It can be said with confidence that any success in containing the Corona virus will come directly at the expense of a slowdown in economic activity, as the most effective practice in stopping the spread of the virus is social distancing and stopping social and economic forms of life based on mixing. Indeed, reports indicate that this virus has caused major disruption to the global economy, as its impact has exceeded the severity of the major financial crisis in 2007-2008, as the FTSE, Dow Jones Industrial Average, and Nikkei indices have witnessed massive declines since the outbreak of the virus began.
Survivors of the crisis
Only one aspect may flourish as a result of the epidemic: the technology sector, media and digital in general. While the global economy is suffering as governments close entire business sectors to stop the spread of the Corona virus, business at major technology companies remains stable and even thriving. For example, Amazon announced the hiring of 100,000 full-time workers in warehouses to meet the increasing demand, as its labor needs are unprecedented this time of year. Facebook stated that its social platform has witnessed a sharp rise in usage around the world, with most usage based on private messages and video calls. As for Microsoft, it announced that the number of users of its services, which enable remote learning and work via chat, video calls, and collaboration on file editing, increased by approximately 40% within a week.
Password: work from home
With people being asked to work from home and stay away from others to avoid the spread of the Corona virus, reliance on services provided by major technology companies has increased, in addition to accelerating the adoption of trends on which they already depend. People quarantining at home now rely on e-commerce sites, such as Amazon, to purchase a variety of goods, such as groceries and over-the-counter medications. While the spread of video streaming services such as: Netflix has affected the box office sales of films in recent years. However, now with cinemas closed by government orders, platforms such as: Netflix, Amazon Prime Video, and YouTube have begun to gain larger numbers of users every day. The shift to working at home has also demonstrated the benefits of cloud computing, and for companies that rely on internal information infrastructure, switching to cloud computing solutions has become essential to their business continuity. Many companies have transformed their infrastructure and begun to rely on cloud computing services provided by Google, Amazon, and Microsoft. This shift is likely to accelerate as millions of employees are forced to work from home. Even Apple; Which seemed to be more at risk among American companies due to its reliance on Chinese factories to manufacture its devices, but it seems to be in a good position now, as many of Apple’s factories have returned almost to normal, and people are spending more time using its digital services, and spending more money on subscriptions for these services, and it even announced new versions of its devices during the month of March. The Teams digital meetings service witnessed an unprecedented increase in usage, with the number of its users reaching more than 44 million users daily, which reflects a growth of about 12 million users during the period from March 12 to 19.
But there are obstacles
All of the above; This does not mean saying that the largest giant companies should not worry, as the digital advertising industry, which is considered the primary source of transcontinental companies such as Google and Facebook, suffers during periods of economic recession, and the shares of Apple, Microsoft, and Amazon collectively lost more than a trillion dollars in market value a month ago, with American stocks trading at record levels. For example, ride-sharing services companies such as Uber and Lyft, and real estate rental sites such as Airbnb, were severely affected by customers’ adherence to home isolation policies imposed by governments, and both Microsoft and Apple reduced their short-term financial expectations due to the slowdown in consumer spending. Airbnb also announced the day before yesterday that it will pay $250 million in compensation to hosts due to cancellation of reservations. When a guest cancels an accommodation reservation due to circumstances related to the Corona virus for reservations that were scheduled between March 14 and May 31, the company will pay 25% of the reservation value to the host based on its cancellation policies, and these payments will begin to be paid during the month of this April.
What do we expect in the future?
It is now likely, according to economists, that global companies worth $3.9 trillion will suffer this year, and although the extent of the losses is not yet clear, the research firm IDC expected during December that sales of hardware, software, and services during 2020 would achieve a growth of 5% globally, but one month ago it became clear that the Corona virus would disrupt supplies and reduce sales in China. Accordingly, IDC said: “Annual revenues may grow by only 1%,” and Frank Janes, chief analyst at IDC, commented, saying: “This 1% growth is certainly very optimistic.” Expectations indicate that major technology companies could benefit from changes in consumer habits when the economy eventually improves. It is also expected that major technology companies will end this year in a stronger position than ever before.
