COVID-19 demonstrates Silicon Valley power as Congress fights back

At a time where the influence of the internet giants is being challenged by the US Government, the champions of Silicon Valley have navigated turbulent times very prosperously.

Jamie Davies

July 31, 2020

2 Min Read
COVID-19 demonstrates Silicon Valley power as Congress fights back

At a time where the influence of the internet giants is being challenged by the US Government, the champions of Silicon Valley have navigated turbulent times very prosperously.

Looking specifically at the six companies who could be considered the heavyweights of the internet economy (Amazon, Apple, Alphabet, Facebook, Netflix and Microsoft), the financials are looking very attractive.

Financial results for internet giants in most recent period (in millions, USD)

Company

Revenue

Year-on-year

Profit

Year-on-year

Amazon

88,912

40%

5,243

108%

Apple

59,685

11%

11,253

12%

Alphabet

38,297

-2%

6,959

-42%

Netflix

6,148

24%

720

1%

Microsoft

38,033

13%

11,202

-15%

Facebook

18,687

11%

5,178

98%

Google’s core advertising business has been suffering through the drought of online advertising dollars, however a 2% year-on-year decline in revenues would have been welcomed by most other businesses during these difficult months. Fortunately for Google and its shareholders, there has been an adequate level of diversification to protect itself against a dip in the market.

For the major cloud players (Amazon, Google and Microsoft), the COVID-19 pandemic could act as a catalyst for a sustained digital transformation programme. Many companies will return to the office in some capacity, however we suspect the work-from-home period has demonstrated enough benefits for at least some elements to be retained. This is a win for the cloud players.

But will this success have any material impact on society? Perhaps.

The on-going investigation from the House Judiciary Committee in the US Congress is one which is attempting to understand whether the internet giants have too much power and influence over the digital economy and society. The politicians have already made up their minds, but this probe is looking for evidence to validate an assault on Silicon Valley, diluting the power of its residents.

Those who would like to see this influence taken back will look at these financial results with dread. Just economy is weakening and start-ups struggle for cash, the internet giants are becoming stronger. Smaller companies could be at risk of becoming acquisition targets, while traditional industries could be disrupted even more aggressively with ventures from Silicon Valley.

COVID-19 could have a compounding impact on the power of these companies, distorting competition further and making it even more difficult for a rival to challenge Silicon Valley. The six companies mentioned above are becoming more influential as the rest of the economy is battered by a looming recession. Perhaps the political elite will soon learn it cannot bring these beasts to heel.

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