We are in a strange time for technology. Can you feel it? The mighty forces of unstoppable change and technological wealth are advancing, but mixed with them is an ounce of something else: doubt.
Some of the titans of the digital age, including Netflix and Facebook, are both ubiquitous and disruptive digital supernovas and tarnished stars embarking on existential growth challenges.
The war in Ukraine, government efforts to limit consumer price inflation, and the unstable economic and social effects of the pandemic have put a pause on some digital advertising and technology purchases. Money pros betting on the promise of tech start-ups are losing confidence a bit.
In a sign of investor concern, half a dozen tech giants – Apple, Microsoft, Google, Amazon, Facebook and Netflix – have collectively lost $2.2 trillion in market value this year, at the end of the week. (Facebook’s stock price surge on Thursday had retreated little since its epic 2022 crash.)
The past decade has been an almost non-stop party for technology as we digitize our lives. And while there have been periodic tech panics before, including briefly when the coronavirus began to spread in early 2020, it seems harder than it has been in years to predict the fate of technology and leading companies in the industry.
The reckless optimism is out and the realism is in. It’s so low tech.
Maybe this nervous time is just a lull and the near future will look something like the years since 2010 when tech rose to prominence, tech companies generated crazy dollars and tech investors have wallowed in wealth. Or maybe we’re on the cusp of something else – not a meltdown, but maybe a sadder phase for technology.
Right now, everything is still rosy in the techland. We need technology in our personal and professional lives, and many makers of that technology are still incredibly wealthy. Backers of Meta, Facebook’s parent company, were relieved on Wednesday when the company, which lost users at the end of 2021, reported that more people had gotten back into the habit of using Facebook or the the company’s Messenger app. Facebook stock climbed 15% on Thursday.
But many tech leaders are struggling to repeat past successes. Netflix in the first quarter of this year lost subscribers for the first time in a decade. Facebook has predicted that its quarterly revenue could soon decline from 2021. That’s not shocking in part because it’s been a weird year for Facebook, but a tech company’s revenue isn’t expected to decline.
We’ll get more data points later today from Amazon and Apple, which will report earnings for the first three months of 2022. Tech startups including stock trading app Robinhood this week , have announced layoffs because their investors want it. crouch down.
There has also been a more nuanced reassessment of the belief that the pandemic will energize technology. Many retail sales have returned to brick-and-mortar stores since the online shopping craze of 2020. Turns out, not everyone wants to zoom all the time or ride a Peloton bike in their dining room. Businesses that panic-bought work-from-home tech in 2020 might not need it for a while.
Twitter is emblematic of this period of shaky ground. Perhaps Elon Musk, who agreed to buy the company this week for $44 billion, will help Twitter realize potential that has always seemed out of reach. Or maybe he’ll drive the business into the ground.
And if there is a recession in the United States, as some economic observers predict, all bets are off. The last time there was a prolonged global recession – putting aside the brief pandemic-related U.S. downturn in early 2020 – tech was a pipsqueal compared to today. Many tech companies that are successful today have never had a lean period.
In a recent conversation with a veteran tech investor, who didn’t want to be named so he could speak more freely, he sketched out what a dark tech phase might look like, especially for companies selling technology to enterprises.
Over the past decade, companies have poured money into buying technology, mostly with little financial constraint. But if there was a recession, he imagined leaders would carefully review budgets and cut unnecessary technology. If that happens, tech companies that have assumed they will continue to grow rapidly for a long time will face a rude awakening, this investor warned.
We are not there yet. But the fact that investors are imagining bad scenarios highlights a change in mood. Tech boom times have largely been based on hard facts – more people have gone online, more companies desperately need to upgrade before their rivals, and investors have found few places other than tech to earn a lot of money.
But another underpinning was the belief that the technology sector would continue to experience uninterrupted expansion. Once that feeling fades a bit, it’s not always easy to get it back.
Elon Musk is hard to like, but he also has contributed to improving the condition of humanity, wrote Farhad Manjoo for the Opinion section of the New York Times. “I, for one, am excited to see what he comes up with,” Twitter’s next owner Farhad wrote.
More on social media: New European regulations can improve social media sites without hampering free speech, and the United States can do the same, writes Frances Haugen, the former Facebook product manager who leaked documents about her ideas on damage they have caused.
And my colleague Brian X. Chen was disappointed with his experience on Truth Social, the social media app backed by former President Donald J. Trump.
Competitive typing: It’s one thing, and the hobby has found new life in online communities.
Hugs to that
Today in exceptional multitasking: This guy caught a baseball without shoving the baby he was breastfeeding.
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