3.a.u2
Financial Instruments - Reconciliation to Cash Flow (Details) - USD ($)
$ in Millions
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Reconciliation to Cash Flow [Abstract]        
Cash and Cash Equivalents $ 36,092 $ 31,750    
Restricted cash included in accounts receivable, net and other 276 418    
Restricted cash included in other assets 42 5    
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows $ 36,410 $ 32,173 $ 21,856 $ 19,934
v3.19.3.a.u2
Property and Equipment - Components (Details) - USD ($)
$ in Millions
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Property, Plant and Equipment [Line Items]      
Gross property and equipment $ 119,680 $ 95,770  
Total accumulated depreciation 46,975 33,973  
Total property and equipment, net 72,705 61,797 $ 48,866
Land and buildings      
Property, Plant and Equipment [Line Items]      
Gross property and equipment 39,223 31,741  
Equipment      
Property, Plant and Equipment [Line Items]      
Gross property and equipment 71,310 54,591  
Other assets      
Property, Plant and Equipment [Line Items]      
Gross property and equipment 3,111 2,577  
Construction in progress      
Property, Plant and Equipment [Line Items]      
Gross property and equipment $ 6,036 $ 6,861  
v3.19.3.a.u2
Property and Equipment - Additional Information (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Property, Plant and Equipment [Abstract]      
Depreciation expense $ 15,150 $ 12,138 $ 8,831
Amortization of capital lease assets   $ 7,300 $ 5,400
Amortization of lease assets $ 10,094    
v3.19.3.a.u2
Leases Additional Information (Details) - USD ($)
$ in Billions
Dec. 31, 2019
Dec. 31, 2018
Leases [Abstract]    
Capital Leased Assets, Gross   $ 36.1
Finance Lease, Right-of-Use Asset $ 57.4  
Capital Leases, Accumulated Depreciation   $ 19.8
Finance Lease, Right-of-Use-Asset, Accumulated Amortization $ 30.0  
v3.19.3.a.u2
Leases Lease Costs (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Lease, Cost [Abstract]      
Operating Lease Cost $ 3,669    
Finance lease cost:      
Amortization of lease assets 10,094    
Interest on lease liabilities 695    
Finance lease cost 10,789    
Variable lease cost 966    
Total lease cost $ 15,424    
Rental expense under operating lease agreements   $ 3,400 $ 2,200
v3.19.3.a.u2
Leases Other Operating and Finance Lease Information (Details)
Dec. 31, 2019
Leases [Abstract]  
Operating Lease, Weighted Average Remaining Lease Term 11 years 6 months
Finance Lease, Weighted Average Remaining Lease Term 5 years 6 months
Operating Lease, Weighted Average Discount Rate, Percent 3.10%
Finance Lease, Weighted Average Discount Rate, Percent 2.70%
v3.19.3.a.u2
Leases Operating and Finance Lease Reconciliation (Details) - USD ($)
$ in Millions
Dec. 31, 2019
Dec. 31, 2018
Leases [Abstract]    
Gross lease liabilities - operating leases $ 31,963  
Gross lease liabilities - finance leases 28,875  
Gross lease liabilities 60,838  
Impute interest - operating leases 6,128  
Imputed interest - finance leases 1,896  
Imputed interest (8,024)  
Present value of operating leases 25,835  
Present value of finance leases 26,979  
Present value of lease liabilities 52,814  
Current portion of operating leases 3,139  
Current portion of finance leases 9,884  
Current portion of lease liabilities (13,023)  
Total long-term operating lease liabilities 22,696  
Total long-term finance lease liabilities 17,095  
Long-term lease liabilities $ 39,791 $ 9,650
v3.19.3.a.u2
Acquisitions, Goodwill, and Acquired Intangible Assets - Additional Information (Details) - USD ($)
$ in Millions
12 Months Ended
Sep. 11, 2018
Apr. 12, 2018
Aug. 28, 2017
May 12, 2017
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Business Acquisition [Line Items]              
Acquisitions, net of cash acquired         $ 2,461 $ 2,186 $ 13,972
Other Acquisitions              
Business Acquisition [Line Items]              
Aggregate purchase price         $ 315 $ 57 $ 204
Souq              
Business Acquisition [Line Items]              
Acquisitions, net of cash acquired       $ 583      
Whole Foods Market              
Business Acquisition [Line Items]              
Acquisitions, net of cash acquired     $ 13,200        
Ring Inc.              
Business Acquisition [Line Items]              
Acquisitions, net of cash acquired   $ 839          
PillPack, Inc.              
