Facebook's down, privacy's up: 8 takeaways from this quarter's tech earnings

The cloud business did well, Meta is all-in on Reels, and the chip shortage was no match for chip companies.

Big Tech cash pile earnings

There's still a lot of money out there for Big Tech — but not everything looks rosy.

Image: Barta IV / Protocol

Big Tech has emerged from a couple of busy earnings weeks. Most of those companies will feel pretty good about their earnings ... except for Meta.

Amazon and Microsoft pointed to their cloud businesses as bright spots, while chip companies say they feel they have this whole chip crisis increasingly under control. On the other hand, TikTok is scaring seemingly everybody, as the race for short-form video supremacy heats up. Then there’s Tesla, which is more concerned about its humanoid robot than its cars.

Here’s a look at some of the biggest takeaways from tech earnings over the past couple weeks:

TikTok is taking over

Mark Zuckerberg confirmed what everyone knows to be true: TikTok is a force to be reckoned with. As Meta’s stock tanked after the company reported its first drop in Facebook users ever, Zuckerberg emphasized the importance of short-form video. So expect to see even more focus on Reels, Meta’s short-form video feature, as it looks to take on TikTok. Meta isn’t the only platform feeling pressure from the short-form video giant, either. Sundar Pichai said YouTube is continuing to focus on Shorts, its own TikTok clone.

The key to building the best short-form video platform seems to come down to how well companies can treat creators: YouTube highlighted all of the ways creators can make money off its platform late last month, and Instagram most recently began testing out creator subscriptions.

Apple's privacy push was bad, especially for Meta

Meta said that Apple’s ad-tracking change, which requires apps to ask users if they want to be tracked, will result in a $10 billion sales drop this year. That admission has been a long time coming: The company said back in October that Apple’s ad-tracking rule was bound to hurt business. "The Facebook ad product — thanks to the Apple iOS changes — just doesn't cut the mustard anymore,” Alexis Ohanian noted.

Snap had also expressed concerns about Apple’s change a few months ago, but CFO Derek Anderson said the company bounced back from the change “quicker than we anticipated.” Snap remains cautious, though, adding that it’ll take a couple more quarters before its ad partners are fully behind its new measurement solutions.

Pinterest had also worried about Apple's change, but its retail advertisers helped offset that concern.

What chip shortage?

The chip shortage hasn’t gone away, but chip companies came out strong this quarter. Qualcomm performed well this quarter, following the likes of Samsung and Apple, which said the chip crisis has mainly impacted its older models. Intel even posted the best quarterly and full-year revenue in its history.

Not everyone is so optimistic about the shortage: Tesla said it won’t release any new models this year, in part because of the bottleneck.

Competition in the Cloud

AWS is keeping its commanding lead over the cloud-computing business, despite long-held predictions that Google and Microsoft would eventually outpace it. While Microsoft Azure revenue increased 46% and Google Cloud grew 44% last quarter, AWS revenue increased by 40%.

But Satya Nadella thinks Microsoft might make bigger moves in the coming quarter. He’s been saying since the fall that cloud infrastructure can combat inflation, and though Azure’s growth slowed from 50% and 51% the previous two quarters, the company is still broadcasting an optimistic outlook. Microsoft indicated that its cloud business will continue to accelerate next quarter, and given it has an edge on Amazon in business software, the company is probably hoping committed Office 365 users will shift towards wanting all their enterprise tech in one place.

Amazon continues to feel the labor crunch

Amazon is still dealing with a labor shortage. The issue is impacting Amazon Prime, which will see a $20 increase in its annual membership due in part to the rising cost of workers. Andy Jassy said labor supply shortages continued because of a surge in COVID-19 cases, but a rise in wages and transportation costs also haven’t helped.

The price hike for Amazon Prime follows a stressful holiday season for the company. Amazon spent billions to offset labor costs, transportation fees and supply chain issues ahead of the holiday season, while Apple said it lost billions because of similar issues. Apple hasn’t completely navigated labor shortages and high shipping fees either, but said it’s expecting those problems to let up by March.

Tesla is in its own world

Sure, Amazon might also be competing with Tesla in the race for the first efficient electric truck. But Elon Musk hasn’t seemed to notice.

The chip shortage is getting in the way of Tesla finally delivering its Cybertruck, which Musk originally said would be in production by 2021. But he missed that self-set deadline, and is again delaying expectations at least another year.

Instead, Musk wants all eyes on a flashy new humanoid robot Tesla will be releasing … at some point, maybe this year. (As we've learned, Musk is not great with deadlines.) It’s been assigned the code-name “Optimus,” and Musk said it’s the “most important product development” Tesla’s working on — despite the fact that he warned about an AI apocalypse just a few years ago.

