Big Tech keeps printing money

The Big Story

Big Tech keeps printing money

Seasons change, elections come and go, people file lawsuits, the world falls apart, but one thing remains the same: Tech companies keep making incomprehensible amounts of money.

Yesterday was Big Tech Earnings Day, with Apple, Amazon, Facebook and Alphabet all reporting. The financial tl;dr is just the "DuckTales" diving-into-money GIF: more than $228 billion in revenue between them, and more than $38 billion in profit. But underneath those piles of money were some interesting updates on each company.

• Apple: Lower-than-normal iPhone sales mean one of two things: Either the iPhone's dead (not likely) or the iPhone 12 delays mean all the usual Q3 sales have shifted to Q4 (much more likely). And Cook said the iPhone 12's doing well so far. But the biggest news was Apple One, Apple's everything bundle, which is launching today.
• Alphabet: Ads are back, baby. After a second-quarter slump caused by advertisers abandoning ship, the company's return to growth was fueled by renewed advertiser enthusiasm for Search and YouTube, leading to year-over-year gains in advertising revenue across almost all of Alphabet's verticals.
• Amazon: Amazon's employment numbers are off the charts. It's currently hiring at least 220,000 people, and said more than 320,000 people attended its recent Career Day. Amazon's earnings releases are always an eye-opening read, just based on how many things Amazon does. And the company's not slowing down, at all.
• Facebook: It's been years since Facebook was mostly a U.S. platform, but it really, really isn't one now. In just the last quarter, user numbers were down 2 million in the U.S. and Canada, while its Asia-Pacific numbers are up more than 150 million since this time last year. And yet Facebook still makes half its revenue from Americans and Canadians. Believe it or not, Facebook may still have untapped earning potential.

A few other things of note from earnings week:

• The ad business is back for everyone in tech, it seems. YouTube hit $5 billion in revenue, while Pinterest had an unexpected monster quarter. And as Snapchat pointed out, the brand-advertising market is finally moving to digital in a big way.
• Twitter was the rare disappointment this week. Its revenue is growing fast, but its user numbers are growing slower than expected. It has 187 million users, yet again reminding us that Twitter is very important to culture but ultimately not that huge a product.
• Spotify now has 144 million paid subscribers and 320 million overall, which is the new benchmark for the music biz. Apple hasn't updated Music's figure since last summer, when it had 60 million paid users.
• Netflix's boil-the-frog price strategy continues: It's raising the cost of most plans by $1 or $2.
• Uncertainty still reigns: A lot of companies declined to give guidance going forward, and others were vague or obviously conservative. There's an election coming, COVID is spiking everywhere, and nobody knows what comes next.

Ads

Hyper-targeted political ads aren't going anywhere

Anna Kramer writes: Here in Chester County, the Philadelphia suburb where I'm living, every influencer (or wannabe influencer) I see on Instagram has a political message. For the next four days, people in important electoral counties like mine will be spammed every time we look at a screen. So while Facebook tries to prohibit researchers from using data scraping to examine how political ads are targeted, I went straight to the source and asked political strategists how they think about ad targeting.

The key takeaway: For campaigns, Facebook is an affordable and efficient ad-testing ground, Jessica Alter, the CEO of Tech for Campaigns (which supports Democrats), explained.

• For example, here in Chester County, Alter's team could test out two different messages on women aged 35-50 for a week and then invest heavily in the message that gets better feedback. This strategy helped campaigns refine what goes into their mailers and TV spots, which are much more expensive than digital ads.

Facebook's new political ad pause this week infuriated Democrats like Alter, especially after the company accidentally banned a number of pre-approved ads.

• One of Biden's key targeted ads was still blocked Thursday afternoon, according to a Biden senior media advisor. And smaller campaigns lost valuable ad time while the faulty system blocked their ads.
• "You get to the same essential substance in the end, but it's more expensive," Alter said.

Another type of targeted advertising got its first real tryout this cycle: hiring "nano" and "micro" influencers to endorse candidates on platforms like Instagram. In key geographies, these endorsements could persuade voters where other ads might not, explained Mae Karwowski, the CEO of influencer marketing company Obviously, which has been active in all of the swing states.

