Justin Fox, Columnist

The Big Spenders on R&D

Amazon and Facebook are putting more and more into long-term bets. They won't be the only beneficiaries.

April 29, 2016 at 8:17 PM UTC

Corrected

May 3, 2016 at 12:05 AM UTC

Justin Fox is a Bloomberg Opinion columnist covering business, economics and other topics involving charts. A former editorial director of the Harvard Business Review, he is author of “The Myth of the Rational Market.”

Thinking big.
Photographer: Chris Ratcliffe/Bloomberg

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Amazon.com and Facebook had great earnings reports this week. They also reported spending a lot of money on the future. Capital spending was up 35 percent at Amazon and 125 percent at Facebook in the first quarter compared with the same quarter last year. Research and development spending was up 28 percent at Amazon and 26 percent at Facebook.

In an age when much of corporate America seems focused on buying back shares, cutting costs and meeting quarterly earnings targets, Jeff Bezos and Mark Zuckerberg are thinking big, and long-term -- and it seems to be working out for them.

I wondered, though, whether the spending by these relatively young companies really amounts to much compared with spending by the rest of corporate America. That is, are Amazon and Facebook's investments big enough to matter to the economy?