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What to learn from Big Tech’s latest massive earnings results

Bull

Good morning! This Thursday, Big Tech's earnings continue to be ridiculous, Amazon's already facing another union battle, Epic and Apple continue to spar and Microsoft has a new font plan.

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The Big Story

Big Tech's Big Quarter

Three of the four biggest names in tech have reported earnings so far this week. Amazon reports today. And if I were to try and explain the fortunes of Alphabet, Facebook and Apple — and presumably Amazon as well — over the last three months, I would just send you the GIF of Scrooge McDuck diving into a giant pile of gold coins. Because that's pretty much what it is.

But rather than bore you with the numbers — which are all huge to the point of being sort of meaningless — let's dive into a few of the bigger-picture things happening in Big Tech.

  • The ad business is no longer a two-company race. Google made just shy of $44.7 billion in ad revenue for the quarter, and Facebook reported a little over $25.4 billion. But, between LinkedIn and Bing, Microsoft has a booming ad offering as well, and I suspect we'll hear the same from Amazon today. Two companies still rule, but they're not the only players anymore.
  • LinkedIn is a true force in social. Microsoft said the platform has more than 750 million users and brought in more than $3 billion in revenue in the last year. In both cases, that puts LinkedIn ahead of Snap, Pinterest, Twitter and practically anything not made by Facebook.
  • YouTube is a streaming giant. Its revenue grew almost 50% over last year, bringing in $6 billion for the quarter. (For comparison, Netflix reported $7.16 billion in the most recent quarter.) Netflix's subscription base gives it a certain stability, but YouTube's advantage is its ubiquity: A Pew study found that 81% of U.S. adults have used the service in 2021, which makes it the most popular social platform by a mile.
  • Everyone's nervous about the chip shortage. Microsoft said it expects Surface and Xbox revenue to be hamstrung for the foreseeable future, not because of interest but because it simply can't make enough to keep up. Apple said it expects to sell $3 billion to $4 billion less than it would have without the shortage. (Qualcomm said it expects the shortage to ease by the end of the year, though.)
  • But the post-pandemic world isn't scary. Across the board, executives seem to think that there's not going to be some great retreat after people are vaccinated and can go outside again. If anything, they seem to think some of the online-first habits people have developed are only going to increase. A year ago, everyone seemed uncertain about the future, but now it's mostly optimism.
  • Well, except at Facebook: It's terrified of Apple's privacy changes. "We continue to expect increased ad targeting headwinds in 2021 from regulatory and platform changes, notably the recently-launched iOS 14.5 update, which we expect to begin having an impact in the second quarter. This is factored into our outlook," Facebook wrote in its earnings report, even as Mark Zuckerberg and Sheryl Sandberg projected confidence in the earnings call.

These companies face real threats, of course, from the U.S. Congress, the EU and from a growing list of competitors. (Shopify and TikTok are coming hard and fast.) But for now, as long as you're not having to prepare for yet another Senate Judiciary hearing, it's still good to be Big Tech.

Labor

Another Amazon union drive

Megan Rose Dickey writes: Amazon is facing another union challenge. This time, it's in Staten Island.

Leading this latest drive is a familiar name: Christian Smalls. Amazon fired Smalls last year after he organized a protest against the company's pandemic working conditions. He's currently suing for his allegedly illegal termination and has support from New York Attorney General Letitia James, who filed her own companion lawsuit against Amazon.

  • Smalls told me that he's sat outside Amazon's JFK8 Staten Island fulfillment center for the last several days handing out union literature and trying to get people to sign union authorization cards. So far, several hundred workers have signed cards with what he's calling the Amazon Labor Union.
  • If it succeeds, the union has its eyes set on longer breaks, having Amazon fully cover the cost of health insurance, getting rid of productivity quotas and more. "This is the new day slavery," Smalls said of the productivity quotas. "So they need to get rid of that."
  • Unlike the union drive in Bessemer, Alabama, the union is independent from any major organization, like the Retail, Wholesale and Department Store Union that led the union drive in Bessemer.

Amazon, unsurprisingly, is already on the defensive. The company has sent workers text messages that say "you give up the right to speak for yourself" if you sign a union authorization card, and it has also displayed anti-union messaging on the TVs in the JFK8 warehouse.

People Are Talking

Mark Zuckerberg said AR and VR account for a lot of Facebook's R&D budget because the Oculus Quest 2 is doing so well:

  • "I don't want to overstate it because I think compared to platforms that are large, massive successes today, it's still obviously on the small end … [but] there's been a very real inflection, in terms of adoption and engagement that we're seeing."

