An embarrassment of riches

Fully Charged
Bloomberg

Hello everyone, Ian here. Thursday was a blockbuster day for tech industry earnings. Apple Inc. blew past Wall Street's predictions, chalking up an 11% revenue increase. Facebook Inc. similarly crushed estimates, as did Amazon.com Inc. on its way to a record profit. Even Alphabet Inc.'s stock was up, despite the company reporting its first-ever decline in revenue, after it said ad sales were picking back up.

The reports showcased just how vital these companies' products and services have become to the everyday lives of billions of people, a phenomenon that the global coronavirus lockdowns have only accelerated. At Thursday's close, the four tech giants had a combined market value of $4.9 trillion. If after-hours gains hold in regular trading on Friday, it might take them over $5 trillion.

But instead of taking the usual victory lap on earnings calls late Thursday, tech leaders were almost apologetic. "We're conscious of the fact that these results stand in stark relief during a time of real economic adversity," Apple Chief Executive Officer Tim Cook said on a conference call. "Especially in times like this, we are focused on growing the pie, making sure our success isn't just our success and that everything we make build or do is geared towards creating opportunities for others."

As Cook's delicate phrasing suggests, it's awkward timing for a Big Tech blowout. Less than 24 hours before releasing their financial results, the CEOs of all four companies were arguing before Congress that they hadn't flouted antitrust rules on the way to making their companies massively powerful, and that they still faced intense competition.  

Also bad for optics: As tech stocks soared on Thursday, U.S. government officials reported that the country's gross domestic product had fallen an astounding 32.9% and jobless claims shot up. On Wednesday, the Census Bureau said that nearly 30 million Americans felt food insecurity at least once last week.

Cook wasn't the only executive who tried to tread lightly on Thursday. Amazon's executives touted their hiring record during the pandemic and investments in employee safety. CEO Jeff Bezos used the earnings release to note that revenue from small sellers on the platform was growing faster than sales of its own gear. Facebook Chief Operating Officer Sheryl Sandberg said small businesses have to go online like never before—hence the usefulness of Facebook. And Alphabet CEO Sundar Pichai told analysts that at Google's scale, it's appropriate that the company get close scrutiny.

Tech leaders, who have long complained of a "techlash," are showing they're hyper-aware that their escalating stock prices make them look more powerful than ever. And CEOs are eager to stress the societal benefits of the riches that are piling up. As tech fortunes climb, though, this new tack may not help them fend off rising attention from both the public and lawmakers.

Will it matter? Whether it's because there's a monopoly, or because their products are truly modern marvels, the numbers show consumers are still voting in the companies' favor in the most important sense: Even as budgets tighten, people are spending more on tech. Ian King

If you read one thing

Behold, the strange story of how photo company Kodak landed a $765 million government loan to make ingredients for generic drugs. It involves President Trump, a fresh-faced American University graduate and a lot (a lot) of Robinhood traders. 

And here's what you need to know in global technology news

Apple will launch next batch of iPhones a few weeks later than usual. 

Expedia bookings fell 90% in what the CEO said was "the worst quarter the travel industry has seen in modern history."

Australia's government ordered Facebook and Google to share revenue generated from news articles with media outlets

SoftBank is set to buy back up to 12% of shares, for $9.6 billion

 

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