Despite a historic economic downturn in which the American economy contracted more than it ever has in one quarter, four big tech companies — Alphabet, Amazon, Apple, and Facebook — saw huge profits and extremely healthy second quarters, proving that they operate in a different space than much of the rest of the economy.
The gross domestic product (GDP) in the U.S. sank 9.5 percent in the second quarter, as was widely reported on Thursday — on an annualized basis that translates to 32.9 percent, which was the figure most widely publicized. That also translates to a contraction of $1.8 trillion.
But for Bay Area tech giants Alphabet, Apple, and Facebook, along with Seattle-based Amazon, it was a pretty stellar quarter overall, with Facebook reporting a 98-percent jump in profit, and Amazon reporting a 40-percent jump in sales year over year. As the New York Times reports, the four companies reported a combined $28.6 billion in quarterly net profit, in stark contrast to the dismal showing in the rest of the economy. And, as the Times notes, following a week in which multiple tech companies were answering questions before Congress, their financial situations underscore “how regulatory scrutiny remains more background noise and a distraction for them rather than an imminent threat to their businesses.”
Amazon CEO Jeff Bezos, Apple CEO Tim Cook, Alphabet CEO Sundar Pichai, and Facebook automaton Mark Zuckerberg all testified before a House antitrust subcommittee on Wednesday, with one congressman, Rep. David N. Cicilline (D-Rhode Island) calling the CEOs to “emperors of the online economy” and comparing their power to that of the King of England, whom the founding fathers “would not bow before.” As the Washington Post reports, the hearing may have been full of political theater, but it nonetheless showed how Silicon Valley had lost support on both sides of the aisle, and could have implications down the road with penalties and more antitrust investigations.
Still, the COVID-19 pandemic has largely been a boon to Amazon, Apple, and Facebook in particular, with one analyst telling the Times that it’s been like an injection of a “growth hormone” for Amazon while people’s shopping behaviors have shifted.
It’s also notable that in a quarter when Facebook was the subject of a major advertiser boycott and major news stories about how it moderates content that incites violence, it still turned a more than healthy profit and consumers showed little interest in changing their relationships to the site. Facebook currently has 2.47 billion people on Earth using one or more of its apps each day.
And while lawmakers threw some of Zuckerberg’s old emails back in his face, with regard to the 2012 acquisition of Instagram and more, it remains unlikely that these hearings and investigations will result in “breaking up” Facebook or these other tech giants. And they have plenty of extra cash to spend on high-priced lawyers if and when it came to that.
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