Daniel Ek is dead serious about buying the Arsenal soccer club:

  • "I want to bring what I think is a very compelling offer to the owners, and I hope they hear me out. I'm very serious. I have secured the funds for it."

On Protocol: Bradley Tusk said governments shouldn't regulate at startups' expense, but that Big Tech should have foreseen the problems:

  • "Pretending to be able to independently moderate content was a mistake … Any third-rate political consultant could have told you a decade ago how this would turn out."

The United Auto Workers union wants to bring in EV startup employees everywhere, President Rory Gamble said:

  • "That's a given. We are formulating plans to go out to all these startups to give these workers a voice. In today's world, you have to think out of the box in how you reach people. We really have to drive home the benefits of belonging to the union."

David Heinemeier Hansson wrote a long defense of the Basecamp culture changes:

  • "My belief is that the key to working with other people of different ideological persuasions is to find common cause in the work, in the relations with customers, in the good we can do in the industry. Not to repeatedly seek out all the hard edges where we differ. "

A MESSAGE FROM FACEBOOK

The internet has changed a lot since 1996 - internet regulations should too. It's been 25 years since comprehensive internet regulations passed. See why we support updated regulations on key issues, including: protecting people's privacy, enabling safe and easy data portability between platforms, preventing election interference and reforming Section 230.

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Making Moves

Shapeways is going public via SPAC, which will value the 3D-printing marketplace at $410 million.

On Protocol | Enterprise: MessageBird bought SparkPost for $600 million, and is officially coming for Twilio.

CES is planning to be live and in Vegas next year. I mean, we'll all still get sick, but hopefully just with the CES flu.

Verizon is reportedly exploring the sale of its media assets, including Yahoo and AOL. The company still can't decide if it wants to be a media company or not.

Amazon said it's raising pay for 500,000 workers, by between 50 cents and $3 an hour.

Patreon laid off 36 people from its product, design and engineering teams, as part of a restructuring of the way it builds products.

In Other News

  • On Protocol | Enterprise: Twitter suspended Oracle exec Ken Glueck for tweeting a reporter's (publicly available) contact info. The tweet came after a long blog post from Glueck responding to the reporter's stories on Oracle's ties to the Chinese government.
  • China's preparing a "substantial" antitrust fine for Tencent, Reuters reported. The fine is reportedly likely to be less than the $2.75 billion Alibaba was fined, but could still top $1.5 billion.
  • On Protocol: Epic made the case for an App Store monopoly in its expert testimony ahead of next week's Apple trial. The company called on multiple academics in an attempt to establish alleged monopolistic conduct.
  • Spotify shares tanked on its earnings, with monthly active users for last quarter at the low end of guidance, a 7% drop in ARPU, and subdued guidance for the current quarter.
  • Feeling Miami Tech Week FOMO? Wired's got the lowdown on what's going on at tech's hottest (unofficial) event, with hundreds of VCs and founders swarming the city.
  • On Protocol | Policy: Facebook briefly censored posts calling for India's prime minister to resign. It reinstated them, and said it was done "by mistake, not because the Indian government asked us to."
  • On Protocol: Indian delivery company Zomato filed for an IPO. Here's everything you need to know about the listing, which could be a nice exit for Ant, Uber and Sequoia.

Work In The Future

Help Microsoft fix its fonts

Anna Kramer writes: Calibri's hegemony is about to end. The font had a long and impressive reign, born in 2007 as a replacement for the paragon of all fonts, Times New Roman, as the Office default. But Microsoft, in its wise and long-enduring wisdom, has decided it's time for a forced retirement. Given that whatever replaces Calibri will apparently be part of your life for upwards of a decade, what comes next matters. And you're going to want to help Microsoft get it right.

The company has released five new custom fonts in Microsoft Office, and it's encouraging users to play with them and share how they feel on social before it selects a winner. Your options are: Tenorite, a sort of warmer Times New Roman; Bierstadt, a precise, rational, sort of typerwritery vibe; Skeena, a soft-edged sort of Swedish-minimalist font; Seaford, which is asymmetrically old-fashioned; and Grandview, a highly legible take on German railway signage. You can check them all out in more detail, and the stories of their design, right here.

A MESSAGE FROM FACEBOOK

2021 is the 25th anniversary of the Telecommunications Act of 1996, the last major update to internet regulation. It's time for an update to set clear rules for addressing today's toughest challenges. See how we're taking action on key issues and why we support updated internet regulations.

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Today's Source Code was written by David Pierce, with help from Anna Kramer and Shakeel Hashim. Thoughts, questions, tips? Send them to david@protocol.com, or our tips line, tips@protocol.com. Enjoy your day; see you tomorrow.

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