How Big Tech Got Even Bigger
February 06 2021 - 12:30AM
Dow Jones News
By The staff of The Wall Street Journal
The tech industry's titans were already huge before Covid-19,
the subject of soaring valuations and snowballing antitrust
investigations. The pandemic has only made them bigger. A lot
bigger.
In almost every facet of life -- the tools we use to work,
study, and play; how we shop and interact; the way companies
operate and market their products -- people and businesses have
become more reliant on technology over the past year. Even amid one
of the most punishing economic downturns on record, spending surged
on computers, videogames, online retail, cloud-computing services
and digital advertising.
The result was dizzying growth for some of the largest
corporations in history -- and for their stock prices. At a time
when companies such as airlines and bricks-and-mortar retailers
struggled to survive, combined revenue for the five biggest U.S.
tech companies -- Apple Inc., Microsoft Corp., Amazon.com Inc.,
Google-parent Alphabet Inc., and Facebook Inc. -- grew by a fifth,
to $1.1 trillion. Their aggregate profit rose an even faster 24%.
And their combined market capitalization soared by half over the
past year to a staggering $8 trillion.
Their economic sway expanded in other ways, too, including
employment: Amazon alone added 500,000 new workers in a single
year, roughly equivalent to the entire population of Atlanta.
Lawmakers and regulators may yet find ways to rein them in, but
the economic and societal forces propelling Big Tech to even higher
heights seem likely to outlast Covid-19. Microsoft Chief Executive
Satya Nadella has said that he expects spending on technology to
double to 10% of gross domestic product from its current level of
5%. This month he said he now expects that to happen even
faster.
Here is a closer look at the rise of the big five:
Apple
Apple was one of a number of companies that saw demand soar for
laptops, tablets and other devices as many people stayed home for
work and school due to Covid-19 lockdowns. The Cupertino, Calif.,
company unveiled a variety of new iPhone models in the year, a
device that makes up a substantial portion of its annual profits.
Sales of its Mac computers fell in the January-to-March quarter
compared with the same period in the previous year before shooting
up in the rest of 2020.
Microsoft
Microsoft has enjoyed surging sales as companies and individuals
adapted to pandemic life, with its Xbox videogames, Surface laptops
and myriad cloud-computing services in hot demand. Its Teams
software suite, the company's workplace collaboration tool that
includes video functionality similar to Zoom Video Communications
Inc. and text chat like Slack Technologies Inc., has seen average
daily use numbers more than triple. In the latest quarter, the
business selling ads on its Bing search engine, which struggled
early in the pandemic, also turned the corner. Microsoft shares are
up more than 30% over the past year and trading at all-time highs,
giving the software powerhouse a market valuation above $1.8
trillion, second only to Apple.
Amazon
Pandemic-fueled online shopping powered a rapid shift to
e-commerce among consumers, and few benefited as much as Amazon.
The company's revenue jumped 38% to $386.1 billion last year. To
meet the uptick in demand, Amazon went on a hiring spree, adding
roughly 500,000 workers. It now employs 1.3 million people
globally, and if the rapid pace of hiring continues, Amazon could
overtake Walmart Inc. in the coming years as the largest U.S.
employer.
Alphabet
Google, the advertising behemoth, powered through the pandemic
as more people spent time on the internet and increasingly shifted
their spending to digital channels through the health crisis. The
Alphabet unit was hurt in the first half of 2020 as advertisers
paused spending in the early pandemic months, but the business
rebounded later in the year. The eponymous search engine has been
the advertising breadwinner for years but the company has said
YouTube is seeing strong growth in ad spend.
Facebook
Facebook was already a social-networking giant prior to the
pandemic, but its swath of services including Instagram, WhatsApp
and Messenger continued to add users world-wide through 2020 as
people spent loads of time online as stay-at-home orders grounded
in-person activities.
The company has been introducing new features such as shopping
into Instagram to capitalize on the e-commerce boom and
strengthened the connections among its platforms to help it better
compete with tech rivals. The moves also are aimed to make its
products hard to quit.
(END) Dow Jones Newswires
February 06, 2021 00:15 ET (05:15 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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