How the coronavirus reinforces the hegemony of GAFA

Audio 04:02

By: Dominique Baillard Follow

The coronavirus recession is barely scratching the American Internet giants. GAFA, Google Amazon FaceBook and Apple could even emerge strengthened from the pandemic.

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The turnover of the online sales platform Amazon jumped 28% in the first quarter. Daily use of Messenger and WhatsApp, the two social networks on Facebook, has doubled. At Microsoft, the use of the paid Teams video conferencing application increased by 1,000%. The health crisis is galvanizing the activity of all GAFAs. If the fall in advertising revenues and health security spending will undoubtedly penalize them more in the second quarter, they should come out almost unscathed by the crisis, or even strengthened, because they are more than ever the essential supports of our confined life , forced to work, buy, download movies or books, play, or trade with peers online. New gestures for some of us who will no doubt partly remain after the return to normal life.

Are the Internet giants the only ones to benefit from this windfall effect ?

Some startups have had tremendous successes like Zoom, which offers videoconferences for free. But the game is far from won for this newcomer because these giants with full pockets have already counter-attacked. Facebook and from today Google offer the same service. In addition, the other companies on the Net, from middleweights to start- ups , were hit hard by the crisis. The fall in advertising revenues and activity forced the American search engine Yelp to lay off a third of its employees, or 2,000 people. Same trend at Tripadvisor. Tens of thousands of jobs generated by startups are evaporating while the Internet's steamrollers are hiring hard. 170,000 at Amazon to meet the increase in demand, and Facebook promises 10,000 recruitments this year.

GAFA have a war chest to get through this crisis without a hitch

Mountains of cash reserves, which allow them to cheerfully bear the fall in advertising revenues and even to consider the acquisition of competitors in distress. After the 2008 financial crisis, Google absorbed more than 30 companies. At that time, GAFA were emerging, a single company, Microsoft was among the 5 largest listed American companies. Today, the 4 GAFA have joined it, and the quintet weighs 5,200 billion dollars on the stock market, three times more than the club of 5 in 2008.

Their hegemony is however threatened by justice and by plans to dismantle part of the political class.

In the United States these companies are all under investigation for violation of anti trust law. They are also the subject of dozens of investigations opened following complaints of unfair practices. But today containment works in their favor by slowing down the action of justice. And during this time they look after their corporate citizen profile. Google and Facebook have become essential partners in tracking the virus. A news which completely overshadowed the debate on their dismantling.

IN SHORT

This Monday the Hong Kong stock market closed on a sharp decline of 3% The return of the trade war between China and the United States revives the concerns of investors. Donald Trump said he had evidence proving Beijing's responsibility for the spread of the coronavirus, thus fueling discord between the two great powers.

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