The big four technology firms have produced a record £29billion in profits and £177billion of sales during the coronavirus pandemic.
In a blowout set of earnings, Amazon, Apple, Google, and Facebook all reported quarterly results within minutes of each other yesterday.
For July to September, Amazon’s profits climbed to £4.87billion ($6.3billion); Apple’s dropped to £9.8billion ($12.7billion); Google’s increased to £8.7billion ($11.25billion); and Facebook’s rose to £6.1billion ($7.84billion).
The figures stand in stark contrast to the fortunes of many traditional businesses, which have been devastated by the Covid-19 crisis, as consumers flock online to buy goods and switch to working from home.
Big Tech’s earnings are also continuing to soar despite increased regulatory scrutiny across the four companies – including federal antitrust charges against Google’s parent company Alphabet Inc and user and advertiser boycotts of Facebook Inc.
Amazon CEO Jeff Bezos (right) and Apple chief Tim Cook (left) are seen in file photographs
Sundar Pichai, CEO of Google’s Alphabet Inc., is seen as he testifies remotely during a Senate Commerce hearing on Wednesday (right). Marck Zuckerberg is pictured in February (left)
On Wednesday, a day before the earnings were published, Republican senators in a virtual Senate commerce committee tongue-lashed Facebook, Google and Twitter, accusing them of censoring conservative content on their platforms.
Google has also been sued by the Department of Justice for anti-competitive behaviour and Apple is being watched after it emerged that it was charging a premium for companies to advertise through its App Store.
Amazon said yesterday that its sales surged 37 per cent for the quarter to a record $96.2 billion (£74.4billion), generating a $6.3 billion (£4.87billion) profit, roughly three times its profits from the same period last year.
‘There is no doubt that Amazon’s latest results show it continues to be a winner from disruption caused by the pandemic,’ said Neil Saunders of the research firm GlobalData.
But Saunders said growth was slower than in recent quarters as rivals ramped up competition and that ‘Amazon’s share of wallet dropped back a little.’
Shares in iPhone maker Apple fell as the firm reported a one per cent rise in revenues to £50billion ($64.7 billion) and a seven per cent drop in profits to £9.8billion ($12.7billion).
This was slightly better than expectations but Apple did not offer any forecasts of sales for Christmas, leaving investors in the dark about how well the firm thinks its new iPhone 12 handset will sell.
Amazon shares initially rose 2 per cent in after-hours trading, but then slumped 1 per cent as the company forecast £3.97billion ($4 billion) in COVID-19 related costs for the fourth quarter
Making a fortune: Jeff Bezos – pictured with partner Lauren Sanchez
However the company reported a 21 per cent drop in iPhone sales in the July to September quarter, worse than analysts had predicted, with strong sales of its Macbook computers and iPad tablets failing to make up for the decline.
At the same time, Google parent Alphabet’s shares roared almost eight per cent higher.
It reported a 14 per cent rise in third-quarter revenues to £35.7billion ($46.1 billion) and a 60 per cent rise in profits to £8.7billion ($11.25 billion).
The company, which makes most of its income from digital ads, benefited from higher spending by businesses seeking to attract online shoppers over the summer as well as a 45 per cent rise in sales at its cloud computing division.
Fuelling the jump was money made from cloud computing offerings and from its Google Play shop for smartphones powered by its Android software, the company said.
‘None of the political machinations made any difference at all,’ said analyst Patrick Moorhead of Moor Insights and Strategy. ‘We had a Facebook boycott and a lot of regulatory scrutiny about Google. Digital advertising is back.’
Shares in iPhone maker Apple also fell by more than four per cent as the firm reported a one per cent rise in revenues to £50billion and a seven per cent drop in profits to £9.8billion
Blockbuster revenue in the quarter was led by an increase in ad spending at Google’s search engine and video streaming platform YouTube, according to chief financial officer Ruth Porat.
Elsewhere, the return to higher advertising spending by businesses also buoyed the rival ad businesses of social networks Facebook and Twitter.
Facebook reported a 22 per cent rise in revenues to £16.6billion ($21.2billion) and a 29 per cent rise in profits to £6.1billion ($7.84 billion), as the company continued to benefit from people relying on the internet to stay connected during the pandemic.
‘Facebook has rebounded nicely from both the early-pandemic advertiser pullout, when marketers pulled ads across all media to redo messaging or conserve funds, and from the July ad boycott,’ said eMarketer analyst Debra Aho Williamson:
‘Despite its challenges with election turmoil and content moderation, it remains a go-to for advertisers seeking to engage a broad base of consumers.’
The company said daily users rose 12 per cent to 1.82billion during the quarter.
Google parent Alphabet’s shares roared almost eight per cent higher in post-session trading after the firm blew analysts’ expectations out of the water
Since the start of the virus outbreak in the United States eight months ago, consumers have turned increasingly to Amazon for delivery of groceries, home goods and medical supplies.
As brick-and-mortar shops closed their doors under lockdown orders, Amazon moved to recruit over 400,000 more workers and earned the largest profits in its 26-year history.
It has kept the world’s largest online retailer at the center of workplace and political tumult. Democratic politicians this month accused Amazon of holding ‘monopoly power’ over merchants on its platform, which the company disputes.
Facebook reported a 22 per cent rise in revenues to £16.6billion and a 29 per cent rise in profits to £6.1billion
Meanwhile, more than 19,000 of Amazon’s U.S. employees contracted COVID-19, and some staff protested for site closures.
Amazon has responded with an array of precautions and a virus testing program for employees that have helped the company stay operational.
Jeff Bezos, Amazon’s chief executive and richest person in the world, said in a press release, ‘We’re seeing more customers than ever shopping early for their holiday gifts, which is just one of the signs that this is going to be an unprecedented holiday season.’
At the same time, logistics costs have been rising in recent months as Amazon worked to cut standard delivery times for Prime loyalty club customers — and the pandemic has only added to its challenges.