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Home / Business / Big Tech ignores the global economic downturn and makes a profit

Big Tech ignores the global economic downturn and makes a profit



The four largest U.S. technology companies announced a Big Tech quarter on Thursday as the global economy slowed and many of their customers and business partners are experiencing severe financial pain.

A graphical display of the resilience of Apple, Amazon, Facebook and Google to business came the day after senior executives from the same companies faced hostile polls in the U.S. Congress, accusing them of using the power of their platforms to seize and stifle competition. . .

While growing concerns in Washington clarified regulatory concerns for businesses, it was still lost on Wall Street, which reacted euphorically to Thursday’s revenue news. After earnings became clear, the combined market value of the four companies rose by about $ 230 billion after trading in the secondary market, increasing by $ 5 for the first time.

Their success attracted a staggering alignment with the American economy, which fell 9.5 percent from the previous three months.

“The day we learned that the U.S. economy was shrinking more than ever before, these companies saw tremendous growth,”

; said Roger McNamee, a longtime technology investor and one of Facebook’s most prominent critics of Silicon Valley.

“Without some regulatory intervention, they will continue to displace more and more of the economy.”

Mark Zuckerberg, Facebook’s chief executive, took advantage of a Wall Street call for earnings to call regulators, who may be considering ways to limit his company’s advertising practices to avoid fear of privacy.

According to him, the restrictions “will reduce the opportunities for small business to such an extent that it is likely to be felt at the macroeconomic level”. He added: “Do politicians really want that during a pandemic and recession?”

At the end of Thursday, Apple saw its market capitalization jump to more than $ 100 billion, after a period of expected shortening in the second quarter, it made a staggering explosion of growth. Despite many weeks forced to close stores due to the coronavirus pandemic, its revenue rose 11 percent, or about $ 6 billion.

Tim Cook, Apple’s chief executive, acknowledged that his company’s revenue “is a staggering relief in times of real economic hardship for large and small businesses, and certainly families.” He added that Apple has focused on growing cake and creating opportunities for others.

Research group Canalys estimated that iPhone sales rose 25 percent in the last quarter, which is even more surprising as the broader smartphone market fell 14 percent. Samsung phone shipments fell 30 percent and handed over its sales crown to Huawei for the first time. However, Huawei also fell 5 percent. Of the top five vendors, only Apple grew.

The extent of the surprise was matched by Amazon. Many investors expected the email. The trading company’s profits will be full, but the quarter was wiped out by the extra $ 4 billion in costs it incurs to sustain its operations during the crisis. Instead, profit after tax doubled to $ 5.2 billion and revenue rose 40 percent.

On the contrary, their reliance on advertising on Facebook and Google has made them less isolated from the wider economic turmoil. But they were still doing well, with more than 20 percent of total advertising falling in many global markets, said Brian Wieser, head of business intelligence at WPP-owned GroupM.

He added that not only reflects the overall transition of advertising to digital channels, but also their resilience has shown that the largest platforms have done the best periods of recession.

Facebook’s revenue jumped 11 percent to $ 18.7 billion – a much larger rebound than expected 3 percent growth. Mr Zuckerberg also calmed concerns about advertising boycotts of more than 1,000 brands, including Verizon and Ford, saying critics still “wrongly think our business depends on a few big advertisers.”

Only Alphabet, the father of Google, did not join the party because it revealed the first drop in sales ever reported by an online group. But even the alphabet exceeded expectations and its revenue fell by only 2 per cent at a time when other advertising companies were shrinking sharply.

The excellent results of leading technology platforms have shown that they have disproportionately benefited from the increased digital activity this year, as industry reviewers have forced people around the world to work, study and entertain themselves at home.

“The benefits of both Amazon and Facebook are simply incredible, especially when you consider what bad things were in March,” said Youssef Squali, Robinson Humphrey, an Internet analyst at SunTrust.

He added that companies had good opportunities to change online operations, but also responded “flexibly” when in March. The bottom has fallen out of many of their markets.

Several technology executives also pointed to the impact of government action to isolate consumers from the worst of the economic crisis.

“Economic stimulus packages have helped economic activity not only in the U.S. but around the world and lifted some of the restrictions in place at the beginning of the quarter,” said Luca Maestri, Apple’s chief financial officer.

After receiving calls on Wall Street late Thursday, technology company executives, after receiving criticism from the House’s antitrust subcommittee the day before, had almost no questions about the potential cost of more regulation.

Faced with one analyst question, Google CEO Sundar Pichai said: “If there are any areas that need to be adapted, we will. I think there has been an inspection for a while and we are committed to doing it. “

Additional reports by Dave Lee


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