Unending fixation of big tech companies over TikTok and Apple
Two businesses that posed existential threats to their rivals dominated the earnings season. It has become a culture for Wall Street to expect huge numbers from big tech firms every three months. A runaway success story for years, with revenue growth, profits, and user counts.
Companies like Microsoft, Meta, Spotify, Amazon, Apple, Alphabet and Snap regularly send reports about their performance for a little more than a week. There has been a major shift in that sequence as they reported stagnant or decreasing financial statements and revised their future expectations in response to a difficult economic downturn as they published their second-quarter results.
Despite the stagnant earnings, the two firms were Apple and TikTok, dominating every wall street report.
Apple and TikTok championed the largest figures over the other tech giants. These results can be attributed to their increasingly pivotal role in the tech world. TikTok has bagged a whooping one billion users within five years, a generous gap ahead of any previous app, including Instagram and Facebook, which took eight years to reach the same milestone.
On the other side, Apple is concerned about changes that could impact others’ customer reach and competition in the metaverse.
Snap was the first member of the cohort and released its findings on July 21. Although Snap's 347 million daily active users exceeded analyst expectations of 343 million, its income lagged. CEO Evan Spiegel stated, "Our financial results for Q2 do not reflect our vision.
The outcomes were a "trainwreck," according to Dan Ives, the principal analyst at the Los Angeles investment company Wedbush Securities. Snap's statistics show "a slowdown in digital advertising, privacy challenges with Apple iOS, and a further escalation of TikTok competition. In the analyst call, Snap's CFO Derek Anderson said the competition is getting more fierce.
Google and YouTube's parent company, Alphabet, released its findings on July 26. More than 1.5 billion users a month watch YouTube Shorts, the firm's version of TikTok-like short-form videos, according to CEO Sundar Pichai of the company during its earnings call. The data were also made public a day later by Meta, the parent company of Facebook and Instagram.
According to digital consultant Jay Owens, "TikTok's breakthrough was discovering that social media no longer needed to be social, just media." And other businesses are attempting to emulate that recognition, with Meta leading the way with Instagram. "Meta undoubtedly had data demonstrating that friends and family were no longer the primary sources of engagement on Facebook and Instagram, but they didn't quite dare make the jump to creating Instagram's Explore tab."
While the competition and “copy-catting” between these companies continue, they all face a major hurdle, which means that apple, such as Snap, Twitter and Meta, won’t be able to maximise their online advertising and user tracking capabilities to optimise results. Apple released a new feature in its iOS 14.5 that empowers users with the ability to allow tracking by big apps.
If there is no real solution to this challenge, Meta could lose a whopping $10 billion ad revenue this year. Meta’s CFO, Dave Wehner, commented, "We’re … continuing to face targeting and measurement headwinds such as Apple’s iOS changes, which we believe are contributing to the growth challenges across the digital advertising industry.”
Alphabet Chief Business Officer Philipp Schindler also mentioned that they are experiencing major pullbacks in spending by some advertisers due to the uncertain outcomes arising in the industry.