Tech companies are still trying to figure out how to moderate content.

“It is important to me that we don’t take on the position of being a content censor.”

Sound familiar? That was Spotify’s CEO explaining to investors his handling of the Joe Rogan Experience podcast in a blog post last week, ahead of the company’s earnings call. But it’s awfully similar to how Mark Zuckerberg describes his thoughts on content moderation, over and over again.

Will platforms ever learn? Probably not until earnings force their hands. And though Spotify’s stock took about a 20% hit over the Joe Rogan controversy, the company is hoping it’ll blow over, just like Netflix’s controversial decision to stick with Dave Chappelle. “Usually when we’ve had controversies in the past, those are measured in months and not days. But I feel good about where we are in relation to that,” Ek said at the top of the company's earnings call.

Some industry giants are losing momentum for the first time.

FAANG — the initials for five tech stocks that seemed perpetually bound for the moon.

While Apple, Amazon and Alphabet continue to appear unstoppable, earnings calls this past week have shaken up that inevitability for Meta and Netflix. Facebook’s daily users declined for the first time ever, while Netflix’s membership growth is slowing, and Netflix forecasted even bleaker news next quarter.

Make no mistake, though: The giants remain giant. Facebook has nearly 2 billion daily users, despite a more pronounced downturn in the U.S. Netflix added 8.3 million new subscribers last quarter. But stock prices still took a major hit, each falling about 20% after earnings. So while it may not yet be the end of the road, the ceiling may be in sight.

Latest Bulletins

Google is allowing some Android apps to use their own payment systems after getting into battles with both Match Group and Epic Games' Bandcamp, but the move might be temporary. The company is facing legal action for requiring apps in the Google Play Store to use its billing, and the interim solution Google came up with is to let those apps use their own payments — with a catch.

Keep Reading Show less

Larry Ellison was among the participants on a call in November 2020, during which top Trump allies discussed ways to contest the election results, according to The Washington Post. It's unclear what role Ellison played on the call, but The Post found evidence of Ellison's apparent involvement in court records and confirmed with one of the call's other participants.

Keep Reading Show less

Microsoft Bing has exported Chinese censorship abroad, according to a new report by The University of Toronto's Citizen Lab.

Bing searches for national figures, leaders within the Chinese Communist Party, dissidents and topics that Beijing considers politically sensitive did not appear in auto-suggest in North America, according to the report. Among the search terms that didn't generate autocomplete suggestions were searches for President Xi Jinping, the late human rights activist Liu Xiaobo and searches related to the Tiananmen Square massacre.

Keep Reading Show less

Google had its "best year yet" for hiring Black and Latinx employees in the U.S. as well as women globally, according to its 2022 Diversity Annual Report. The hiring rate increased for Black, Latinx, Native American and female employees, although these identities are still very underrepresented compared to white and male employees.

Keep Reading Show less

Tech companies are figuring out how to handle the upcoming historic Supreme Court decision that could overturn abortion rights. In the case of Meta, that includes telling employees to not talk about it at work. Meta VP of HR Janelle Gale told workers during an all-hands on Thursday not to talk about abortion on Workplace, the company's internal messaging platform.

Keep Reading Show less

As many tech companies face a slump and crypto looks set for a deep freeze, Coinbase is facing reality and hitting the brakes on spending. The company is halting some business projects, freezing hiring for two weeks and cutting its spending on Amazon Web Services, the Information reported Thursday.

Keep Reading Show less

AWS reached a private settlement with a female employee who accused now-former executive Joshua Burgin of discrimination and harrasement, Protocol has learned.

Keep Reading Show less

The Federal Trade Commission on Thursday unanimously reminded providers of education technology to follow federal limits on the collection and use of kids' data in an attempt to ensure that common practices in the data economy don't become the norm in schools.

Keep Reading Show less

The apocalypse is coming, at least according to one of the world's biggest startup accelerators.

Y Combinator sent an email to portfolio founders this week, obtained by TechCrunch, advising the startups to "plan for the worst" as the market turbulence has prompted many companies to initiate layoffs, cost-cutting measures and hiring slowdowns.

Keep Reading Show less

Apple just hit an important milestone in developing its mixed-reality headset as rivals like Meta are making strides in developing similar devices. Executives showed off an AR/VR device to Apple's board last week, according to Bloomberg, a sign that the product is really happening and it's inching closer to a public launch.

Keep Reading Show less

The SEC is pushing back on Ripple’s bid for access to emails and other documents that the crypto giant believes could bolster its case against the regulator.

