Slowing Economy Impacts Earnings Of Google And Microsoft

Sales at Alphabet and Microsoft have slowed sharply, adding to concerns about an economic downturn. Alphabet, which owns Google and YouTube, reported a 6 per cent increase in sales to $69 billion in the three months to September as companies cut their advertising budgets.

Outside of the start of the pandemic, it was the US firm’s weakest quarterly growth in nearly a decade.

Meanwhile, Microsoft reported a drop in demand for its computers and other technology. Its sales increased by 11 per cent to $50.1 billion, marking the slowest revenue growth in five years.

Globally, consumers and businesses are cutting back as prices and interest rates rise, fueling fears of a global recession.

A strong US dollar has also harmed American multinational corporations by increasing the cost of selling products abroad.

Alphabet’s profits fell nearly 30 per cent to $13.9 billion in the third quarter, as YouTube ad revenues fell for the first time since the company began reporting them publicly.

The company’s sales growth has slowed for five consecutive quarters.

Sundar Pichai, Alphabet’s CEO, stated that the company was “sharpening” its focus and “being responsive to the economic environment.”

“When Google stumbles, it’s a bad omen for digital advertising at large,” said Evelyn Mitchell, principal analyst at Insider Intelligence, noting that Google’s core website has in the past been more resilient to ad spending downturns than social media sites like Facebook or Snap.

“This disappointing quarter for Google signifies hard times ahead if market conditions continue to deteriorate.”

Microsoft predicted that demand for its PC and cloud computing technology would continue to fall this year as businesses cut back. Sales of its Xbox video game console have also fallen.

During the pandemic, big tech firms saw their sales increase as locked-down consumers and workers came to rely more on their technology. However, the sector’s fortunes appear to be bleaker in the current climate.

(Adapted from

Categories: Economy & Finance, Geopolitics, Regulations & Legal, Strategy, Sustainability

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