Big Tech is still on a roll — but maybe not for long

The Big Story

The money tap's still flowing

Three hundred and thirty-one billion dollars. That's how much revenue the five biggest companies in tech — Amazon, Apple, Alphabet, Microsoft and Facebook — brought in over the last three months. Here's some Very Sophisticated Analysis: That's a lot of money.

These are five very different companies, of course, but one thing that became clear this week was how much they actually have in common. Here are a few things we learned from the Big Five this quarter:

• It's still really, really good to be Big Tech. This quarter may actually look a little better than it is, given that the year-over-year comparison includes the panic-stricken early days of the pandemic. But still: Apple, Alphabet, Microsoft and Facebook all smashed expectations. Across the board, only a few companies — Spotify and Pinterest among them — had disappointing quarters.
• The ad business is booming. Amazon missed expectations overall, but the category that includes its ad business was up 87%. Meanwhile, LinkedIn is crushing it, YouTube is a juggernaut and even Bing is up big! Apple's privacy push still looms — and will probably show up more next quarter, given that the App Tracking features only launched at the end of April — but Facebook and Alphabet both seem confident that they'll survive. In fact, their stranglehold over the ad market might only increase as first-party data becomes more important.
• But the chip shortage isn't getting better. "We expect supply constraints during the September quarter to be greater than what we experienced during the June quarter," Apple's Luca Maestri said on the company's earnings call. That was a running theme of the week. The shortage also hit Microsoft's Windows business, caused trouble for Tesla and Nissan, and doesn't seem to be letting up anytime soon.
• A metaverse platform war is coming. "The metaverse is going to be the next chapter for us as a company," Mark Zuckerberg said. Satya Nadella spent a chunk of Microsoft's call talking about "the enterprise metaverse." Once we had Windows and Mac. Then we had iOS and Android. The race is already on to build the operating system in the digital world, and there are a lot of deep-pocketed players who want in.
• Who's afraid of the FTC? Everybody, and also nobody. Regulation seems to be more of a looming shadow in the distance for Big Tech than a present reality to be grappled with, but all acknowledge the hit that regulatory actions could have on their bottom lines. Amazon (probably correctly) seems to be the most concerned, citing "actions taken by governments" as the second biggest unpredictable factor in its future. (Only the pandemic was higher on the list.)

The most open question for all these companies is the new normal. Amazon's miss is a small but real signal that people are going outside again and buying things, for instance. But it doesn't look like anyone's going back to bus stop ads and billboards. And questions about office openings, vaccine mandates, hybrid work and the like are still very much open ones.

For the last year and a half, quarter by quarter, billion by billion, the FAAAM companies have continued to separate from the pack. But ... well, "winter is coming" is probably too strong, but there's definitely a storm gathering. You might call it Hurricane Lina.

— David Pierce (email | twitter)

A MESSAGE FROM ALIBABA

Most people are not aware that Alibaba has a business in the U.S. because we're not a U.S. consumer-facing service that people use every day – nor do we want to be. Our consumers – nearly 900 million of them – are in China. We enable American businesses to sell to Chinese consumers.

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Join Protocol's Biz Carson for a conversation with Atomic's Swathy Prithivi, Accel's Rich Wong and Asana's Oliver Jay during our upcoming event: Going Global: How Tech Companies Can Expand Internationally August 10 at 9 a.m. PT / 12 p.m. ET Learn More

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People Are Talking

Robinhood's Vlad Tenev thinks meme stock investors are legit:

• "I think it's a real thing. There's customers that love these companies, they want them to thrive. You're seeing [meme stocks] also get resources that allow them to hire really good management teams, in some cases, and then build for the future."

On Protocol: Streaming won't kill the Redbox kiosk, said CEO Galen Smith:

• "None of the competitors in the space have this retail presence that we do. It gives us a really distinct advantage, and the kiosk becomes an incredible asset to the digital transformation going forward."

A handful of tech leaders, including Tim Cook and Andy Jassy, want action for Dreamers:

• "Securing a pathway to citizenship for Dreamers not only is the right thing to do, but is a huge economic benefit to the United States. The latest court ruling makes it all the more urgent that Congress take up and pass a legislative solution right away."

On Protocol | Workplace: COVID-19 pushed companies to hire a chief purpose officer, a trend Cisco's Francine Katsoudas thinks will stick:

• "A purpose officer can bring the company together to be clear around plans, how they communicate and how we hold ourselves accountable to progress."

Making Moves

Clubhouse — the project-management app — is now Shortcut. The company said it was going for a snappy new name that represents its goal to "cut through chaos," and also to get away from a certain social audio app.

Vacasa is going public this fall via SPAC. The company is merging with TPG Pace Solutions in a deal valued at about $4.5 billion.

Apple is looking for a regulatory project manager to work in the company's health unit. The hire would take point on regulation around the company's Class II medical devices.

MacKenzie Scott and Melinda French Gates gave away $40 million to a handful of gender equality initiatives, adding onto Scott's boatload of donations over the past few years.

In Other News

• Robinhood's debut was rocky. Its dropped more than 8% on its first day of trading, after starting on the low end of its price range.
• The COVID-19 updates keep coming: LinkedIn is now letting employees choose if they want to go back to the office, and workers aren't required to be vaccinated. Amazon still plans to head back to work in September, and it also won't require vaccines. Meanwhile, Uber pushed back its back-to-work date and will mandate vaccines upon return.
• Trevor Milton was charged with fraud. The former Nikola head is being accused of telling investors "false and misleading statements," like saying the company's faulty semi-trucks were working.
• The SEC has stopped processing Chinese IPO registrations, Reuters reported, while it drafts new guidance on how companies should disclose regulatory risks to investors.
• Facebook's smart glasses are coming soon. Its Ray-Ban partnership is almost ready to hit the market, Zuckerberg said, as the company inches closer toward the metaverse. But these definitely won't be AR glasses.
• China isn't the only country swinging at Big Tech. Countries less known for antitrust regulation, like Turkey, are coming down on Google with pro-competitive rules and fines, showing just how much pressure world leaders are trying to put on tech giants.
• Britain wants to be part of the space hype. The country's aviation regulator is now responsible for space trips, and it's begun taking applications from companies interested in flying their spacecraft under a U.K. license.
• Uber's next attempt at keeping drivers is language lessons. The company is partnering with Rosetta Stone to add language-learning courses on the Uber app used by its employees.

One More Thing

Get up to (Wi-Fi) speed

Having spotty Wi-Fi sucks. And having spotty Wi-Fi while you're on vacation (or "working remotely," as we like to euphemistically call it this summer) sucks even harder. Airbnb understands this, and is launching a tool that tells you the Wi-Fi speeds of its listings long before you book your place.

Hosts can test out their Wi-Fi speeds using the Airbnb app. It's then automatically posted on their listing page for any potential guest to check. We'd rank this about the second most important feature of an Airbnb, right behind "is there a hot tub." Which is also for work, obviously.

A MESSAGE FROM ALIBABA

Alibaba is a marketplace, not a retailer, so we connect U.S. businesses to Chinese consumers. Businesses own the relationships and consumer insights, and control pricing, marketing and merchandising. Alibaba is a partner, not a competitor to businesses on our platforms. We succeed if the U.S. businesses we work with succeed.

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