SAN FRANCISCO – Even as Facebook this month tackled an internal revolt and a cascade of criticism over its refusal to act on President Trump’s incendiary messages, the social network was actively making other behind-the-scenes bets.
Late tuesday, when attention was focused on how Facebook could handle Mr. Trump, the Silicon Valley company said in a brief blog post that it had invested in Gojek, a “super app” in Southeast Asia. The deal, which gave Facebook a bigger footing in the fast-growing region, followed a $5.7 billion investment it recently pumped into Reliance Jio, a telecommunications giant in India.
The moves were part of a spending frenzy by the social network, which also spent $400 million last month to buy a lively GIF company and is spending millions of dollars to build an undersea cable of nearly 23,000 miles fiber optic encircling Africa. On Thursday, Facebook confirmed that it was also developing a venture capital fund to invest in promising start-ups.
Other tech giants are adopting similar behavior. Apple bought at least four companies this year and released a new iPhone. Microsoft has purchased three cloud computing companies. Amazon is in talks to acquire a standalone vehicle start-up, has leased more planes for delivery and has hired an additional 175,000 people since March. Google has unveiled new messaging and video features.
Even with the global economy In the face of a pandemic-induced recession and dozens of companies filing for bankruptcy, the largest technology companies — still extremely profitable and full of billions of dollars from years of corporate dominance — are deliberately laying the foundation for a future where they will be bigger and more powerful than ever.
Amazon, Apple, Facebook, Google and Microsoft are aggressively placing new bets as the coronavirus pandemic has made them near-essential services, with people turning to them to shop online, entertain themselves and stay in touch with their loved ones. The rampant use has given companies a new fuel to invest as other industries fall back.
The expansion comes as lawmakers and regulators in Washington and Europe sound the alarm about the concentration of power of the tech giants and how it may have harmed its competitors and led to other problems, such as the spread of misinformation. This week, European Union officials were preparing antitrust charges against Amazon for using its dominance of e-commerce to eliminate its smaller rivals, while Britain opened an investigation into Facebook’s purchase of GIF.
Some of the tech giants have made little secret of their intention to move forward in a recession that has put more than 44 million Americans out of work and that public servants warn will be extended.
“I’ve always believed that in times of economic downturn, the right thing to do is to continue to invest in building the future,” Facebook CHIEF executive Mark Zuckerberg said in a call to investors last month. “When the world changes rapidly, people have new needs, which means there are more new things to build.”
By doubling growth in these difficult economic times, the largest technology companies are continuing their trend. In previous recessions, those who invested when the economy was most vulnerable often appeared stronger. In the 1990s, IBM took advantage of a recession to reorient itself from a hardware company to a software and services company. Google and Facebook were both pulled out of the dot-com bust about 20 years ago.
Apple, whose iPhones now dominate computing, doubled its research and development budget for two years during the downturn of the early 2000s. This led the company, which nearly went bankrupt in the late 1990s, to create its iPod music player and iTunes music store – and finally the iPhone, the App Store and a frantic growth trend, said Jenny Chatman, a professor at the Haas School of Business at the University of California, Berkeley.
Ranjan Roy, a technology commentator for The Margins, an internet industry blog, said it was clear that tech giants weren’t afraid to be more aggressive now and that the power they were accumulating should give people a break.
“Without any backtracking from regulators, large technology companies would almost certainly emerge from the more powerful pandemic,” he said. “So many additional parts of our daily lives become dependent on their products, or they could simply buy or copy services they don’t yet provide.”
Still, companies are taking risks by spending in uncertain times, said John Paul Rollert, a professor at the University of Chicago Booth School of Business.
“Doubling and even tripling when the casino is on fire is a remarkable gesture, because they may not even be able to cash their chips later,” he said.
Amazon, Apple, Facebook, Google and Microsoft, which have refused or did not respond to requests for comment, have a lot of money. Together, they sit at the top of about $557 billion, allowing them to maintain a pace of acquisitions and investments similar to last year, when the economy was humming, according to a financial disclosure count. They have been among the largest business spenders in research and development for most of the past decade, according to PwC, the leading accounting firm.
Businesses have stepped up their operations since March, when orders for existing shelters began. Like Amazon, Facebook and others adapted to their employees working from home, they experienced a spike in usage. Messaging and other conference conferencing software have grown in popularity.
This has created opportunities. Microsoft, for its part, has begun promoting its Teams video conferencing service, which allows people to talk and collaborate online. Microsoft has also acquired three cloud computing companies in recent months — Affirmed Networks, Metaswitch Networks and Softomotive — to offer more technology to businesses.
Google, too, updated the products that people can use to work from home. In April, he said his video chat service, Google Meet, would be readily available inside people’s Gmail windows and free for anyone with a Google account. He also said he would start making ads in his mostly free shopping search results, instead of having traders pay for all their products to appear in the results, to strengthen e-commerce searches.
Amazon was initially overwhelmed by a wave of online orders and security for its warehouse employees. In response, the company added more than 175,000 jobs to meet demand.
Amazon has since invested more. While aviation all but grounded at a standstill in the pandemic, the company said this month that it was adding 12 Boeing 767s to its fleet of more than 70 delivery aircraft. He also discussed the purchase of Zoox, a start-up of autonomous vehicles valued at $2.7 billion, according to a person familiar with the talks. The discussions were previously reported by the Wall Street Journal.
Apple, with $193 billion in cash and debt, has gone on its own buying frenzy. This year he bought DarkSky, a popular weather smartphone app; NextVR, a virtual reality company; Voysis, digital assistant and publisher of voice recognition software; And Xnor.ai, an artificial intelligence start-up.
The company will soon hold a virtual developer conference and manages an increase in activity on FaceTime and iMessage as people use these services to communicate in quarantine.
Facebook’s activity was most pronounced. When the coronavirus swept across the United States in March, the social network was inundated with people flocking to its apps to use voice chat and video services. Zuckerberg said Facebook was “just trying to keep the lights on.”
But the company quickly capitalized on the momentum. Zuckerberg accelerated the construction of some products by introducing Messenger Rooms, a group video chat service, in April.
The same month, Facebook said it was taking a $5.7 billion stake in India’s Reliance Jio. It was the company’s largest investment in an outside company, giving it better access to one of the world’s fastest growing digital markets.
“We are committed to connecting more people in India with Jio,” Facebook said of the deal, noting that Jio had put more than 388 million people online in less than four years.
Last month, Facebook bought GIF Giphy for about $400 million. Giphy needs to be integrated into Instagram, the photo-sharing app owned by Facebook. And last week, the social network invested millions in Gojek. Headquartered in Jakarta, Indonesia, Gojek manufactures an application for digital payments, transportation and other services that is used by more than 170 million people in Southeast Asia.
Facebook is now working on the new venture capital fund, which will help it identify new popular applications. The fund has been reported earlier by Axios.
By leading the business, Mr. Zuckerberg can draw inspiration from a member of Facebook’s board of directors, venture capitalist Marc Andreessen. In April, Mr. Andreessen wrote a blog post entitled “It’s Time To Build” and said, “We need to demand more from our political leaders, our CEOs, our entrepreneurs, our investors.”
Less than two weeks later, Mr. Zuckerberg said at the call of investors that he was doing just that: construction.
He said that he”A responsibility and a duty to invest” and added, “We are in a privileged position to be able to do so.”
Daisuke Wakabayashi contributed to the oakland, California report; Karen Weise of Seattle; and Erin Griffith from San Francisco.