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DOJ Files Antitrust Suit Against Google; Snap Exceeds Q3 Expectations

In today’s ExchangeWire news digest: the US Department of Justice has filed a lawsuit against Google, accusing the tech heavyweight of anticompetitive business practices; Snap over-achieves in Q3, beating analysts’ revenue and user predictions; and Netflix misses its Q3 subscriber estimates, but remains philosophical.

 

DOJ launches lawsuit against Google

 

The US Department of Justice (DOJ) has filed a landmark lawsuit against big tech firm Google for allegedly misusing its market dominance to sustain a monopoly over search and search advertising.

The case marks the climax of a more than year-long investigation by the government into Google’s business practices, both in its native US and elsewhere. Alongside accusing Google of intentionally stifling its competitors via a series of business agreements, the DOJ also criticised the prevalence of Google’s Chrome search engine, which is set as the default on (and cannot be deleted from) phones that run on its Android operating system.

The move is the first major legal action to be taken against a large tech firm in the US in decades, and follows intensifying scrutiny of Google (as well as its big tech peers) from both sides of Congress. A house subcommittee report into Google and fellow giants Amazon, Apple, and Facebook published in July this year asserted that the major tech firms hold “too much power”, a situation which has simultaneously strangled innovation and eroded trustworthy journalism.

Google has dismissed the rationale behind the filing as “deeply flawed”, asserting that the suit will give an undeserved boost to less-sophisticated search alternatives, worsening users’ experiences.

 

Snap exceeds Q3 expectations

 

Snapchat LogoSnap, the parent-company of photo-messaging platform Snapchat, outperformed estimates for its Q3 results. The social media platform saw an 18% year-on-year rise in daily active users (DAUs), with the app drawing 249 million by the end of the quarter. The figure exceeds the 244 million DAUs analysts had predicted the app would accrue during the period.

The jump in usage also saw revenues leap 52% to USD $679m (£520.3m), leaving analysts’ estimate of USD $555.9m (£426m) trailing. The revenue boost comes mainly from an increase in advertising on the platform – more and more advertisers have started to explore Snapchat, encouraged by the growing user base and the brand-safety element provided by the disappearing messages function synonymous with the platform.

Snapchat also received unprecedented boosts from the ad boycott launched against Facebook in July and the long-running uncertainty surrounding rival app TikTok’s future in the US. However, according to Snap CEO Evan Spiegler, it’s the app’s ability to provide localised and novel advertising for brands in the form of filters and lenses, as well as its partnerships with local telecoms providers, that has really spurred the app’s success.

Snap saw shares grow 23% yesterday (20th October), and the company experienced a 28% increase in the average revenue per user alongside a decline in net losses. Snap is reportedly confident that growth will continue into the next quarter.

 

Netflix falls short of Q3 subscriber predictions

 

Leading streaming service Netflix failed to meet Q3 subscriber estimates. US stock market analysts had predicted that the company would collect 3.3 million new subscribers to its audience in the period of July to August, but the company only acquired two-thirds of this target, finishing the quarter with 2.2 million new sign-ups.

Despite missing expectations, the firm is confident that the result is not reflective of a decline in interest in its offering, nor indicative of the creeping success of a rival. Rather, Netflix attributes the figure to its over-achieving in acquiring new subscribers during the first half of 2020. The company saw its subscriber base sky-rocket amidst anti-COVID stay-at-home measures, with 15.8 million and 10.1 million new viewers signing up in Q1 and Q2 respectively.

The result is doubtlessly of little surprise to Netflix, which indicated a couple of months ago that it was wary that its runaway success was unlikely to last forever as the global health crisis evolved. The streaming champion saw stock prices drop 5% yesterday in light of the result, but it’s unlikely that this will have a significantly detrimental effect on the firm – Netflix recorded a 23% growth in revenue over the period, and expects this growth to remain steady at 20% in Q4.