Big Tech continues its surge ahead of the rest of the economy

This combination of pictures created on July 10, 2019 shows a Facebook logo on July 4, 2019 in Nantes, an Apple logo in San Francisco on September 7, 2016, a Google logo in China's Chongqing on August 23, 2018, and an Amazon logo in New York on September Photograph:( AFP )

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Amazon reported record sales, and an almost 200% rise in profits, as the pandemic accelerated the transition to online shopping.

While the rest of the US economy languished earlier this year, the tech industry’s biggest companies seemed immune to the downturn, surging as the country worked, learned and shopped from home.

On Thursday, as the economy is showing signs of improvement, Amazon, Apple, Alphabet and Facebook reported profits that highlighted how a recovery may provide another catalyst to help them generate a level of wealth that hasn’t been seen in a single industry in generations.

With an entrenched audience of users and the financial resources to press their leads in areas like cloud computing, e-commerce and digital advertising, the companies demonstrated again that economic malaise, upstart competitors and feisty antitrust regulators have had little effect on their bottom line.

Combined, the four companies reported a quarterly net profit of $38 billion.

Amazon reported record sales, and an almost 200% rise in profits, as the pandemic accelerated the transition to online shopping. Despite a boycott of its advertising over the summer, Facebook had another blockbuster quarter. Alphabet’s record quarterly net profit was up 59%, as marketers plowed money into advertisements for Google search and YouTube. And Apple’s sales rose even though the pandemic forced it to push back the iPhone 12’s release to October, in the current quarter.

On Tuesday, Microsoft, Amazon’s closest competitor in cloud computing, also reported its most profitable quarter, growing 30% from a year earlier.

“The scene that’s playing out fundamentally is that these tech stalwarts are gaining more market share by the day,” said Dan Ives, managing director of equity research at Wedbush Securities. “It’s ‘A Tale of Two Cities’ for this group of tech companies and everyone else.”

The results were strong despite increasing antitrust scrutiny from regulators. Last week, the Justice Department filed a lawsuit accusing Google of cementing the dominance of its search engine through anti-competitive agreements with device makers and mobile carriers. Facebook faces a possible antitrust case from the Federal Trade Commission.

The companies’ advantages are becoming more pronounced in an economy starting to dig out from the coronavirus pandemic. On Thursday, the Commerce Department said US economic output grew 7.4% last quarter, the fastest pace on record, but remained below where it was in the last pre-pandemic quarter.

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