Parent Profits at Google and Microsoft Fall; Recession More Real!

Sales growth at tech behemoths Microsoft and Alphabet has abruptly paused. Concerns about a global economic recession are increased by this circumstance.

As prices and interest rates rise, consumers and businesses around the world are beginning to operate more efficiently. American multinational corporations suffer from a high US currency as well since it forces them to sell more expensive goods abroad.

The parent company of Google and YouTube, Alphabet, reported Wednesday (10/25/2022), that its sales increased only 6% to US $ 69 billion, which is equal to Rp. 1.008 trillion, in the three months to September 2022. (exchange rate of Rp. 15,600).

As businesses slash their advertising budgets, the economy is slowing down. As a result, this was the slowest quarterly growth for a US corporation since the beginning of the Covid-19 pandemic.

In the quarter, Alphabet's profit decreased by roughly 30% to $13.9 billion. The reason for this is that YouTube's ad revenue has dropped for the first time since the firm began disclosing it to the public.

The company's sales growth has decreased for five consecutive quarters. Alphabet, according to Google CEO Sundar Pichai, is narrowing its focus and improving its responsiveness to the business climate.

On the other hand, social media platforms like Facebook and Snap have historically been less robust to dropping ad expenditure than Google's core websites, according to Evelyn Mitchell, chief analyst at Insider Intelligence.

Google's missteps are terrible news for all of digital advertising, according to Mitchell.

If market circumstances keep deteriorating, "this poor quarter for Google implies challenging days ahead."

Microsoft also observed a fall in the market for technology items, including computers. Its sales growth was the smallest in five years, increasing barely 11% to US$ 50.1 billion, or Rp 781.56 trillion.

According to Microsoft, the reduction in business clients this year will result in a further decline in the demand for PCs and cloud computing technology. Additionally, Xbox video game sales declined.

Sales at large IT companies have increased significantly during the pandemic. Consumers and employees become more reliant on technology as a result of the lockdown. But at this moment, the sector's future appears grimmer.

Alphabet has recently stated that it is reducing hiring, while Microsoft has reduced its employees. In Tuesday's after-hours trade, the shares of both companies dropped significantly.

Many other digital firms, such as Netflix and Twitter, have also chosen to reduce employee numbers or slow down hiring, such as social media site Snap.