AWS is an amazing business itself but it's easy to underestimate what a massive strategic advantage it is for amazon - compared to other retailers - to have it in their portfolio! [edited M to B - thanks for catching that :)]
That's by design. Amazon has found it's far more effective to deploy their excess capital toward company expenditures in the form of acquisitions, real estate, capex, employees, stock buybacks, etc rather than letting it get taxed as corporate operating income.
Those dollars do ultimately get taxed, to be clear, but in the form of employment taxes, individual capital gains, individual income taxes, and property taxes.
Acquisitions depend on what is being acquired. Goodwill can be depreciated.
But you’re right, I had forgotten that it may be amortized for tax purposes when it comes from a taxable asset sale (not for an stock-based acquisition).
edit: Take for example McDonalds. What are they supposed to invest in? Its a mature business at this point, and over-investment in random things would just destroy shareholder value.