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Big tech companies report massive earnings amid pandemic

Big tech companies report massive earnings amid pandemic
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America’s biggest tech companies on Thursday reported massive earnings for the third quarter of 2020, strengthening their positions at a time when the coronavirus recession is ravaging other industries.

Amazon, Facebook, Google, Twitter and Alphabet, Google’s parent company, all notched significant gains from July through September.

Alphabet beat Wall Street expectations with revenue of $46.2 billion, up 14 percent from the same period a year earlier. Those numbers boosted its shares more than 9 percent.

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"We had a strong quarter, consistent with the broader online environment,” CEO Sundar Pichai said in a statement. “It’s also a testament to the deep investments we’ve made in AI and other technologies, to deliver services that people turn to for help, in moments big and small.”

Google’s advertising brought in $37.1 billion, up from $33.7 billion in the third quarter last year, and YouTube ad revenue increased 30 percent to $5 billion.

That growth represents a major bounce back from the second quarter, when the company saw its first ever revenue decline as advertising plummeted early in the pandemic.

Amazon on Thursday said its third quarter sales rose 37 percent up to a record $96.2 billion. Those sales drove a $6.3 billion profit, up from $2.1 billion the year prior.

The e-commerce giant is predicting sales to rise again in the fourth quarter, with a forecast of between $112 and $121 billion.

Apple also exceeded Wall Street expectations with its earnings, but its stock fell slightly after trading with iPhone sales plunging.

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Revenue grew to a record $64.7 billion, although that figure is only a 1 percent increase from the year prior. Total net income was $12.67 billion, down roughly $1 billion from last year.

The company did not provide a forecast for the fourth quarter.

“Despite the ongoing impacts of COVID-19, Apple is in the midst of our most prolific product introduction period ever, and the early response to all our new products, led by our first 5G-enabled iPhone lineup, has been tremendously positive,” CEO Tim Cook said in Apple’s earnings report.

Facebook reported $21.47 billion in revenue in the third quarter of 2020, up from $17.66 billion the year prior.

However, the company reported a dip in U.S. and Canada daily active users compared to last quarter — from 198 million to 196 million. That decline tempered the market reaction to the company's strong revenue.

"We had a strong quarter as people and businesses continue to rely on our services to stay connected and create economic opportunity during these tough times," CEO Mark ZuckerbergMark Elliot ZuckerbergDemocrats urge YouTube to remove election misinformation, step up efforts ahead of Georgia runoff Democrats press Facebook, Twitter on misinformation efforts ahead of Georgia runoff Hillicon Valley: Facebook content moderators demand more workplace protections | Ousted cyber official blasts Giuliani press conference | Tech firms fall short on misinformation targeting Latino vote MORE said.

The Facebook ad boycott campaign organized by civil rights groups over the summer does not seem to have affected the company's advertising revenue in any meaningful way. Facebook saw a 22 percent increase in that category, up to $21.22 billion, compared with the same period last year.

Twitter also beat analysts' expectations for third quarter earnings, but saw its stock fall sharply on the back of slowing user growth.

Revenue jumped 14 percent to $936 million from the year prior. Monetizable daily active users grew to 187 million, but some analysts had predicted higher numbers.

“We have grown our daily audience by 42 million in the last year as people all around the world come to Twitter to find out about the topics and events they care about most,” CEO Jack Dorsey said in the earnings report.

The across-the-board revenue growth for tech companies comes amid increasing regulatory pressure from Washington.

Alphabet, Amazon, Apple and Facebook were the subjects of a comprehensive report on digital marketplace competition released last month by a House Judiciary Committee antitrust panel.

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More recently, the Justice Department charged Google with illegally maintaining a monopoly on search and search advertising.

The Federal Trade Commission and several state attorneys general are preparing to file suits targeting Facebook and Google as well.

“Today’s positive earnings reports from Alphabet, Amazon, Apple, and Facebook are not shocking. They merely reflect the insidious and unchecked power Amazon, Apple, Facebook and Google have over American society and business,” said Sarah Miller, executive director of the American Economic Liberties Project, an advocacy group focused on fighting monopolies and corporate power.

Even Twitter, which is not nearly as large as the other four companies, took heat from the Senate Commerce Committee in a hearing Wednesday over unfounded allegations of anti-conservative bias.

Both Zuckerberg and Dorsey are scheduled to appear before the Senate Judiciary Committee on Nov. 17 for another round of questioning on content moderation.