Business Acquisition [Line Items]              
Acquisitions, net of cash acquired $ 753            
v3.19.3.a.u2
Acquisitions, Goodwill, and Acquired Intangible Assets - Allocation of Aggregate Purchase Price of Acquisitions (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Purchase Price      
Cash paid, net of cash acquired $ 2,461 $ 2,186 $ 13,972
Allocation      
Goodwill $ 14,754 $ 14,548 13,350
Acquired intangibles weighted average amortization period 14 years 3 months 18 days    
Minimum      
Allocation      
Intangible assets, estimated useful life   1 year  
Maximum      
Allocation      
Intangible assets, estimated useful life   25 years  
Marketing-related      
Allocation      
Acquired intangibles weighted average amortization period 20 years 8 months 12 days    
Contract-based      
Allocation      
Acquired intangibles weighted average amortization period 10 years 6 months    
Technology-based      
Allocation      
Acquired intangibles weighted average amortization period 3 years 7 months 6 days    
Customer-related      
Allocation      
Acquired intangibles weighted average amortization period 4 years 3 months 18 days    
2017 Acquisitions      
Purchase Price      
Cash paid, net of cash acquired     13,859
Indemnification holdback     104
Aggregate purchase price     13,963
Allocation      
Goodwill     9,501
Intangible assets     2,647
Property and equipment     3,810
Deferred tax assets     117
Other assets acquired     1,858
Long-term debt     (1,165)
Deferred tax liabilities     (961)
Other liabilities assumed     (1,844)
Allocated purchase price     $ 13,963
Acquired intangibles weighted average amortization period     21 years
2017 Acquisitions | Minimum      
Allocation      
Intangible assets, estimated useful life     1 year
2017 Acquisitions | Maximum      
Allocation      
Intangible assets, estimated useful life     25 years
2017 Acquisitions | Marketing-related      
Allocation      
Intangible assets     $ 1,987
2017 Acquisitions | Contract-based      
Allocation      
Intangible assets     440
2017 Acquisitions | Technology-based      
Allocation      
Intangible assets     166
2017 Acquisitions | Customer-related      
Allocation      
Intangible assets     $ 54
2018 Acquisitions      
Purchase Price      
Cash paid, net of cash acquired   $ 1,618  
Indemnification holdback   31  
Aggregate purchase price   1,649  
Allocation      
Goodwill   1,228  
Intangible assets   677  
Property and equipment   11  
Deferred tax assets   174  
Other assets acquired   282  
Long-term debt   (176)  
Deferred tax liabilities   (159)  
Other liabilities assumed   (388)  
Allocated purchase price   $ 1,649  
Acquired intangibles weighted average amortization period   6 years  
2018 Acquisitions | Minimum      
Allocation      
Intangible assets, estimated useful life   2 years  
2018 Acquisitions | Maximum      
Allocation      
Intangible assets, estimated useful life   7 years  
2018 Acquisitions | Marketing-related      
Allocation      
Intangible assets   $ 186  
2018 Acquisitions | Contract-based      
Allocation      
Intangible assets   13  
2018 Acquisitions | Technology-based      
Allocation      
Intangible assets   285  
2018 Acquisitions | Customer-related      
Allocation      
Intangible assets   $ 193  
2019 Acquisitions      
Purchase Price      
Cash paid, net of cash acquired $ 276    
Indemnification holdback 39    
Aggregate purchase price 315    
Allocation      
Goodwill 189    
Intangible assets 161    
Property and equipment 3    
Deferred tax assets 29    
Other assets acquired 41    
Long-term debt (31)    
Deferred tax liabilities (34)    
Other liabilities assumed (43)    
Allocated purchase price $ 315    
Acquired intangibles weighted average amortization period 5 years    
2019 Acquisitions | Minimum      
Allocation      
Intangible assets, estimated useful life 2 years    
2019 Acquisitions | Maximum      
Allocation      
Intangible assets, estimated useful life 7 years    
2019 Acquisitions | Marketing-related      
Allocation      
Intangible assets $ 8    
2019 Acquisitions | Contract-based      
Allocation      
Intangible assets 0    
2019 Acquisitions | Technology-based      
Allocation      
Intangible assets 139    
2019 Acquisitions | Customer-related      
Allocation      
Intangible assets $ 14    
v3.19.3.a.u2
Acquisitions, Goodwill, and Acquired Intangible Assets - Summary of Goodwill Activity by Segment (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Goodwill [Roll Forward]    
Goodwill, balance at beginning of period $ 14,548 $ 13,350
New acquisitions 189 1,228
Other adjustments 17 (30)
Goodwill, balance at end of period 14,754 14,548
North America    
Goodwill [Roll Forward]    
Goodwill, balance at beginning of period 12,191 11,165
New acquisitions 71 1,031
Other adjustments 2 (5)
Goodwill, balance at end of period 12,264 12,191
International    
Goodwill [Roll Forward]    
Goodwill, balance at beginning of period 1,270 1,108
New acquisitions 29 177
Other adjustments 1 (15)
Goodwill, balance at end of period 1,300 1,270
AWS    
Goodwill [Roll Forward]    
Goodwill, balance at beginning of period 1,087 1,077
New acquisitions 89 20
Other adjustments 14 (10)
