The daily business briefing: October 27, 2021
Google reports historic sales growth, Democrats consider taxes on billionaires and big corporations to pay for spending plan, and more
Google reports historic sales growth
Google saw historic sales growth in the third quarter, nearly doubling its profit as the pandemic drove gains for its core advertising business. Revenue for Google-parent Alphabet increased by 41 percent to $65.12 billion, a 14-year high, as smaller businesses spent more on digital ads. Profit reached $21.03 billion, nearly three times pre-pandemic levels. Google's ad business, including Search, Maps, and YouTube, had $53.13 billion in sales, a 43 percent increase. Much of that growth came as online retailers sought to snag customers searching for products online. YouTube also boosted Google's ad gains, with sales growing by 43 percent to $7.21 billion in the quarter, putting it on a pace to make almost as much this year as subscription video streamer Netflix.
Democrats consider taxes on billionaires, corporations to pay for spending plan
Senate Democrats rushed to try to finalize a deal on a major spending plan before President Biden leaves on a foreign tour this week. The Build Back Better proposal could cost $1.75 trillion over a decade, and some Democrats are pushing a tax hike that would raise more than half of its revenue from the 10 richest people in America, including Tesla CEO Elon Musk and Amazon founder Jeff Bezos. The "billionaire" tax proposal would make the 700 wealthiest taxpayers the main revenue source for the spending plan, which would expand the social safety net and boost Biden's effort to fight climate change. Leading Democrats also are proposing a 15 percent minimum tax on corporations posting more than $1 billion in profits over three years, and a 3 percent "surtax" on millionaires earning more than $5 million annually.
Senators grill YouTube, Snap, TikTok leaders on damaging posts
Lawmakers questioned YouTube, Snap, and TikTok on data privacy, damaging posts, and other issues on Tuesday, shifting attention briefly to other social media companies after weeks of criticism of Facebook for allegedly putting profits above user safety. A bipartisan group of senators told executives of the companies during a three-hour hearing that they feared the firms' software was driving young users to inappropriate posts, and that the companies were not doing enough to remove dangerous content. "Everything that you do is to add users, especially kids, and keep them on your apps for longer," said Sen. Richard Blumenthal (D-Conn.). The companies said they were working hard to protect child users. Several lawmakers said their staff had accessed harmful content with ease, sometimes logged in as a teenager, echoing concerns about Facebook that were raised by whistleblower Frances Haugen.
Dow, S&P set fresh records with slight gains
The Dow Jones Industrial Average and the S&P 500 eked out the latest in a string of records on Tuesday with a nudge from continuing strong corporate earnings reports. The Dow and the S&P 500 gained less than 0.1 percent. The tech-heavy Nasdaq rose by 0.2 percent. Nearly 30 percent of the S&P 500 companies have reported this earnings season, and more than 80 percent of them have exceeded analysts' expectations. United Parcel Service and General Electric were among the companies whose shares gained Tuesday as they posted strong quarters. "Corporate earnings have been the key catalyst behind the recent record-high rally as robust demand continues to offset well-known supply constraints and pricing pressures," said Craig Johnson, Piper Sandler's chief market technician. Stock futures edged lower early Wednesday, with the three main averages down by less than 0.1 percent.
Merck to license COVID-19 pill to U.N. nonprofit
Merck plans to license its promising COVID-19 pill to a United Nations-backed nonprofit, the Medicines Patent Pool, to expand access to treatment in low- and middle-income countries, the company and the nonprofit said Wednesday. Merck developed the drug, molnupiravir, with Ridgeback Biotherapeutics. It aims to manufacture 10 million courses this year, but licensing partners will be able to increase supplies available in 105 countries, including Pakistan, Cambodia, and all of Africa. Molnupiravir promises to be the first pill COVID-19 patients can take at home, avoiding hospitalizations in places with limited access to health care. The supply and licensing deals will provide "global access in high-income and low- and-middle income countries at the same time," said Paul Schaper, Merck's executive director of global pharmaceutical public policy.