The SEC, which sued Ripple in 2020 for failing to register $1.4 billion worth of XRP as securities, has refused to release emails related to a 2018 speech by former director William Hinman in which he argued the ether cryptocurrency was not a security. The speech sparked a rally in ether’s price and was interpreted as an endorsement of the industry’s view that cryptocurrencies are not securities.

Keep Reading Show less

Tesla’s autopilot system is being investigated by the U.S. National Highway Traffic Safety Administration following a fatal crash in California that killed three passengers this month. It is the 35th accident the agency has investigated since 2016 related to Tesla's Autopilot feature, according to Reuters. Those accidents have resulted in a total of 14 deaths.

Keep Reading Show less

Google has reportedly pulled out of Russia, and many employees there have moved to Dubai.

The Wall Street Journal reported Wednesday that most of Google’s Russia-based employees had chosen to leave the country, and that the company will soon have no workforce presence in Russia amid the country’s ongoing war in Ukraine.

Keep Reading Show less

Add lawmakers to the growing list of people, companies and trade groups that are ticked off about the Commerce Department’s solar probe.

This week, a collection of 85 House Democrats wrote to the White House saying that they're concerned “about the devastating economic and environmental impacts” of the probe, which began in April and has already had already stunted the clean energy transition in the U.S. While the probe has not resulted in any changes to the U.S. tariff structure so far, the chance that it could has the industry upset. Lawmakers have heard those concerns, and they're turning up the pressure on the Biden administration to wrap the probe up as quickly as possible.

Keep Reading Show less

A major reversal by the U.S. Department of Justice on how it views good-faith security research is expected to be warmly welcomed by the cybersecurity community.

Keep Reading Show less

TikTok is getting much more serious about gaming, according to a new report from Reuters. The social video platform is already testing mobile games with users in Vietnam, due to the country's high concentration of younger smartphone owners. Eventually, TikTok plans to roll out games more broadly in Asia and possibly other markets as well.

Keep Reading Show less

A bipartisan group of senators wants to force Google to spin off huge chunks of the online ads business at the heart of its profits.

A bill introduced Thursday, led by Republican Sen. Mike Lee, would ban major digital exchanges that match buyers and sellers of online ad space from also operating technology that allows publishers to manage their part of the sales and advertisers to control their purchases. Google is the biggest player in all three areas.

Keep Reading Show less

Twitter will begin taking action against misinformation in crisis situations, the company said Thursday. The new policy will be immediately applied to misinformation surrounding the war in Ukraine.

Keep Reading Show less

Cisco blamed COVID-19 lockdowns in China and the war in Ukraine for its flat revenue growth during the fiscal third quarter, and forecast for a declining current quarter when it reported earnings late Wednesday.

Supply shortages appear to be the largest culprit, and CEO Chuck Robbins said during a conference call Wednesday that the company’s disappointing revenue was the result of its inability to secure adequate components to sell its various products. The lockdowns in China were especially damaging, Robbins said.

Keep Reading Show less

Block just detailed plans for its self-custody bitcoin hardware wallet, aiming to bring together the often contradictory goals of convenience and crypto security. Block's goal is to monetize the wallet through a subscription service.

Keep Reading Show less

Apple's loss is Google's gain: Ian Goodfellow, who was a director in Apple's machine learning division, left the company recently, citing the company's return-to-office policy as the reason for his departure. Goodfellow is reportedly joining Google's DeepMind AI group.

Keep Reading Show less

SEC Chair Gary Gensler warned Congress Wednesday that consumers and investors are vulnerable in an increasingly volatile crypto market now reeling from a sharp downturn.

Citing the recent collapse in the crypto market's value, Gensler said, “This is a field that is now worth $1.2 trillion. Two weeks ago it was supposedly worth $2 trillion.”

Keep Reading Show less

New York Attorney General Letitia James is launching an investigation into social media companies' role in this past weekend's mass shooting in Buffalo, which the shooter mapped out on Discord for months prior to the attack and livestreamed on Twitch before the video was taken down.

Keep Reading Show less

Salesforce will slow hiring and cut back other expenses, according to a Wednesday report from Insider. The company will join Meta, Netflix, Coinbase, Uber and others that have slowed or frozen hiring in recent weeks.

Per an internal memo, cutbacks will include corporate travel and some upcoming off-sites, Insider reported.

Keep Reading Show less

Tesla's cars have helped spur an electric vehicle revolution. But that wasn't enough to stop the S&P 500 from removing the company from its ESG list on Tuesday, leading Elon Musk to call the list a "scam" that has been "weaponized by phony social justice warriors."

Keep Reading Show less