Goodwill, balance at end of period $ 1,190 $ 1,087
v3.19.3.a.u2
Acquisitions, Goodwill, and Acquired Intangible Assets - Acquired Intangible Assets (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Acquired Finite-Lived Intangible Assets [Line Items]      
Acquired Intangibles, Gross $ 5,298 $ 5,350  
Accumulated Amortization (1,249) (1,240)  
Acquired Intangibles, Net $ 4,049 4,110  
Weighted Average Life Remaining 14 years 3 months 18 days    
Amortization expense for acquired intangibles $ 565 $ 475 $ 366
Minimum      
Acquired Finite-Lived Intangible Assets [Line Items]      
Intangible assets, estimated useful life   1 year  
Maximum      
Acquired Finite-Lived Intangible Assets [Line Items]      
Intangible assets, estimated useful life   25 years  
Marketing-related      
Acquired Finite-Lived Intangible Assets [Line Items]      
Acquired Intangibles, Gross 2,303 $ 2,542  
Accumulated Amortization (340) (431)  
Acquired Intangibles, Net $ 1,963 2,111  
Weighted Average Life Remaining 20 years 8 months 12 days    
Contract-based      
Acquired Finite-Lived Intangible Assets [Line Items]      
Acquired Intangibles, Gross $ 1,702 1,430  
Accumulated Amortization (302) (224)  
Acquired Intangibles, Net $ 1,400 1,206  
Weighted Average Life Remaining 10 years 6 months    
Technology- and content-based      
Acquired Finite-Lived Intangible Assets [Line Items]      
Acquired Intangibles, Gross $ 1,011 941  
Accumulated Amortization (477) (377)  
Acquired Intangibles, Net $ 534 564  
Weighted Average Life Remaining 3 years 7 months 6 days    
Customer-related      
Acquired Finite-Lived Intangible Assets [Line Items]      
Acquired Intangibles, Gross $ 282 437  
Accumulated Amortization (130) (208)  
Acquired Intangibles, Net $ 152 $ 229  
Weighted Average Life Remaining 4 years 3 months 18 days    
v3.19.3.a.u2
Acquisitions, Goodwill, and Acquired Intangible Assets - Expected Future Amortization Expense of Acquired Intangible Assets (Details)
$ in Millions
Dec. 31, 2019
USD ($)
Year Ended December 31,  
2020 $ 486
2021 424
2022 391
2023 334
2024 270
Thereafter 2,116
Acquired intangibles $ 4,021
v3.19.3.a.u2
Debt - Additional Information (Details)
1 Months Ended 12 Months Ended
Apr. 30, 2018
USD ($)
extension
Oct. 31, 2016
USD ($)
Dec. 31, 2019
USD ($)
Dec. 31, 2018
USD ($)
Dec. 31, 2017
USD ($)
Debt Instrument [Line Items]          
Borrowings outstanding     $ 24,820,000,000 $ 24,965,000,000  
Credit Agreement, additional term     1 year    
Commercial Paper          
Debt Instrument [Line Items]          
Credit term 397 days        
Commercial Paper, Maximum Borrowing Capacity $ 7,000,000,000.0        
Commercial Paper Borrowings     $ 0    
Senior Notes          
Debt Instrument [Line Items]          
Borrowings outstanding     23,300,000,000    
Unamortized discount     101,000,000 101,000,000  
Estimated fair value of notes     26,200,000,000 24,300,000,000  
Senior Notes | 5.200% Notes due on December 3, 2025          
Debt Instrument [Line Items]          
Borrowings outstanding     1,000,000,000 1,000,000,000  
Line of Credit and Other Long-term Debt          
Debt Instrument [Line Items]          
Borrowings outstanding     1,600,000,000 715,000,000  
Credit Facility | Revolving Credit Facility          
Debt Instrument [Line Items]          
Borrowings outstanding     740,000,000 594,000,000  
Credit Facility | October 2016 Revolving Credit Facility | Revolving Credit Facility          
Debt Instrument [Line Items]          
Maximum borrowing capacity   $ 500,000,000 740,000,000    
Commitment fee percentage   0.50%      
Borrowings outstanding     $ 740,000,000 $ 594,000,000  
Weighted average interest rate     3.40% 3.20%  
Collateral amount     $ 852,000,000 $ 686,000,000  
Credit Facility | October 2016 Revolving Credit Facility | Revolving Credit Facility | LIBOR          
Debt Instrument [Line Items]          
Basis spread on variable rate (as a percent)     1.40%    
Credit Facility | April 2018 Revolving Credit Facility | Revolving Credit Facility          
Debt Instrument [Line Items]          
Maximum borrowing capacity $ 7,000,000,000.0        
Credit term 3 years        
Commitment fee percentage 0.04%        
Borrowings outstanding     $ 0 0  
Credit Agreement, number of extensions | extension 3        
Credit Facility | April 2018 Revolving Credit Facility | Revolving Credit Facility | LIBOR          
Debt Instrument [Line Items]          
Basis spread on variable rate (as a percent) 0.50%        
Other Long-term Debt          
Debt Instrument [Line Items]          
Borrowings outstanding     $ 830,000,000 $ 121,000,000  
Weighted average interest rate     4.10% 6.00%  
Amazon.com, Inc. | 5.200% Notes due on December 3, 2025          
Debt Instrument [Line Items]          
Borrowings outstanding         $ 872,000,000
Whole Foods Market, Inc. | 5.200% Notes due on December 3, 2025          
Debt Instrument [Line Items]          
Borrowings outstanding         $ 128,000,000
v3.19.3.a.u2
Debt - Long-Term Debt Obligations (Details) - USD ($)
$ in Millions
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Debt Instrument [Line Items]      
Total debt $ 24,820 $ 24,965  
Less current portion of long-term debt (1,307) (1,371)  
