It’s a Tech War, and It Costs a Fortune

One trend was clear this week: It is incredibly costly to stay ahead in the technology industry.

During the quarter ended in March, four U.S. tech superpowers — Alphabet, Amazon, Microsoft and Facebook — collectively spent $16.2 billion


on capital projects, including real estate; warehouses to stow and ship packages; and data centers to fuel their cloud-computing businesses and internet hangouts. That figure, which includes assets that the tech giants effectively lease rather than own, was 68 percent higher than the companies’ combined capital spending in the March quarter of 2017. The rate of growth is far higher than the companies’ pace of revenue. 

Alphabet on its own had capital spending of $7.3 billion in the quarter, including a $2.4 billion purchase of a piece of commercial real estate in New York City. Even excluding that big acquisition, Alphabet’s capital spending was about the same as the capex of Exxon Mobil in the same period — a company that does the pricey work of digging oil and gas out of the ground.

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