Google reports a rare decline: Amazon massively increases profits in a crisis

Amazon and Facebook make more than five billion dollars in profit in the second quarter – but the reasons can hardly be more different. Amazon increases thanks to closed shops, Facebook defies the advertising boycott. Google and Alphabet sales are falling.

Internet giants Facebook and Amazon have doubled their quarterly profits. Both online platforms reported earnings of $ 5.2 billion each for the second quarter of the year. While Facebook had sales of $ 18.7 billion despite an advertising boycott by numerous companies, it was $ 88.9 billion on Amazon.

Facebook's profit was about twice as high as in the same quarter of the previous year. At that time, however, earnings were burdened, among other things, by a payment of two billion dollars according to investigations by the consumer protection agency FTC. The company said the number of monthly users worldwide rose to 2.7 billion. However, a number of large companies had recently announced that they would initially stop advertising on Facebook in the fight against hatred and racist agitation.

Despite the increased profit, Facebook's business is growing much more slowly than before. Last quarter, revenue increased 11 percent year over year to $ 18.8 billion. In the first weeks of July there was similar growth, as announced by the world's largest online network. Before the crisis, growth rates of over 20 percent were the order of the day in Facebook's business.

Apple exceeds expectations

The online mail order company Amazon has clearly benefited from the crisis. Revenue in the second quarter rose 40 percent year over year. "It was another highly unusual quarter," said Amazon CEO Jeff Bezos. Because of the pandemic, many people worldwide order more online – because shops have had to close for weeks or because customers prefer to continue shopping online even after the stores reopen. In addition, the cloud business with IT services and storage space on the net continues to flourish, even if Amazon's flagship AWS has recently not been able to fully meet the high growth expectations.

The Internet and technology group Apple posted a more modest profit increase. The iPhone manufacturer's quarterly earnings increased eight percent to just under $ 11.25 billion. The business is thus immune to the crisis. Revenue rose eleven percent to $ 59.7 billion in the past quarter – a record for the June quarter. All product areas grew. Profits increased twelve percent to $ 11.25 billion. The numbers exceeded analysts' expectations.

The stock gained around five percent in after-hours trading and was trading above the $ 400 mark for the first time. Among other things, the iPhone business performed significantly better than many market observers expected. Apple increased sales of its key product by almost 1.7 percent to $ 26.4 billion. Analysts had expected iPhone sales to be as low as $ 21 billion. Mac computers' sales jumped by around 22 percent to a record $ 7 billion.

YouTube strong, Google not so much

In contrast, Alphabet's profit declined significantly. Profits shrank 30 percent in the second quarter. Higher costs and falling advertising revenue during the pandemic burdened Google’s parent company. Earnings fell year-on-year from $ 9.95 billion to $ 6.96 billion (€ 5.87 billion), the Internet giant said. Alphabet's money machine – Google's advertising business – received a rare damper during the crisis. Overall, the group's revenue shrank by approximately two percent to $ 38.3 billion.

The advertising revenue of the video subsidiary Youtube, however, developed strongly, with an increase of six percent to $ 3.8 billion. Google's cloud business even increased sales by 43 percent to $ 3.0 billion. Although Alphabet outperformed market expectations, the initial reaction from investors was subdued. The stock initially posted only a slight increase. In the course of the year so far, however, the price has already increased by 14.5 percent.