Get Out The Vote

Facebook affects democracy after all

Facebook's scale remains untouchable. Mark Zuckerberg announced in May that Facebook wanted to help register 4 million people to vote across all platforms, and it ended up getting more than 4.4 million signed up. It was so successful that a bunch of Republican Secretaries of State reportedly tried to stop it from happening.

• That's a pretty strong signal of how powerful the real estate at the top of users' News Feeds really is. Facebook's been putting registration drives and information up there all summer.
• Another big number: More than 39 million people have visited Facebook's Voting Information Center, where users get personalized information about registration status, polling places, mail-in ballots and the like.
• At the same time, Facebook said it's been able to get about 100,000 people to sign up as poll workers, and more than 1.7 million people clicked on the notification asking people to sign up.

Obviously, Facebook's trade is information. It has spent most of the year grappling with how best to show and share useful information, hide and ban disinformation, and even distinguish between the two. It's not easy, and Facebook hasn't always done it well. But it has clearly done more and pushed harder than ever before.

• And when it comes to more straightforward, fact-based questions like "where is my polling place" and "what day is the election," Facebook's able to put that information in front of people like no other company. It's been working with state authorities and organizations like Ballotpedia, too, to make sure it gets that stuff right.

Things might get even tougher next week. "I'm worried that with our nation so divided and election results potentially taking days or weeks to be finalized, there's a risk of civil unrest across the country," Zuckerberg said on the company's earnings call yesterday. "Given this, companies like ours need to go well beyond what we've done before."

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People Are Talking

On Protocol: McKinsey's Lareina Yee said leaders need to recognize that just hiring more women is not enough:

• "If you start with 30% women engineers, my question is, are you a funnel? Meaning that you end up with very few women over time. Or are you a pipe?"

ByteDance is suing Triller, and Triller CEO Mike Lu called it pure politics:

• "This is nothing more than a transparent attempt by a Chinese conglomerate with tens of thousands employees to manipulate the U.S. legal system by not responding to Triller's complaint or answering for their violations."

Sony's Jim Ryan believes in VR, but doesn't see it coming soon:

• "At some point in the future, VR will represent a meaningful component of interactive entertainment. Will it be this year? No. Will it be next year? No. But will it come at some stage? We believe that."a

Making Moves

Dionna Smith is the new Global Head of DEI at Thumbtack. She fills a role the company had originally cut earlier this year before reinstating after internal protests.

Lux Capital made a few hires and promotions: Brandon Reeves is now a partner, Alex Nguyen is now a Principal, and Scott Rubin is now the firm's first CMO.

Sydney Thomas is now a Principal at Precursor Ventures. She's been at the firm since 2016.

In Other News

• Huawei sanctions might not be as bad as expected: The Financial Times reports that the U.S. government is allowing chip companies to supply Huawei if their tech isn't used for 5G; Nikkei reports that Sony and Omnivision have been granted licenses for some image sensors.
• On Protocol: Facebook's botched ad ban is still a mess, and Democrats are still waiting for it to be fixed.
• Facebook employees will get Thanksgiving week off, CNBC reports. Zuckerberg told them that it was a reward for their hard work this year.
• On Protocol: Discord accidentally invented the future of the internet. So why does no one want to buy it?
• The White House wanted Elon Musk to appear in an ad campaign designed to "defeat despair and inspire hope" amid the pandemic. In fact, Musk was one of more than 250 celebrities approached about the gig.
• Retail demand for Ant Group shares was $2.8 trillion in Shanghai, about equivalent to the U.K.'s GDP. So the company increased the amount of shares for sale in its IPO: It could now raise almost $40 billion.
• Sony is in talks to buy Crunchyroll, Nikkei reports. The deal could reportedly value the anime streaming platform at almost $1 billion.

One More Thing

Move over, iPhone

Because I'm buying the Yahoo Mobile ZTE Blade A3Y, which is the real name of a smartphone that Yahoo just launched for $49.99. Yahoo's first-ever phone preinstalls a bunch of Yahoo apps, just like every user wants, and is a Verizon exclusive. And it's purple! Sign me up.

A MESSAGE FROM ROKU

Introducing the OneView Ad Platform. From Roku.

A single platform for marketers and content owners to reach more cord cutters and measure performance using TV identity data from the No. 1 TV streaming platform in the US. Advertisers can manage their entire campaigns — including OTT, linear TV, omnichannel, and more — all in one place.

Learn More