How Amazon & Google are helping states as unemployment soars amid COVID-19

Tech giants Amazon and Google are helping states amid an unprecedented rise in unemployment claims triggered by the coronavirus. Yahoo Finance’s Dan Howley joins Seana Smith to discuss.

Video Transcript

SEANA SMITH: Welcome back Yahoo Finance's "The Ticker." Let's talk about Tesla. Tesla CEO Elon Musk making headlines yet again this week. This time, he's defying orders by resuming production at its California plant.

Now the President Trump also backed him today, backed his decision today to reopen that plant. He tweeted this morning, quote, California should let Tesla and Elon Musk open the plant now. It can be done fast and safely.

For more on this, I want to bring in Emily McCormick. And Emily, I mean, I guess my question to you is where do things stand at this point? Because there was even discussion when we were talking about this earlier in the day that-- is there a possibility that Elon Musk could be arrested at this point?

EMILY MCCORMICK: Well, Seana, to take things back to where we started, we have to really remember that this really all began last week. And that's when California Governor Gavin Newsom said that the state would ease some of its lockdown orders for manufacturing and some other industries. However, he did leave the door open for individual counties to continue with more stringent stay-in-place measures for an extended period of time.

Alameda County was one such county. So they had previously extended their lockdown, along with several other counties in the San Francisco Bay Area, where Tesla's Fremont facility is headquartered. They'd extended that through at least the end of May.

So that's something that Elon Musk and Tesla are contesting at this point. They filed a complaint with the US District Court for the Northern District of California, seeking a permanent injunction to prevent enforcement of those county orders that are right now saying that Tesla can't return to operation. And even though that case is still ongoing, we know that earlier today, according to a Bloomberg report, the lawsuit had been referred to a mediation process, although that doesn't necessarily mean that's how the case will be resolved.

We know that Elon Musk said that he'd already reopened the facility. There have been employees streaming in and out of the factory as of yesterday, and presumably today as well. He did acknowledge that there was a possibility that he could be arrested for defying these county orders. But for now, this is something that is an ongoing case, and is-- really, just the drama continues between California, the county and Tesla and Elon Musk.

SEANA SMITH: We know we've seen how Musk, he hasn't backed down before when he's been faced with, I guess-- he defied SEC regulators. There was also a couple of other interactions, or different times that he was aggressive. But Emily, I want to talk about Tesla, the impact that the company is having, or the company is seeing from COVID-19.

We talked about earlier this week, yesterday that sales in China fell in the month of March. Any indication about how sales here in the US have been doing over the last two months?

EMILY MCCORMICK: Well, that's something that does remain to be seen. We know for the first quarter at least, the first three months of the year, we had Tesla post year-over-year growth and better-than-expected delivery figures. But at the same time, that didn't capture the full impact of the coronavirus pandemic and both the supply-side and the demand-side impacts. What we know about the Fremont factory in particular, though, is that's the only location that Tesla has in the United States to actually assemble those cars. So really imperative for the company in hitting its delivery goals to have this facility up and running.

But at the same time, of course, with that legal battle with Alameda County, that's something that could potentially stand in the way in the short-term.

SEANA SMITH: All right, Emily, thank you. Speaking about the fallout of COVID-19, big tech is trying to help with the jump in jobless claims. So states including New York, Kentucky, Rhode Island, and also Kansas, they're getting help from Amazon and Google in handling an unprecedented surge in unemployment claims. We have Dan Howley here with us with more on this story.

And Dan, we've been-- we've seen the video of the long lines. States simply cannot, or are struggling to keep up with the number of jobless claims over the last several weeks. What are Amazon and Google doing to help with this situation?

DAN HOWLEY: Yeah, they're essentially trying to get the states and cities on to their cloud services, because they're using horribly outdated infrastructure as it is. And that's why you're seeing these long lines. That's why you're hearing people who are frustrated, who aren't able to get their unemployment benefits, because those systems frankly aren't up to the standards that they need to be, and can't take the workloads that are being pushed on them.

This is unprecedented, the amount of people that have lost their jobs. That is then forming a backlog of people because those systems can't handle the deluge. And then we don't-- we get people who just can't get their benefits.

So what you have, then, is Amazon and Google stepping into these situations and saying, look, we can use the cloud. We can use our call centers to help you remedy this situation, and allow people to get the money that they need. Whether or not they're doing it at the-- for niceties or because it allows them to show to governments that they are companies that are worth keeping around and not breaking up, that kind of remains to be seen. But I'm sure it doesn't hurt their case when they eventually go to Washington to fight those antitrust issues.

SEANA SMITH: Dan, is this something that other large cloud companies, or that have significant presence in the cloud, like Microsoft, is this something that some of these other tech companies will also likely get in on, and try to help states across the country file the jobless claims?

DAN HOWLEY: It could be, yeah. I think what this really does is kind of put into context the issues that states have with their technology infrastructure. It's all very outdated. Some of them are using coding that people don't even use anymore, that you have to hire older folks who were specialists in this, or you have to try to recruit new people to be interested in it.

But since it's so specialized, it's so niche, they don't want to, because it's either work in a municipality or a state, trying to keep up their own infrastructure, or that's it, you can't take that to other places. Whereas if you develop your skill set for code you can use across the internet, then you have better opportunities for jobs. So it comes down to there's not enough people to deal with the influx of issues with the code that these companies are using-- states and municipalities are using.

The fact that the systems themselves can't even handle the influx of people that need access to their unemployment benefits, and then as a result, we're seeing these companies that are using more modern technologies come in and try to take that workload off. But you can imagine that going forward, hopefully states will recognize-- that haven't potentially had issues with this will recognize that they, too, need to update their infrastructure.

We've seen this with the DOD, for instance. They're updating their software to an AI cloud-based platform. The JEDI Project, we've see Microsoft and Amazon bidding on that. Microsoft won. Amazon contends that it was a flawed bidding process influenced by President Trump.

But that's something that, again, is showing that government needs to step up and really join the 21st century, as far as cloud computing and just modern technology, really.

SEANA SMITH: All right, Dan Howley, thank you so much for bringing us that.