Big tech companies bet on digital platforms to successfully steer through COVID-19 crisis, says GlobalData

Despite the COVID-19 crisis, tech giants Facebook, Apple, Microsoft, Google and Amazon (FAMGA) have reported revenue growth in the first quarter (Q1) of 2020 even while small and medium enterprises struggled to navigate through the difficult times. Given that consumers would continue to spend more time online during the pandemic-induced lockdown in some form through the end of 2020, these big tech companies will take advantage of their portfolio of digital platforms to sustain growth, says GlobalData, a leading data analytics company.

Archi Dasgupta, Director of Disruptive Tech at GlobalData, comments: “With life locked at home being the new norm around the world, the COVID-19 pandemic has deepened the consumer reliance on digital platforms to access various services. This trend, which is cushioning the big tech companies from turbulence in their traditional revenue-generating businesses to balance their overall growth, will continue throughout 2020.”

An analysis of GlobalData’s Disruptor Intelligence Center reveals how FAMGA have switched their digital platforms in response to the COVID-19 pandemic to register year-over-year revenue growth in Q1 2020.

Despite its digital ads business taking a major hit in the last three weeks of March, Facebook posted nearly 18% growth in its revenue to US$17.7bn, mainly attributed to the lockdown and the effective work from home substantially increasing the traffic for its video calling and messaging applications.

Apple, confident of its long-term prospects, registered a marginal increase in its revenue to US$58.3bn. Though the sale of iPhones declined, Apple saw the growth in subscription services such as television content streaming as billions were confined to their homes.

Microsoft recorded a 15% growth in its revenues to US$35bn fueled by the growth in its cloud business. The company saw an uptick in the usage of its remote communication platform Microsoft Teams, cloud computing service Azure, and Windows Virtual Desktop services.        

Alphabet, the parent company of Google, posted a 13% growth in revenues to US$41.2bn. Despite the slowdown in its advertising business, Alphabet witnessed increased revenues for its G Suite, a part of Google Cloud, YouTube, and Pixel products.

Amazon recorded 26% growth in its revenues to US$75.5bn, backed by its digital businesses such as Amazon Web Services (AWS), Prime Video, and Fire TV that saw a huge surge in terms of both usage and subscription numbers. In contrast with other tech giants, the company’s advertising business revenues were up by 44% suggesting the usage of advanced machine learning algorithms to drive better ad relevancy.

Dasgupta concludes: “Post-COVID-19, the world will be different with the new normal being work-from-home, virtual meetings and conferences, touchless transactions and online education. FAMGA, with their portfolio of digital platforms, will come back strong to exploit the situation by engaging their customers more intensely and building long-term relationships.”

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