YouTube and Big Tech: Are They Profiting from the Pandemic?
Under normal market conditions, 2020 would have been the year where YouTube and other technology giants gained more market share and therefore grew in size, once again. However, if we can say one thing about this year, it’s that market conditions are anything but normal. Looking back 12 months, nobody in the world was able to predict the year we were about to endure. While some have thrived, others have struggled for survival (this includes multi-national corporations). With this in mind, what has happened with Big Tech?
YouTube
Throughout quarantine and the months that followed, Americans had lots of time on their hands. While some took to baking or learning an instrument, others were forced to learn how to cut hair and do things that were typically performed by a professional. Whatever you did during the lockdown, everybody had one thing in common: they leaned on technology to achieve goals. This ranged from playing the piano to communicating with elderly relatives.
As a result, YouTube profited from the pandemic, and its user base seems bigger than ever. For example, you may have looked for a tutorial on the platform, like how to cut hair. For others, it was a source of entertainment while the whole world seemed to shut down. Many musicians performed live virtual gigs on YouTube to bring people together. Even elderly generations, who had never previously been exposed to YouTube, were relying on the platform for live shows and other entertaining videos.
In the UK, YouTube even surpassed BBC iPlayer (the national broadcasting service’s on-demand platform) and Netflix in terms of online video service market share. According to YouTube statistics, the video platform now has over two billion users around the world. What’s more, 19 in every 20 Americans between 18 and 44 visit the website at least once per month. Every single minute, 400 hours of video make it onto the platform.
All in all, YouTube thrived when people were looking for both entertainment and education during the global lockdown. While some consumers will return to their TVs, a few will also stay behind now that they have discovered live shows and other videos.
Apple
At the beginning of May, it was revealed that Apple still saw a small boost in revenue despite the pandemic. During what was, and still is, a difficult time, Apple seemed to push through; this could have been the result of YouTube’s success. As workers were furloughed, they needed better devices for their entertainment, to track exercise, and to perform work tasks. While some bought a new Apple Watch to stay active during quarantine, others had to buy Apple computers or tablets to improve their home office. With everybody at home, some had to invest in AirPods just to find a quiet spot for work.
In August, Apple reached a valuation of $2 trillion, and this is for a company that was supposed to be past its best days.
Amazon
Earlier in the year, Jeff Bezos warned of difficult times for investors. He said that all Q2 profits would be put towards pandemic-related expenses and some even said that Amazon would post a $1.5 billion loss in the second quarter. Instead, it actually reached a profit figure of $5.2 billion (more than double the same period in 2019). Not only has the company enjoyed growth during the pandemic, but it has also hired 175,000 new employees to cope with the increase in demand.
Like Apple, Amazon experienced an extensive rise in demand as people turned to the marketplace for entertainment, home office equipment, home gym equipment, and so much more. Apple took charge of the technology side while Amazon was delivering puzzles and board games to homes around the country. Of the 175,000 new jobs, five in seven have converted to full-time employment and the company has also donated (alongside employees) $27 million to Black Lives Matter causes.
Bezos believes that despite Amazon’s $2 billion spending in the third quarter, the trend of growth is likely to stay the same. Amazon has even gained a reputation for increasing the wages of hourly workers and ensuring a safe environment for most employees during this time.
Next, Facebook joined the trend because more people at home meant more people logging into social media platforms each day. Across the United States, shelter-in-place orders led to a 12% growth in Facebook usage. Compared to 2019, those using the platform every day grew to nearly 1.8 billion. If we expand the Facebook brand to include WhatsApp and Instagram, there was a 14% increase in monthly usage.
Facebook took on an important role for many groups:
- Users who were bored and needed entertainment
- Users who wanted to stay in contact with colleagues, friends, and family members
- Small businesses that needed to move online to survive
Alphabet
Sadly, it wasn’t good news for all the Big Tech companies. Alphabet, Google’s parent company, struggled. For a long time, Google has dominated the advertising field, but this all changed earlier this year. In March, Alphabet said that ad revenues slowed ‘significantly’. As the second period commenced, things went from bad to worse when the company encountered antitrust investigations while ad spending was down.
According to some reports, the pandemic has caused Alphabet to drop $8 billion below sales expectations. As a result, Google rushed to create new services and adapted with the introduction of Google Shopping. Now, there’s a cleanup operation for the global giant as it entices product listings, consumers, and merchants back to the platform.
Success for Smaller Companies — Period of Change
For those who missed the antitrust hearing back in July, the intention was to discuss the size and power of Big Tech companies. Facebook, Apple, Google, and Amazon were all present at the meeting, and it seems like a positive step for the market. Are the four tech giants too powerful?
While Google struggled with the fluctuations in ad demand, YouTube grew revenue from $3.6 billion to $3.8 billion and Facebook increased revenue to nearly $19 billion. Amazon doubled profit figures and Apple managed to make a profit of $11.3 billion even though many stores were closed.
There’s no doubting success for Big Tech companies so far in 2020, but there’s also no doubting the shifting attitudes towards these same brands. Although we seem to be more reliant on the Big Tech brands, we’re also less trusting of them. On the one hand, we have Jeff Bezos claiming in an email that the purchase of Ring was purely for market position. On the other, Mark Zuckerberg revealed that Facebook uses all sorts of techniques to limit the reach and success of competitors.
Most Big Tech companies have certainly enjoyed success in 2020, but trust in them is falling, allowing some smaller names to grow too. For example, some are choosing Etsy over Amazon to buy gifts and small handmade items. Etsy posted an increase in profit of 400% earlier in the year, compared to 2019. We all need a mask, and the demand for homemade designs is helping Etsy to surpass services like Amazon in this regard.
Elsewhere, a brand in the exercise niche that has expanded in 2020 is Peloton. As we lost access to gyms, customers started to invest in the stationary bike and exercise program. The company seemed to struggle for traction (no pun intended!) in 2019, but saw sales grow by 66% in the third quarter.
Zoom — a name that seemed to come from nowhere, right? We had video conferencing solutions from Google and many other large companies, but it was Zoom that got all the attention. The company reported an increase in revenue of nearly 170% compared to 2019; the company’s success was so unexpected that it desperately invested in security to counter many concerns.
It’s an interesting time for Big Tech with reliance increasing but trust decreasing. With many smaller names gaining attention (even smaller than those mentioned here), there could be a tipping point where trust outweighs value and consumers step away from the big names.
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