every three months, Wall Street is anticipating bumper results from Big Tech companies. Over the course of a little over a week, Snap, Alphabet, Microsoft, Meta, Spotify, Amazon and Apple are announcing to investors how well they have performed.
For years it has been a story of unbridled success, with revenue, profits and user numbers generally moving in one direction: up. This time, however, as they released their second quarter results in recent days, major tech companies talked about stagnating growth or declines and are reviewing their future forecasts in light of what they expect to be a challenging economic downturn. And with every call for profit, two names kept popping up: Apple and TikTok.
The two companies loomed over the achievements of the others because of their increasingly integral role in the world of technology. TikTok’s user base grew to one billion users within five years, far more than any previous apps, including Meta’s Facebook and Instagram, both of which took eight years to achieve the same goal. From Apple comes the threat of changes that could affect customer reach and competition from others in the metaverse.
The first of the group was Snap, which reported its results on July 21. While the company’s 347 million daily active users exceeded analyst forecasts of 343 million, Snap’s revenues were disappointing. “Our second quarter financial results do not reflect our ambition,” CEO Evan Spiegel said at the time.
Dan Ives, chief analyst at Los Angeles-based investment firm Wedbush Securities, says the results were a “train wreck.” Snap’s results show “a slowdown in digital advertising, headwinds from Apple iOS privacy, and TikTok competition escalating further,” Ives said. Snap’s chief financial officer Derek Anderson admitted this in the analyst talk alongside earnings. “The competition, whether it’s with TikTok or any of the other very big, advanced players in this space, has only intensified,” he explained.
A day later, on July 22, Twitter’s results focused on the $33 million spent on work related to Elon Musk’s on-again, off-again purchase of the company. The company announced a year-over-year revenue decline that it said was a reflection of “advertising industry headwinds”. Twitter didn’t hold an analyst call or mention Apple by name, but the “headwind” was likely code for its changes to data sharing.
Alphabet, the parent company of Google and YouTube, announced its results on July 26. In his earnings call, the company’s CEO, Sundar Pichai, said that YouTube Shorts, the version of TikTok-esque short videos, was viewed by more than 1.5 billion users every month. A day later, Meta – parent company of Facebook and Instagram – also revealed their results.
“TikTok’s big innovation was the realization that social media no longer has to be social, just media,” said digital strategist Jay Owens. And that recognition is one that other companies, including Meta and Instagram, are trying to follow. “Meta undoubtedly had data showing that friends and family were no longer the main sources of engagement on Instagram and Facebook, but was afraid to take the plunge to make Instagram’s Explore tab the home page,” she says. “Now they’re catching up — and users seem to have not one but three apps dominated by vertical video.”