Face value of long-term debt 23,513 $ 23,594  
Senior Notes      
Debt Instrument [Line Items]      
Total debt 23,300    
Senior Notes | 2.600% Notes due on December 5, 2019      
Debt Instrument [Line Items]      
Debt Instrument, Interest Rate, Stated Percentage   2.60%  
Total debt $ 0 $ 1,000  
Senior Notes | 1.900% Notes due on August 21, 2020      
Debt Instrument [Line Items]      
Debt Instrument, Interest Rate, Stated Percentage 1.90%    
Total debt $ 1,000 1,000  
Effective interest rate 2.16%    
Senior Notes | 3.300% Notes due on December 5, 2021      
Debt Instrument [Line Items]      
Debt Instrument, Interest Rate, Stated Percentage 3.30%    
Total debt $ 1,000 1,000  
Effective interest rate 3.43%    
Senior Notes | 2.500% Notes due on November 29, 2022      
Debt Instrument [Line Items]      
Debt Instrument, Interest Rate, Stated Percentage 2.50%    
Total debt $ 1,250 1,250  
Effective interest rate 2.66%    
Senior Notes | 2.400% Notes due on February 22, 2023      
Debt Instrument [Line Items]      
Debt Instrument, Interest Rate, Stated Percentage 2.40%    
Total debt $ 1,000 1,000  
Effective interest rate 2.56%    
Senior Notes | 2.800% Notes due on August 22, 2024      
Debt Instrument [Line Items]      
Debt Instrument, Interest Rate, Stated Percentage 2.80%    
Total debt $ 2,000 2,000  
Effective interest rate 2.95%    
Senior Notes | 3.800% Notes due on December 5, 2024      
Debt Instrument [Line Items]      
Debt Instrument, Interest Rate, Stated Percentage 3.80%    
Total debt $ 1,250 1,250  
Effective interest rate 3.90%    
Senior Notes | 5.200% Notes due on December 3, 2025      
Debt Instrument [Line Items]      
Debt Instrument, Interest Rate, Stated Percentage 5.20%    
Total debt $ 1,000 1,000  
Effective interest rate 3.02%    
Senior Notes | 3.150% Notes due on August 22, 2027      
Debt Instrument [Line Items]      
Debt Instrument, Interest Rate, Stated Percentage 3.15%    
Total debt $ 3,500 3,500  
Effective interest rate 3.25%    
Senior Notes | 4.800% Notes due on December 5, 2034      
Debt Instrument [Line Items]      
Debt Instrument, Interest Rate, Stated Percentage 4.80%    
Total debt $ 1,250 1,250  
Effective interest rate 4.92%    
Senior Notes | 3.875% Notes due on August 22, 2037      
Debt Instrument [Line Items]      
Debt Instrument, Interest Rate, Stated Percentage 3.875%    
Total debt $ 2,750 2,750  
Effective interest rate 3.94%    
Senior Notes | 4.950% Notes due on December 5, 2044      
Debt Instrument [Line Items]      
Debt Instrument, Interest Rate, Stated Percentage 4.95%    
Total debt $ 1,500 1,500  
Effective interest rate 5.11%    
Senior Notes | 4.050% Notes due on August 22, 2047      
Debt Instrument [Line Items]      
Debt Instrument, Interest Rate, Stated Percentage 4.05%    
Total debt $ 3,500 3,500  
Effective interest rate 4.13%    
Senior Notes | 4.250% Notes due on August 22, 2057      
Debt Instrument [Line Items]      
Debt Instrument, Interest Rate, Stated Percentage 4.25%    
Total debt $ 2,250 2,250  
Effective interest rate 4.33%    
Credit Facility | Revolving Credit Facility      
Debt Instrument [Line Items]      
Total debt $ 740 594  
Other long-term debt      
Debt Instrument [Line Items]      
Total debt $ 830 $ 121  
Amazon.com, Inc. | 5.200% Notes due on December 3, 2025      
Debt Instrument [Line Items]      
Total debt     $ 872
Whole Foods Market, Inc. | 5.200% Notes due on December 3, 2025      
Debt Instrument [Line Items]      
Total debt     $ 128
v3.19.3.a.u2
Debt - Future Principal Payment for Debt (Details) - USD ($)
$ in Millions
Dec. 31, 2019
Dec. 31, 2018
Year Ended December 31,    
2020 $ 1,307  
2021 1,141  
2022 1,773  
2023 1,510  
2024 3,339  
Thereafter 15,750  
Total debt $ 24,820 $ 24,965
v3.19.3.a.u2
Commitments and Contingencies - Principal Contractual Commitments Excluding Open Orders (Details) - USD ($)
$ in Millions
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Debt principal and interest        
Year Ended December 31, 2020 $ 2,202      
Year Ended December 31, 2021 2,009      
Year Ended December 31, 2022 2,603      
Year Ended December 31, 2023 2,273      
Year Ended December 31, 2024 4,084      
Thereafter 26,019      
Total 39,190      
Operating lease liabilities        
Year Ended December 31, 2020 3,757      
Year Ended December 31, 2021 3,630      
Year Ended December 31, 2022 3,226      
Year Ended December 31, 2023 2,900      
Year Ended December 31, 2024 2,605      
Thereafter 15,845      
Gross lease liabilities - operating leases 31,963      
Finance lease liabilities, including interest        
Year Ended December 31, 2020 9,878      
Year Ended December 31, 2021 7,655      
Year Ended December 31, 2022 4,060      
Year Ended December 31, 2023 1,332      
Year Ended December 31, 2024 989      
Thereafter 4,961      
Gross lease liabilities - finance leases 28,875      
Financing obligations, including interest        
Year Ended December 31, 2020 142      
Year Ended December 31, 2021 146      
Year Ended December 31, 2022 148      
Year Ended December 31, 2023 150      
Year Ended December 31, 2024 152      
Thereafter 2,452      
Total 3,190      
