We are
in an odd moment for
technology. Can you feel it? The powerful forces of
unstoppable change and tech wealth are rolling along, but mixed in there is a
shred of something else: doubt.
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Some of the
digital age’s titans, including
Netflix and Facebook, are simultaneously
ubiquitous, disruptive digital supernovas, and tarnished stars careening into
existential growth challenges.
The war in
Ukraine, governments’ efforts to restrain rising consumer prices, and the
unsettled economic and social effects of the pandemic have put a pause on some
digital advertising and tech purchases. Money pros who bet on the promise of
young tech companies are losing some faith.
In one sign of
worry from investors, a half-dozen tech giants — Apple, Microsoft, Google,
Amazon, Facebook, and Netflix — have collectively lost $1.3 trillion of market
value this year. (Facebook’s soaring stock price Thursday had crawled back only
a little from its epic 2022 meltdown.)
The past decade
has been a nearly uninterrupted party for technology as we digitized our lives.
And although there have been periodic tech panics before, including briefly as
COVID-19 started to spread in early 2020, it feels tougher than it has been in
years to predict the fate of tech and the industry’s leading companies.
Heedless optimism
is out and realism is in. It’s so very un-tech.
Perhaps this
nervous period is merely a lull and the near future will resemble something
like the years since 2010, during which technology grew in importance, tech
companies generated bonkers dollars and tech investors wallowed in riches. Or
maybe we are on the cusp of something else — not a collapse but perhaps a
sadder phase for tech.
Right now, plenty
is still rosy in techland. We need technology in our personal and professional
lives, and many makers of those technologies are still unimaginably rich.
Backers of
Meta, Facebook’s parent company, were relieved Wednesday when the
company, which lost users at the tail end of 2021, reported that more people
picked up the habit again of using Facebook or the company’s Messenger app.
Facebook shares climbed 18 percent Thursday.
But many of tech’s
leaders are having trouble repeating past successes. Netflix in the first
quarter of this year lost subscribers for the first time in a decade. Facebook
predicted that its quarterly revenue might decline soon compared with 2021.
It’s not shocking partly because last year was a weird one for Facebook, but a
tech company’s revenue is not supposed to shrink.
This week,
Amazon also disclosed that its sales growth was slowing, and Apple cautioned that it
was having trouble making enough products because of pandemic-related
disruptions. Young tech companies, including stock-trading app Robinhood, have
announced layoffs as their investors want them to hunker down.
There has also
been a more nuanced reassessment of the belief that the pandemic would
turbocharge technology. Lots of retail sales shifted back to physical stores
from the online shopping mania of 2020. It turns out that not everyone wants to
Zoom all the time or ride Peloton bikes in their dining rooms. Businesses that
panic-bought work-from-home technology in 2020 might not need any more for a
while.
Twitter is
emblematic of this period of unsteady ground. Maybe
Elon Musk, who agreed to
buy the company this week for $44 billion, will help Twitter fulfill a
potential that has always seemed just out of reach. Or maybe he’ll drive the
company into the ground.
And if there is a
US recession, as some economic watchers are contemplating, all bets are off.
The last time there was a prolonged global recession, technology was a
pipsqueak relative to today. Many tech companies basking in success now have
never lived through lean times.
In a recent
conversation with an experienced tech investor, who did not want to be named so
he could speak more freely, he sketched out what a dark-tech phase might look
like, particularly for the companies that sell technology to businesses.
Businesses for the past decade have been pouring
money into buying technology, mostly with few financial constraints. But if there
is a recession, he imagined that executives would take a hard look at budgets
and pare back unnecessary technology. If that happens, tech companies that have
assumed they would keep growing fast for a long time will be in for a rude
awakening, this investor cautioned.
We are not there
yet. But the fact that investors are imagining nasty scenarios highlights a
mood shift. The boom times in technology have been largely based on hard facts
— more people have come online, more businesses have been desperate to
modernize ahead of rivals, and investors have found few places other than tech
to make good money.
But another foundation was
the faith that the tech sector would continue to have uninterrupted expansion.
Once that feeling wanes a little, it isn’t always easy to get it back.
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