Big Tech Can’t Stop Obsessing Over Apple and TikTok

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Every three months, Wall Street watches ahead of bumper results from Big Tech companies. Over the course of a little more than a week, Snap, Alphabet, Microsoft, Meta, Spotify, Amazon and Apple announce to investors how well they’ve performed.

For years, it’s been an unhindered success story, with earnings, profits and user numbers generally going in one direction: up. This time, however, as they announced their second-quarter results in recent days, big tech companies have been talking about stagnant or declining growth and revised their forecasts ahead of what they expect will be a recession. challenging economy. And on every earnings call, two names came up: Apple and TikTok.

Both firms outperformed each other because of their increasingly integral roles in the technology world. TikTok’s user base grew to one billion users in five years, far surpassing any previous app, including Meta-owned Facebook and Instagram, which took eight years to reach the same goal. From Apple comes the threat of changes that could affect the reach of customers and the competition of others in the metaverse.

The first of the cohort was Snap, which reported its results on July 21. While the company’s 347 million daily active users beat analysts’ forecasts of 343 million, Snap’s revenue was disappointing. “Our financial results for the second quarter do not reflect our ambition,” CEO Evan Spiegel said at the time.

Dan Ives, principal analyst at Los Angeles investment firm Wedbush Securities, says the results were a “castaway.” Snap’s results show “a slowdown in digital ads, privacy headwinds from Apple iOS and competition from TikTok heating up,” Ives says. Snap CFO Derek Anderson admitted as much on the analyst call alongside earnings. “The competition, whether it’s with TikTok or any of the other very large and sophisticated players in this space, has only intensified,” he explained.

A day later, on July 22, Twitter’s results focused on the $33 million spent on work related to the purchase of Elon Musk’s company. The company announced a year-over-year revenue decline that it said reflected “headwinds in the advertising industry.” Twitter didn’t take an analyst call and didn’t mention Apple by name, but the “headwinds” were likely code for its changes in data sharing.

On July 26, Alphabet, the parent company of Google and YouTube, announced its results. In his earnings call, the company’s CEO, Sundar Pichai, said that more than 1.5 billion users watched YouTube Shorts each month, its version of short-form videos similar to TikTok. A day later, Meta, the parent company of Facebook and Instagram, also announced its results.

“TikTok’s big innovation was realizing that social media doesn’t have to be social anymore, just media,” says digital strategist Jay Owens. And this recognition is what other companies, key among them Meta, are trying to follow with Instagram. “Meta certainly had data showing that friends and family were no longer the primary sources of engagement on Instagram and Facebook, but it didn’t dare make the leap to turn Instagram’s Explore tab into the ‘beginning,’ he says. “Now they’re playing catch-up, and users seem willing to have not one but three apps dominated by vertical video.”

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