Unconditional purchase obligations        
Year Ended December 31, 2020 4,593      
Year Ended December 31, 2021 3,641      
Year Ended December 31, 2022 3,293      
Year Ended December 31, 2023 3,103      
Year Ended December 31, 2024 3,000      
Thereafter 2,358      
Total 19,988      
Other commitments        
Year Ended December 31, 2020 3,837      
Year Ended December 31, 2021 2,274      
Year Ended December 31, 2022 1,770      
Year Ended December 31, 2023 1,439      
Year Ended December 31, 2024 1,389      
Thereafter 12,186      
Total 22,895      
Total commitments        
Year Ended December 31, 2020 24,409      
Year Ended December 31, 2021 19,355      
Year Ended December 31, 2022 15,100      
Year Ended December 31, 2023 11,197      
Year Ended December 31, 2024 12,219      
Thereafter 63,821      
Total 146,101      
Accrued tax contingencies $ 3,923 $ 3,414 $ 2,309 $ 1,710
v3.19.3.a.u2
Commitments and Contingencies - Pledged Assets (Details) - USD ($)
$ in Millions
Dec. 31, 2019
Dec. 31, 2018
Commitments and Contingencies Disclosure [Abstract]    
Pledged or restricted cash, cash equivalents, marketable securities, and other assets $ 994 $ 575
v3.19.3.a.u2
Commitments and Contingencies - Legal Proceedings (Details) - Pending Litigation
$ in Millions
1 Months Ended
Oct. 31, 2013
claim
Feb. 28, 2017
USD ($)
Nationwide Breach of Contract and Unjust Enrichment Claims    
Loss Contingencies [Line Items]    
Number of claims filed | claim 1  
Legal Proceedings with Eolas Technologies, Inc. | Minimum    
Loss Contingencies [Line Items]    
Estimate of possible loss   $ 130
Legal Proceedings with Eolas Technologies, Inc. | Maximum    
Loss Contingencies [Line Items]    
Estimate of possible loss   $ 250
v3.19.3.a.u2
Stockholders' Equity - Additional Information (Details) - USD ($)
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Feb. 29, 2016
Class of Stock [Line Items]        
Preferred stock, authorized shares 500,000,000 500,000,000    
Preferred stock, par value (in usd per share) $ 0.01 $ 0.01    
Preferred stock, outstanding shares 0 0    
Common shares outstanding plus underlying outstanding stock awards 512,000,000 507,000,000 504,000,000  
Stock Repurchased During Period, Value $ 0 $ 0 $ 0  
Net unrecognized compensation cost related to unvested stock-based compensation arrangements $ 8,800,000,000      
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% 28.00%  
Common stock available for future issuance to employees (in shares) 108,000,000      
Restricted Stock Units        
Class of Stock [Line Items]        
Fair value of units vested $ 11,700,000,000 $ 11,400,000,000 $ 6,800,000,000  
Minimum        
Class of Stock [Line Items]        
Award vesting period 2 years      
Maximum        
Class of Stock [Line Items]        
Award vesting period 5 years      
February 2016 Program        
Class of Stock [Line Items]        
Stock repurchase, authorized amount       $ 5,000,000,000.0
v3.19.3.a.u2
Stockholders' Equity - Stock-based Compensation Expense (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]      
Total stock-based compensation expense $ 6,864 $ 5,418 $ 4,215
Tax benefits from stock-based compensation expense 1,400 1,100 860
Cost of sales      
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]      
Total stock-based compensation expense 149 73 47
Fulfillment      
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]      
Total stock-based compensation expense 1,182 1,121 911
Technology and content      
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]      
Total stock-based compensation expense 3,725 2,888 2,305
Marketing      
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]      
Total stock-based compensation expense 1,135 769 511
General and administrative      
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]      
Total stock-based compensation expense $ 673 $ 567 $ 441
v3.19.3.a.u2
Stockholders' Equity - Restricted Stock Unit Activity (Details) - Restricted Stock Units - $ / shares
shares in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Number of Units      
Beginning balance (in shares) 15.9 20.1 19.8
Units granted (in shares) 6.7 5.0 8.9
Units vested (in shares) (6.6) (7.1) (6.8)
Units forfeited (in shares) (1.7) (2.1) (1.8)
Ending balance (in shares) 14.3 15.9 20.1
Weighted Average Grant-Date Fair Value      
Beginning Balance $ 1,024 $ 725 $ 506
Units granted 1,808 1,522 946
Units vested 827 578 400
Units forfeited 1,223 862 649
Ending Balance $ 1,458 $ 1,024 $ 725
v3.19.3.a.u2
Stockholders' Equity - Scheduled Vesting for Outstanding Restricted Stock Units (Details) - Restricted Stock Units - shares
shares in Millions
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Scheduled vesting — restricted stock units        
Year Ended December 31, 2020 6.0      
Year Ended December 31, 2021 5.1      
Year Ended December 31, 2022 2.1      
Year Ended December 31, 2023 1.0      
Year Ended December 31, 2024 0.0      
Thereafter 0.1      
Total 14.3 15.9 20.1 19.8
v3.19.3.a.u2
Income Taxes - Additional Information (Details)
€ in Millions, $ in Millions
3 Months Ended 6 Months Ended 12 Months Ended
Oct. 04, 2017
EUR (€)
Dec. 31, 2019
USD ($)
Sep. 30, 2019
USD ($)
