The last six months have been difficult for some of the world’s largest tech firms, as allegations of tax evasion and profitability issues rob market leaders of their status and public image. From Google to Yahoo!, the giants of the tech world have had an eventful, if not particularly easy, time during 2013.
In May, leading social network Facebook posted revenue of $1.46 billion in the first quarter of the year. Despite the impressive growth – Facebook’s revenue was $1.06 billion a year earlier – the company’s net income was $219 million during the same quarter, putting its earnings per share at a fairly weak 12 cents.
The social network’s growth has largely been attributed to an increase in mobile advertising earnings from users accessing its platform by phone. The ad industry, however, has reported mixed results from Facebook’s desktop advertising service, which produces the majority of the company’s revenues.
Likewise, former tech leader Yahoo has hit some roadblocks in its path to financial recovery. The company, which once sold more display advertising than any other online firm, struggled with reduced revenues and a core business that’s rapidly moving away from advertising revenue and towards developing new products.
Google and Amazon.com, a search advertising firm and online retailer, have faced serious allegations of tax evasion in the United Kingdom. Google, which is the UK’s top search engine, is caught up in a scandal regarding its use of Ireland offices to declare income generated in the UK, which some analysts believe is illegal.
Amazon.com is facing a similar situation regarding tax avoidance, which has hurt the well-known online retailer’s image. Facebook, which sells advertising to many UK and EU-based companies, also uses Ireland offices for the majority of earnings, leading many to believe that it could be the next firm under the ‘tax spotlight.’
