Amazon and Alphabet both reported revenues which increased by around a fifth during the latest quarter, despite US technological giants getting criticised greatly by regulators recently.
Amazon, the world’s biggest online retailer, stated that its sales increased by 20% to a staggering €57.06 billion ($63.4 billion) during the period between April and June.
However, the company also experienced just a 4% increase in profits, resulting in just €2.34 billion ($2.6 billion) in profits, falling way short of analysts’ anticipated results. This has caused shares to simmer down and get lower in after-hours trading.
Alphabet, the owner of Google, experienced a similar fate, as revenues increased by 19% to a massive €35.91 billion ($39.9 billion).
However, on the other hand, Alphabet experienced a much more successful result when it comes to profits, with its profits trebling to €8.91 billion ($9.9 billion), which is much better when compared to the same period last year, when it had to pay a €4.59 billion ($5.1 billion) fine issued by the EU. This result has sent the company’s stocks right up.
Shockingly, these results come in the same week when the United States department of justice issued a review of whether “market-leading online platforms” were acting in a manner in which competition is reduced, restricting innovation, as well as potentially harming consumers.
The major reason as to why Amazon experienced such a drastic rise in sales is its recent investment in delivering a much faster delivery for its Prime customers. However, such an investment may be seen as a major reason as to why profits took a hit as well.
Jeff Bezos, founder and chief executive of Amazon, said “Customers are responding to Prime’s move to one-day delivery – we’ve received a lot of positive feedback and seen accelerating sales growth.”
This focus on its Prime members comes after the company faces much more competition with Walmart and Target, two United States companies which also happen to be boosting their delivery systems.
This succession of results also happens to come right after Amazon’s recent announcement of it expanding its workforce in the United Kingdom in 2019, with over 2,000 new employees in the United Kingdom alone.
On the other hand, Alphabet’s update comes as reassurance to investors and analysts, who had grown worried by the fall in advertising revenue growth during the first quarter.
Other than Amazon and Alphabet, other technological giants are also facing time under the spotlight of United States authorities, with Facebook being hit with a massive €4.5 billion ($5 billion) fine issued by the Federal Trade Commission with regards to the misuse of user data.