Jun. 30, 2019
USD ($)
Mar. 31, 2019
USD ($)
Dec. 31, 2018
USD ($)
Sep. 30, 2018
USD ($)
Jun. 30, 2018
USD ($)
Mar. 31, 2018
USD ($)
Jun. 30, 2017
USD ($)
Dec. 31, 2019
USD ($)
Dec. 31, 2018
USD ($)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
USD ($)
Income Tax Disclosure [Abstract]                            
Provision for income taxes, net   $ 786 $ 494 $ 257 $ 836 $ 327 $ 508 $ 74 $ 287   $ 2,374 $ 1,197 $ 769  
Cash taxes paid, net of refunds                     (881) 1,184 957  
Provisional tax benefit for impact of the Act                         (789)  
Income Taxes [Line Items]                            
Unrecognized Tax Benefits   3,923       3,414         3,923 3,414 2,309 $ 1,710
Valuation allowance against the net deferred tax assets                   $ 600        
Tax credit carryforwards   1,700                 1,700      
Accrued interest and penalties, net of federal income tax benefit, related to tax contingencies   131       $ 127         131 127    
Interest and penalties, net of federal income tax benefit                     4 20 40  
International                            
Income Tax Disclosure [Abstract]                            
Provision for income taxes, net                     1,014 $ 434 $ 923  
Income Taxes [Line Items]                            
Net operating loss carryforwards   $ 8,600                 $ 8,600      
International | Luxembourg Tax Administration                            
Income Taxes [Line Items]                            
Tax examination, estimate of additional tax expense | € € 250                          
v3.19.3.a.u2
Income Taxes - Components of Provision for Income Taxes, Net (Details) - USD ($)
$ in Millions
3 Months Ended 12 Months Ended
Dec. 31, 2019
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
International:                      
Provision for income taxes, net $ 786 $ 494 $ 257 $ 836 $ 327 $ 508 $ 74 $ 287 $ 2,374 $ 1,197 $ 769
U.S. Federal                      
U.S. Federal:                      
Current                 162 (129) (137)
Deferred                 914 565 (202)
International:                      
Provision for income taxes, net                 1,076 436 (339)
U.S. State                      
U.S. State:                      
Current                 276 322 211
Deferred                 8 5 (26)
International:                      
Provision for income taxes, net                 284 327 185
International                      
International:                      
Current                 1,140 563 724
Deferred                 (126) (129) 199
Provision for income taxes, net                 $ 1,014 $ 434 $ 923
v3.19.3.a.u2
Income Taxes - U.S. and International Components of Income Before Income Taxes (Details) - USD ($)
$ in Millions
3 Months Ended 12 Months Ended
Dec. 31, 2019
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Income Tax Disclosure [Abstract]                      
U.S.                 $ 13,285 $ 11,157 $ 5,630
International                 691 104 (1,824)
Income before income taxes $ 4,053 $ 2,632 $ 2,889 $ 4,401 $ 3,350 $ 3,390 $ 2,605 $ 1,916 $ 13,976 $ 11,261 $ 3,806
v3.19.3.a.u2
Income Taxes - Items Accounting for Differences Between Income Taxes Computed at Federal Statutory Rate and Provision Recorded for Income Taxes (Details) - USD ($)
$ in Millions
3 Months Ended 12 Months Ended
Dec. 31, 2019
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Income Tax Disclosure [Abstract]                      
Income taxes computed at the federal statutory rate                 $ 2,935 $ 2,365 $ 1,332
Effect of:                      
Tax impact of foreign earnings                 381 119 1,178
State taxes, net of federal benefits                 221 263 114
Tax credits                 (466) (419) (220)
Stock-based compensation                 (850) (1,086) (917)
2017 Impact of U.S. Tax Act                 0 (157) (789)
Other, net                 153 112 71
Provision for income taxes, net $ 786 $ 494 $ 257 $ 836 $ 327 $ 508 $ 74 $ 287 2,374 1,197 769
Excess tax benefits from stock-based compensation                 $ 1,400 $ 1,600 $ 1,300
v3.19.3.a.u2
Income Taxes - Deferred Income Tax Assets and Liabilities (Details) - USD ($)
$ in Millions
Dec. 31, 2019
Dec. 31, 2018
Deferred tax assets:    
Loss carryforwards U.S. - Federal/States $ 188 $ 222
Loss carryforwards - Foreign 3,232 2,551
Accrued liabilities, reserves, and other expenses 1,373 1,064
Stock-based compensation 1,585 1,293
Depreciation and amortization 2,385 2,386
Operating lease liabilities 6,648 0
Other items 728 484
Tax credits 772 734
Total gross deferred tax assets 16,911 8,734
Less valuation allowance (5,754) (4,950)
Deferred tax assets, net of valuation allowances 11,157 3,784
Deferred tax liabilities:    
Depreciation and amortization (5,507) (3,579)
Operating lease assets (6,331) 0
Other items (640) (749)
Net deferred tax liabilities, net of valuation allowance $ (1,321) $ (544)
v3.19.3.a.u2
Income Taxes - Reconciliation of Tax Contingencies (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]      
Gross tax contingencies – beginning of period $ 3,414 $ 2,309 $ 1,710
Gross increases to tax positions in prior periods 216 164 223
Gross decreases to tax positions in prior periods (181) (90) (139)
