The Covid-19 pandemic is decimating industries and policymakers are attacking tech companies on all fronts, but the Gafa (Google, Apple, Facebook and Amazon) are expected to perform again when they release their quarterly results Thursday.
“The reality is that strong groups get even stronger,” says analyst Daniel Ives of Wedbush Securities.
The bosses of dominant social networks, Facebook, Twitter and Google (YouTube) on Wednesday faced U.S. senators angry at the power of platforms and their influence in public debate, days before the U.S. election.
The blows rained on the Californian leaders, accused of both “censorship” by the right and laxity by the left, in terms of moderation of content.
This topic has stirred up passions in the context of current political tensions, from the Black Lives Matter movements to the many controversies over disinformation and Donald Trump’s regularly inflammatory comments online.
But even the huge advertising boycott against Facebook and its management of problematic content, followed this summer by several hundred companies, will no doubt be a scuff for the revenues of the company in Menlo Park, in Silicon Valley.
Because social networks have seen their number of users and their time spent online explode thanks to the confinements imposed to curb the health crisis.
The sure values of advertising
Facebook and its family of applications (Instagram and Messenger and WhatsApp) reaches 3.14 billion people every month.
The company has also released many new products (Facebook shops, Instagram checkout, Instagram Reels, etc.) to increase the opportunities to monetize their audience with their customers, advertisers and SMEs.
“In today’s environment, brands prefer to allocate even more of their marketing spend to proven digital channels, like Facebook and Google,” note experts at Canaccord Genuity.
In the second quarter, Alphabet, the parent company of Google and YouTube, was the only one of the Four Colossi to stumble, with $ 7 billion in net income, down $ 3 billion from last year.
The world leader in online advertising is indeed more exposed than Facebook to large advertisers, such as tour operators, whose revenues are collapsing due to the coronavirus.
“We expect better results in the third quarter for Google”, indicates Nicole Perrin of the firm eMarketer, betting in particular on “the solid expenses of the advertisers of the online commerce” or other sectors such as “the financial services, the electronics general public and food deliveries ”.
The market therefore awaits confirmation that Google has returned to form, but is also watching the reaction of the group’s leaders to the recent lawsuits launched against him by the Department of Justice and 11 US states.
They accuse the search engine of abuse of dominance.
The best is yet to come
“The irony is that the robust results expected for GAFA (…) will highlight their oversized power, and, ultimately, (…) fuel the dismantling drives of the tech giants to Washington ”, analyzes Daniel Ives.
Google is not alone in the eye of the storm. Various investigations by competition regulators target its neighbors, accused in particular of having prevented any competition from emerging.
Like Amazon. Jeff Bezos’ group continues to highlight the gains of SMEs that pass through its very popular “marketplace”, while many voices are raised in civil society to denounce stifling practices.
The Seattle-based company emerged in the second quarter with more than $ 5 billion in net income, double the level of a year ago, despite having $ 4 billion in operating income directly invested in managing the health crisis.
Its third quarter looks promising, but Wall Street is already eyeing the fourth with gusto, with the combined effects of Prime Day, its annual sales operation which exceptionally took place in October, and the holiday season, which is expected to be. even more digital than usual, pandemic obliges.
The same goes for Apple. The apple brand has just released its first range of smartphones equipped with 5G, the iPhone 12. Daniel Ives anticipates “80 million units sold during the launch period”, but it will be necessary to wait until January for the confirmation.