They are the companies whose names are part of the daily lives of consumers.
It is almost impossible to escape them in many daily economic activities.
They are in the top 10 of the most valuable companies in the world and are multinationals present in hundreds of countries around the world. Between the five tech giants, their worth is $7.6 trillion in market cap. Suffice to say that their weight in the economy is enormous.
At a time when investors are wondering if the economy will experience a hard landing, in other words, will enter into recession in the coming months due to inflation at its highest level in 40 years and a policy of raising interest rates at the Federal Reserve, these companies can give the temperature of the economic machine.
The companies in order of market capitalization include Apple (AAPL) – Get Apple Inc. Report ($2.5 trillion at the time of writing), Microsoft (MSFT) – Get Microsoft Corporation Report ($1.95 trillion), Alphabet (GOOGL) – Get Alphabet Inc. Report, parent company of Google, ($1.42 trillion), Amazon (AMZN) – Get Amazon.com Inc. Report ($1.25 trillion) and social media giant Meta Platforms (META) – Get Meta Platforms Inc. Report, parent company of Facebook, Instagram and WhatsApp ($458 billion). Some of them have already given a taste of what is to come by freezing hiring and removing job listings.
How Bad Is the Economy?
Coincidence or not, the GAFAM, as they are often nicknamed, publishes their quarterly results this week. These results, but especially the comments of their leaders on the health of the economy, are eagerly awaited. Investors’ questions are many, but if we could only retain two, it would be: have consumers started to reduce their spending? Have companies started to suspend their investments and reduce their marketing budgets?
Software giant Microsoft will open the ball on July 26. The activities of the Redmond group in Washington state affect both businesses (cloud with Azure, computer security) and consumers (Xbox consoles, video games, Windows software, Office). The firm recently announced cost-cutting measures, such as layoffs, whose message was clear: Microsoft is preparing for a difficult period ahead.
The firm, led by Satya Nadella, has decided to eliminate many open jobs: Key divisions like the cloud business, Azure, and the security software unit, which are seen as two key areas of growth for the Redmond, Wash., software giant, are affected by the removal of the job listings.
“As Microsoft gets ready for the new fiscal year, it is making sure the right resources are aligned to the right opportunity,” the spokesperson said in an emailed statement on July 21. “Microsoft will continue to grow headcount in the year ahead, and we will add additional focus to where those resources go.”
Are there other cost reduction measures in preparation?
Job Cuts in Sight?
Also on July 26, the Internet giant Alphabet delivers its financial performance. The fears are that businesses, big and small, have begun to dwindle the funds set aside to promote their products and services online. Social network Snap Inc (SNAP) – Get Snap Inc. Class A Report reported disappointing second-quarter sales on July 21, due to a slowdown in online advertising spending as competition between platforms for marketing dollars intensified. Are Google and YouTube as affected as Snap?
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“We’ll be slowing the pace of hiring for the rest of the year, while still supporting our most important opportunities,” chief executive officer Sundar Pichai wrote in a memo to employees on July 12.
“For the balance of 2022 and 2023, we’ll focus our hiring on engineering, technical and other critical roles, and make sure the great talent we do hire is aligned with our long-term priorities.”
Only a few days after this memo, Google sent a new and worrying warning: The Mountain View, Calif., search, advertising and cloud company is immediately suspending hiring for two weeks. The company went from slowing hiring for the rest of the year to suspending it, at least temporarily.
“As Sundar announced, we are slowing hiring for the rest of the year. In line with that, we’re pausing most new offers for two weeks to enable teams to prioritize their roles and hiring plans for the rest of the year,” spokesperson Chris Pappas told TheStreet.
How far will Google go to avoid being taken aback by bad economic conditions?
Meta, which is halting hiring, or in some cases slow hiring for most mid-to-senior level positions, is facing the same problem as Google. Moreover, investors are expecting to have an update on its top priority, the metaverse, as the crypto industry is going through an unprecedented crisis of confidence is another question.
The firm only plans to hire between 6,000 and 7,000 new engineers in 2022, against an initial project of 10,000 new recruits.
“If I had to bet, I’d say that this might be one of the worst downturns that we’ve seen in recent history,” CEO Mark Zuckerberg told employees on June 30.
Meta, which saw the departure of emblematic Chief Operating Officer Sheryl Sandberg in June, publishes its results on July 27.
The next day, July 28, Apple and Amazon will take center stage with some big questions to answer: Where are the consumers? Is consumer confidence good or sluggish? Are they still spending the same? The two giants might provide some clear answers to these questions.
Like other tech behemoths, they are slowing down the pace of their hiring.
Are there any job cuts in sight?