Amazon enters self-driving game with Zoox deal

CNBC's Deirdre Bosa on Amazon's move into self-driving. With CNBC's Melissa Lee and the Fast Money traders, Guy Adami, Tim Seymour, Brian Kelly and Jeff Mills.

Amazon has just taken its boldest step yet into self-driving vehicles, acquiring six-year-old start-up Zoox, the company announced Friday.

Amazon said the deal will help bring Zoox’s “vision of autonomous ride-hailing to reality.” Zoox will continue to operate as a standalone business within Amazon, with CEO Aicha Evans and Jesse Levinson, the company’s co-founder and CTO, continuing to lead the team, Amazon said.

Terms of the deal weren’t disclosed, but the Financial Times previously reported that Amazon would pay more than $1.2 billion to acquire Zoox. An Amazon spokesperson declined to comment.

“Zoox is working to imagine, invent, and design a world-class autonomous ride-hailing experience,” said Jeff Wilke, Amazon’s CEO of global consumer, in a statement. “Like Amazon, Zoox is passionate about innovation and about its customers, and we’re excited to help the talented Zoox team to bring their vision to reality in the years ahead.”

Shares of Amazon moved slightly higher following the news.

It’s a large deal for Amazon, which acquired Whole Foods for $13.7 billion in 2017 but has otherwise generally made acquisitions of less than $1 billion. With regulators bearing down on Amazon’s every move because of its dominance in e-commerce and treatment of warehouse workers during the coronavirus pandemic, the purchase of Zoox is certain to attract scrutiny from lawmakers and criticism from rivals.

It’s not immediately clear what Amazon plans to do with Zoox’s technology, but it’s possible Amazon could integrate Zoox’s offerings into its logistics network to offer cheaper and faster delivery, as well as its cashierless grocery stores.

Zoox, which was valued at $3.2 billion in a financing round two years ago, says on its website that it “is creating autonomous mobility from the ground up.” But the Silicon Valley company has struggled due to turmoil in its executive ranks (co-founder and ex-CEO Tim Kentley-Klay was fired from his leadership post in 2018), a legal fight with Tesla over alleged theft of trade secrets and overall delays in bringing self-driving technology to market.

Zoox cut about 100 jobs, or 10% of its staff in April, just after laying off about 120 contract workers amid California’s shelter-in-place orders. The Wall Street Journal reported in May that Amazon was in advanced talks to buy Zoox for less than its prior $3.2 billion valuation. Deal chatter surfaced even earlier, when The Information reported that the company had hired Frank Quattrone’s Qatalyst Partners to help find a buyer.

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