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The Tech Giants and the Pandemic P1504 June 2020

Author: Rob Edmonds (Send us feedback.)

Although uncertainties exist, the pandemic could increase the tech giants' influence on digital life.

Abstracts in this Pattern:

Before the coronavirus-disease-2019 (covid-19) pandemic, the tech giants—Google (Alphabet; Mountain View, California), Amazon.com (Seattle, Washington), Apple (Cupertino, California), Facebook (Menlo Park, California), and Microsoft (Redmond, Washington)—had significant and growing influence over digital life and the strategies of companies undergoing digitalization. According to some analysts, the tech giants could emerge from the pandemic stronger than ever. Amazon and Apple are benefiting from increased demand for digital entertainment; Microsoft, Facebook, and Google are benefiting from increased demand for collaboration software; and Amazon, Google, and Microsoft are benefiting from increased demand for cloud computing (as businesses realize that increasing engagement with cloud computing simplifies remote operations significantly). In addition, the tech giants with app platforms are benefiting from the sale of third-party software.

Even so, the outlook for the tech giants is not all positive, and differences exist among the companies. Facebook (Menlo Park, California) reports that in some regions where the covid-19 pandemic had a particularly strong impact, total messaging across its social-networking and messaging platforms and services increased by 50%, with video calling more than doubling. But Facebook does not monetize its messaging and video-calling services and is therefore seeing no financial benefits from their increased use. In fact, Facebook is struggling to keep these services operational and stable while losing revenue as a result of the pandemic's causing decreases in digital-advertising spending wherever lockdowns are in place. And Apple is facing uncertainty about consumer demand for its devices. In particular, Apple is unsure what effect the pandemic is having on consumers' willingness to pay the high prices that its flagship iPhone models command. The company needs to forecast demand for such phones so it can order components for its forthcoming models, which typically launch in the fall.

Despite these and many other challenges, predictions that the pandemic will strengthen the tech giants overall are likely correct (though Facebook faces some unique challenges). Perhaps more important than any of the individual wins that the tech giants have experienced is the covid-19 pandemic's increasing the use of digital services, which in turn has deepened the reliance of enterprises and consumers on the technology infrastructure that the tech giants provide.