By Daniel Thomas and Natalia Sherman
Business reporter, BBC News
Alphabet and Microsoft have seen slower-than-expected growth in the last quarter, adding to fears of a downturn in the economy.
Alphabet, which owns Google and YouTube, said sales rose just 6% in the three months to September, to $69 billion.
One of the most troubling developments during the last quarter was the US firm’s weakest quarterly growth in nearly a decade outside of a pandemic.
Meanwhile, Microsoft reported that demand for its PCs had weakened.
Sales of the company increased by 11 percent in the same period to $50.1 billion; this marks the slowest revenue growth in five years.
Consumers and businesses around the world are being forced to cut back because prices are rising and interest rates are going up. People are wary of a recession, which could happen in the future when interest rates rise even higher.
The strong US dollar has made it more expensive for multinational companies to sell products overseas.
India has fined Google $161 million for unfairly collecting user data.
The way Microsoft see it, bosses think workers are slacking and do less work when they’re at home.
Alphabet reported a decrease of 29% in its profits. You can find more information on the profit report by visiting their website.
Out of the top five verticals, sales growth has slowed for one for five consecutive quarters.
The news that Google’s CEO, Sundar Pichai, announced is intended to keep the company “sharpening” focus and “responding” to the economic environment.
“When Google gets hit by a miscalculation, it signals a bad omen for digital advertising,” said Evelyn Mitchell, with Insider Intelligence. He mentioned that the past two examples where Google’s website did not increase the amount of advertising they provided were when the amount of money spent on advertising was at its lowest point.
“This disappointing quarter for Google signals a lot of difficult times ahead if market conditions continue to deteriorate.”
Satya Nadella is the current CEO of Microsoft.
Image caption,
MInimizing manpower and outsourcing more of your projects with teamsters, has allowed Microsoft to keep their current price point. It also benefits Microsoft that they are now inbounding services in the market.
Microsoft is expecting demand for its Surface devices and cloud technology to continue falling this year. Small business customers have been known to cut back on technology spending, which has created a large disparity in demand for Microsoft’s products.
The Xbox video game’s sales have also slumped.
The success of the big-tech sector this year was not met by its advertisers. Although PROBLEM is at bay and their sales continue to increase, it looks grim for the sector in the current climate.
In recent months, both Google and Microsoft have said that they were slowing hiring and potentially cutting jobs.
Many other tech companies have made big adjustments recently, including Netflix and Twitter. Some of the adjustments include staff layoffs, or slowing the pace of recruitment like Snap.
Alphabet and Microsoft each fell sharply on after-hours trading to the point where their shares were doing the opposite of what was expected.
