Griffin on Tech: Meta and Microsoft party while tariffs and trustbusters prep the hangover

Meta and Microsoft party while tariffs and trustbusters prep the hangover

If you’ve been watching Meta and Microsoft’s latest financial results and thinking, “Wow, tech is back!” well, enjoy the party while it lasts. 

Because just beyond the confetti and Mark Zuckerberg’s AI-powered smile, there’s a freight train of tariffs and antitrust headaches barreling straight for Silicon Valley’s golden children. If you thought the last tech downturn was dramatic, buckle up: 2025 is shaping up to be the year when even trillion-dollar titans learn the meaning of gravity.

Meta and Microsoft: Riding high - for now

Let’s start with the numbers, because they’re the only thing more inflated than tech CEOs’ egos. Meta just posted a 16% year-over-year revenue jump for Q1 2025, with net income up a whopping 35% and operating margins at a healthy 41%. Microsoft, not to be outdone, clocked in with US$70.1 billion in revenue (up 13.3%) and an earnings-per-share beat that impressed Wall Street analysts. Both companies are riding the AI wave like it’s 1999 and the dot-com bubble never burst.

But here’s the thing: these results are yesterday’s news. The real story is what’s about to hit them - and it’s not just another round of awkward metaverse avatars.

Trump’s tariffs: The party pooper

At the moment, Trump’s tariffs are less sabre-rattling and more wrecking ball. The new baseline 10% tariff on imports outside the US, and a brutal 145% on Chinese goods are still in effect, despite Trump signalling that the tariffs on imports from China will be dialled back.

Meta reported good quarterly earnings this week. But its digital advertising empire is built on a global web of brands and Chinese advertisers desperate to reach American eyeballs. When tariffs hit, those advertisers pull back, and suddenly Meta’s “diversified” ad base looks as sturdy as a house of cards in a wind tunnel. Analysts estimate up to US$10 billion of Meta’s US revenue comes from foreign advertisers, mostly in China, exactly the group now facing a hefty tax for the privilege of selling Americans knockoff air fryers and TikTok leggings. If you think that won’t show up in Meta’s Q3 numbers, I’ve got some VR real estate to sell you.

Microsoft, meanwhile, is supposed to be “resilient” because of its enterprise focus and sticky cloud revenues. Sure, Office 365 subscriptions won’t vanish overnight, but let’s not pretend Azure data centers and Surface laptops are immune to global supply chain chaos. Even Microsoft’s vaunted “shock absorbers”, recurring revenue, cash flow, and government contracts, can only cushion so much. And if you think the retaliation calendar from China and the EU won’t eventually hit Redmond, you haven’t been paying attention.

Trump’s Bezos call

A call from President Trump to Jeff Bezos this week illustrates the growing tension between the White House and US tech titans. Trump was furious to hear reports that Amazon was considering adding a line item for tariff costs to the bill customers see when they make a purchase at Amazon.com. 

Amazon quickly back-pedalled this week claiming the plan was only ever discussed in relation to Haul, a new section of Amazon that offers a Temu-like service for cheap goods. But the reality is that 70% of merchandise Amazon sells ultimately comes from China. Tariffs not only hit it directly, but also the thousands of third-party merchants that sell through Amazon.

With Trump planning to remove the US$800 threshold on imported goods, exposing low-cost items to the tariffs, he’s creating a logistical headache at the border, but also putting a dent in Amazon’s business.

Taking a bite out of Apple

Then there’s Apple, which this week was reeling from a court deciding that it had violated a 2021 court order requiring it to open its App Store to third-party payments. The court effectively sided with Epic Games which a few years ago took on Apple over the commission Apple charges on sales of games via its App Store - and the lack of alternative purchasing options to get a game onto an iPhone.

Apple’s case is now being referred to federal prosecutors to see if the company is in contempt of court. The implications are major. As Bloomberg reported: “The changes the company must now make could put a sizable dent in the double-digit billions of dollars in revenue the App Store generates each year. Apple is potentially facing another multibillion-dollar hit from losing payments Google makes to be the default search engine for its Safari browser, which is the subject of an ongoing Justice Department antitrust case against the Alphabet Inc. unit.”

Meta’s antitrust nightmare: Breakup or bust

Just as Meta is bracing for a tariff-induced ad slowdown, it’s also facing the biggest existential threat in its history: the Federal Trade Commission’s antitrust trial, which could force it to sell off Instagram and WhatsApp. Yes, the US government is finally trying to do what no competitor could - break up the House That Zuck Built.

The FTC’s case is straightforward: Meta bought Instagram and WhatsApp not to “enhance” them, but to neutralise threats and cement its monopoly over social networking. The trial, currently underway, features Mark Zuckerberg and Sheryl Sandberg on the witness stand, and the stakes couldn’t be higher. If the government wins, Meta could be forced to spin off its crown jewels, instantly halving its ad business and gutting the data synergies that make its targeting so creepily effective.

Meta’s defense is the usual greatest hits: “We made Instagram better!” “There’s tons of competition!” “Look, TikTok!” But the judge seems open to hearing the FTC’s arguments, and if the court sides with the government, Meta’s US$1.3 trillion ad machine could be split like a Thanksgiving wishbone. Even if Meta dodges the breakup, the legal cloud and regulatory scrutiny will hang over every product launch and acquisition for years.

AI spending: The last hurrah?

Both Meta and Microsoft are spending like there’s no tomorrow on AI infrastructure. Meta’s capex could hit US$72 billion this year, with Microsoft not far behind. Investors are still buying the AI hype, but tariffs mean higher costs for servers, chips, and data centers, while regulatory uncertainty makes every dollar riskier. Meta’s Reality Labs is already bleeding billions, and if ad growth slows, those AI bets start looking less like visionary investments and more like expensive hobbies.

Enjoy the view - the cliff Is coming

So yes, Meta and Microsoft just posted blockbuster quarters this week. But the champagne is already flat. Tariffs are squeezing margins, advertisers are getting skittish, and regulators are circling like sharks. The next few quarters will reveal just how much of Big Tech’s “unstoppable” momentum was built on sand.

The era of easy money, global growth, and regulatory apathy is over. This should give us a lot to think about as a nation when it comes to our relationship with big Tech and our uver-reliance on their platforms and services. That’s a topic I delive into in this week’s episode of The Business of Tech featuring Canadian journalist and author Paris Marx - streaming here or wherever you get your pods.

Photo credit: Igor Omilaev, Unsplash