Gross increases to current period tax positions 707 1,088 518
Settlements with tax authorities (207) (36) 0
Lapse of statute of limitations (26) (21) (3)
Gross tax contingencies - end of period 3,923 $ 3,414 $ 2,309
Tax contingencies, that if fully recognized, would decrease our effective tax rate $ 2,100    
v3.19.3.a.u2
Segment Information - Additional Information (Details)
$ in Millions
12 Months Ended
Dec. 31, 2019
USD ($)
segment
Dec. 31, 2018
USD ($)
Dec. 31, 2017
USD ($)
Segment Reporting [Abstract]      
Number of operating segments | segment 3    
Segment Reporting Information [Line Items]      
Property and equipment, net $ 72,705 $ 61,797 $ 48,866
United States      
Segment Reporting Information [Line Items]      
Property and equipment, net 53,000 45,100 35,500
Rest of world      
Segment Reporting Information [Line Items]      
Property and equipment, net $ 19,700 $ 16,700 $ 13,400
v3.19.3.a.u2
Segment Information - Reportable Segments and Reconciliation to Consolidated Net Income (Details) - USD ($)
$ in Millions
3 Months Ended 12 Months Ended
Dec. 31, 2019
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Segment Reporting Information [Line Items]                      
Total net sales $ 87,437 $ 69,981 $ 63,404 $ 59,700 $ 72,383 $ 56,576 $ 52,886 $ 51,042 $ 280,522 $ 232,887 $ 177,866
Operating expenses                 265,981 220,466 173,760
Operating income (loss) 3,879 3,157 3,084 4,420 3,786 3,724 2,983 1,927 14,541 12,421 4,106
Total non-operating income (expense)                 (565) (1,160) (300)
Provision for income taxes (786) (494) (257) (836) (327) (508) (74) (287) (2,374) (1,197) (769)
Equity-method investment activity, net of tax                 (14) 9 (4)
Net income $ 3,268 $ 2,134 $ 2,625 $ 3,561 $ 3,027 $ 2,883 $ 2,534 $ 1,629 11,588 10,073 3,033
North America                      
Segment Reporting Information [Line Items]                      
Total net sales                 170,773 141,366 106,110
Operating expenses                 163,740 134,099 103,273
Operating income (loss)                 7,033 7,267 2,837
International                      
Segment Reporting Information [Line Items]                      
Total net sales                 74,723 65,866 54,297
Operating expenses                 76,416 68,008 57,359
Operating income (loss)                 (1,693) (2,142) (3,062)
AWS                      
Segment Reporting Information [Line Items]                      
Total net sales                 35,026 25,655 17,459
Operating expenses                 25,825 18,359 13,128
Operating income (loss)                 $ 9,201 $ 7,296 $ 4,331
v3.19.3.a.u2
Segment Information - Disaggregation of Revenue (Details) - USD ($)
$ in Millions
3 Months Ended 12 Months Ended
Dec. 31, 2019
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Disaggregation of Revenue [Line Items]                      
Total net sales $ 87,437 $ 69,981 $ 63,404 $ 59,700 $ 72,383 $ 56,576 $ 52,886 $ 51,042 $ 280,522 $ 232,887 $ 177,866
Online stores                      
Disaggregation of Revenue [Line Items]                      
Total net sales                 141,247 122,987 108,354
Physical stores                      
Disaggregation of Revenue [Line Items]                      
Total net sales                 17,192 17,224 5,798
Third-party seller services                      
Disaggregation of Revenue [Line Items]                      
Total net sales                 53,762 42,745 31,881
Subscription services                      
Disaggregation of Revenue [Line Items]                      
Total net sales                 19,210 14,168 9,721
AWS                      
Disaggregation of Revenue [Line Items]                      
Total net sales                 35,026 25,655 17,459
Other                      
Disaggregation of Revenue [Line Items]                      
Total net sales                 $ 14,085 $ 10,108 $ 4,653
v3.19.3.a.u2
Segment Information Net Sales Attributed to Countries Representing Portion of Consolidated Net Sales (Details) - USD ($)
$ in Millions
3 Months Ended 12 Months Ended
Dec. 31, 2019
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Segment Reporting, Revenue Reconciling Item                      
Total net sales $ 87,437 $ 69,981 $ 63,404 $ 59,700 $ 72,383 $ 56,576 $ 52,886 $ 51,042 $ 280,522 $ 232,887 $ 177,866
United States                      
Segment Reporting, Revenue Reconciling Item                      
Total net sales                 193,636 160,146 120,486
Germany                      
Segment Reporting, Revenue Reconciling Item                      
Total net sales                 22,232 19,881 16,951
United Kingdom                      
Segment Reporting, Revenue Reconciling Item                      
Total net sales                 17,527 14,524 11,372
Japan                      
Segment Reporting, Revenue Reconciling Item                      
Total net sales                 16,002 13,829 11,907
Rest of world                      
Segment Reporting, Revenue Reconciling Item                      
Total net sales                 $ 31,125 $ 24,507 $ 17,150
v3.19.3.a.u2
Segment Information - Reconciliation of Assets from Segment to Consolidated (Details) - USD ($)
