Big Tech Companies Reap Gains as Covid-19 Fuels Shift in Demand

Big Tech Companies Reap Gains as Covid-19 Fuels Shift in Demand

Mega tech companies are benefiting from the changed behaviour of users and advertisers during the COVID-19 pandemic. The trend towards online shopping brought Amazon a record profit in the past quarter.

In its advertising business, Facebook is benefiting from the fact that more small companies are going online in order to absorb the burglaries caused by the crisis. At Google, among other things, the video platform YouTube is booming, while people are more at home. And at Apple, the business with Mac computers and iPads grew in times of working from home and online learning.

Amazon increased quarterly sales year-on-year by 37 percent to 96.1 billion dollars (82.3 billion euros). The profit tripled to the previous record of $ 6.3 billion. “We see more customers than ever before who buy gifts early,” said Amazon boss Jeff Bezos. This is an indication that an “unprecedented” Christmas business is imminent.

Amazon has forecast revenues between $ 112 billion and $ 121 billion for the current quarter. It would be the first time that the company has broken the $ 100 billion mark in one quarter. With its delivery services, Amazon had already benefited greatly in the previous quarters from the fact that the demand for orders on the Internet increased sharply during the pandemic. Amazon’s lucrative cloud business with IT services and storage space on the Internet has recently continued to flourish.

At the beginning of the crisis, analysts at Facebook were still concerned about business. Small and medium-sized businesses make up a large proportion of Facebook advertisers. Many of them – such as cafes or restaurants – have been hit hard by the pandemic. However, it turns out that Facebook’s business is even getting a boost as more companies go online in search of new revenue in the pandemic. The turnover of the online network, which is mainly achieved with advertising, rose by 22 percent to 21.2 billion dollars. The bottom line was a profit of $ 7.85 billion – an increase of 29 percent.

As an example, top manager Sheryl Sandberg cited a family company that otherwise sold soaps from its own production at weekly markets. In the pandemic, she is now using Facebook as a platform and has expanded her business. On this basis, Facebook builds the argument that the online network plays a role worth protecting for the economy during the crisis – and, for example, data protection restrictions could ultimately damage the economy.

The number of daily active Facebook users rose within three months by 30 million to around 1.82 billion. Every day 2.54 billion users access at least one app from the group – such as Instagram and WhatsApp.

Thanks to online advertising, the profits of Google parent Alphabet shot up by almost 60 percent to $ 11.2 billion, while revenues grew by 14 percent to $ 46.2 billion.

After a setback in the previous quarter, Google’s advertising business was up and running again and contributed the largest share of sales with 37.1 billion dollars. In addition, the advertising revenues of the video subsidiary Youtube, which rose by a third to five billion dollars, as well as the cloud business with IT services on the Internet flourished.

Unlike these companies, Apple still does a lot of its business selling devices. And here Apple had a problem in the past quarter: The new iPhone generation was not presented in September as usual, but only a month later. That meant for the quarter a profit decline by 7.4 percent to 12.7 billion dollars.

IPhone sales plummeted year-on-year by a fifth to around $ 26.4 billion. But: The group’s total revenues grew by one percent to $ 64.7 billion. This was ensured by increased business with iPads and Mac computers, among other things, as well as subscriptions for streaming and other services.

The exciting question will now be whether the Christmas quarter for the new iPhone 12 is as strong as usual. CFO Luca Maestri said in a conference call with analysts that the group expects growth in the business. The turnover with Macs rose in the past quarter by 29 percent to a good nine billion dollars. The iPad business grew 46 percent to $ 6.8 billion.

At the same time, the successful tech giants are increasingly being targeted by competition authorities in their home market, the USA, where regulators have so far tended to let the reins loose. Last week the US Department of Justice filed a long awaited competition lawsuit against Google. It accuses the group of using its market power in internet searches and related advertising in a prohibited manner.

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