$ in Millions
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Segment Reporting, Asset Reconciling Item [Line Items]      
Total assets $ 225,248 $ 162,648 $ 131,310
Operating Segments | North America      
Segment Reporting, Asset Reconciling Item [Line Items]      
Total assets 72,277 47,251 35,844
Operating Segments | International      
Segment Reporting, Asset Reconciling Item [Line Items]      
Total assets 30,709 19,923 18,014
Operating Segments | AWS      
Segment Reporting, Asset Reconciling Item [Line Items]      
Total assets 36,500 26,340 18,660
Corporate      
Segment Reporting, Asset Reconciling Item [Line Items]      
Total assets $ 85,762 $ 69,134 $ 58,792
v3.19.3.a.u2
Segment Information - Reconciliation of Property and Equipment from Segments to Consolidated (Details) - USD ($)
$ in Millions
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Segment Reporting, Other Significant Reconciling Item [Line Items]      
Property and equipment, net $ 72,705 $ 61,797 $ 48,866
Operating Segments | North America      
Segment Reporting, Other Significant Reconciling Item [Line Items]      
Property and equipment, net 31,719 27,052 20,401
Operating Segments | International      
Segment Reporting, Other Significant Reconciling Item [Line Items]      
Property and equipment, net 9,566 8,552 7,425
Operating Segments | AWS      
Segment Reporting, Other Significant Reconciling Item [Line Items]      
Property and equipment, net 23,481 18,851 14,885
Corporate      
Segment Reporting, Other Significant Reconciling Item [Line Items]      
Property and equipment, net $ 7,939 $ 7,342 $ 6,155
v3.19.3.a.u2
Segment Information - Reconciliation of Property and Equipment Additions from Segments to Consolidated (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Segment Reporting Information [Line Items]      
Property and equipment additions $ 30,018 $ 25,068 $ 29,783
Operating Segments | North America      
Segment Reporting Information [Line Items]      
Property and equipment additions 11,752 10,749 13,200
Operating Segments | International      
Segment Reporting Information [Line Items]      
Property and equipment additions 3,298 2,476 5,196
Operating Segments | AWS      
Segment Reporting Information [Line Items]      
Property and equipment additions 13,058 9,783 9,190
Operating Segments | AWS | Assets Held Under Finance Leases      
Segment Reporting Information [Line Items]      
Property and equipment additions 10,600    
Operating Segments | AWS | Assets held under capital leases      
Segment Reporting Information [Line Items]      
Property and equipment additions   8,400 7,300
Operating Segments | AWS | Assets under finance leases      
Segment Reporting Information [Line Items]      
Property and equipment additions 0 245 134
Operating Segments | North America and International | Assets Held Under Finance Leases      
Segment Reporting Information [Line Items]      
Property and equipment additions 3,800    
Operating Segments | North America and International | Assets held under capital leases      
Segment Reporting Information [Line Items]      
Property and equipment additions   2,000 2,900
Operating Segments | North America and International | Assets under finance leases      
Segment Reporting Information [Line Items]      
Property and equipment additions 1,300 3,000 2,900
Corporate      
Segment Reporting Information [Line Items]      
Property and equipment additions $ 1,910 $ 2,060 $ 2,197
v3.19.3.a.u2
Segment Information - Depreciation Expense, by Segment (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Segment Reporting Information [Line Items]      
Depreciation expense $ 15,150 $ 12,138 $ 8,831
North America      
Segment Reporting Information [Line Items]      
Depreciation expense 5,106 4,415 3,029
International      
Segment Reporting Information [Line Items]      
Depreciation expense 1,886 1,628 1,278
AWS      
Segment Reporting Information [Line Items]      
Depreciation expense $ 8,158 $ 6,095 $ 4,524
v3.19.3.a.u2
Quarterly Results (Unaudited) (Details) - USD ($)
$ / shares in Units, shares in Millions, $ in Millions
3 Months Ended 12 Months Ended
Dec. 31, 2019
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Quarterly Financial Information Disclosure [Abstract]                      
Total net sales $ 87,437 $ 69,981 $ 63,404 $ 59,700 $ 72,383 $ 56,576 $ 52,886 $ 51,042 $ 280,522 $ 232,887 $ 177,866
Operating income 3,879 3,157 3,084 4,420 3,786 3,724 2,983 1,927 14,541 12,421 4,106
Income before income taxes 4,053 2,632 2,889 4,401 3,350 3,390 2,605 1,916 13,976 11,261 3,806
Provision for income taxes (786) (494) (257) (836) (327) (508) (74) (287) (2,374) (1,197) (769)
Net income $ 3,268 $ 2,134 $ 2,625 $ 3,561 $ 3,027 $ 2,883 $ 2,534 $ 1,629 $ 11,588 $ 10,073 $ 3,033
Basic earnings per share $ 6.58 $ 4.31 $ 5.32 $ 7.24 $ 6.18 $ 5.91 $ 5.21 $ 3.36 $ 23.46 $ 20.68 $ 6.32
Diluted earnings per share $ 6.47 $ 4.23 $ 5.22 $ 7.09 $ 6.04 $ 5.75 $ 5.07 $ 3.27 $ 23.01 $ 20.14 $ 6.15
Shares used in computation of earnings per share:                      
Basic (in shares) 496 495 493 491 490 488 486 484 494 487 480
Diluted (in shares) 505 504 503 502 501 501 500 498 504 500 493