We are in an odd moment for technology. The powerful forces of unstoppable change and tech wealth are rolling along, but there is also a shred of something else — doubt.
Some titans like 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, giants such as Apple, Microsoft, Google, Amazon, Facebook and Netflix have collectively lost $1.3 trillion of market value this year.
The past decade has been a nearly uninterrupted party for technology as we digitised our lives. Despite periodic tech panics before, it feels tougher than it has been to predict the fate of tech and the big firms.
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’re on the cusp of something else — not a collapse but perhaps a sadder phase for tech. Plenty is still rosy in techland. Backers of Meta, Facebook’s parent company, were relieved when the company reported that more people picked up the habit again of using Facebook or the Messenger app.
But many are having trouble repeating past successes. Netflix in the first quarter lost subscribers for the first time in a decade. Facebook predicted its quarterly revenue might decline compared with 2021. Amazon too disclosed that its sales growth was slowing, and Apple cautioned it was having trouble making enough products. Young companies 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. It turns out not everyone wants to Zoom all the time or ride Peloton bikes in their dining rooms.
Twitter is emblematic of this period of unsteady ground. Maybe Elon Musk, who agreed to buy the company for $44 billion, will help Twitter fulfil 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 are contemplating, all bets are off. The last time there was a prolonged global recession — putting aside the brief pandemic-related US downturn in early 2020 — 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 didn’t want to be named, he sketched out what a dark-tech phase might look like. 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’re not there yet. But the fact that investors are imagining nasty scenarios highlights a mood shift. The boom times have been largely based on hard facts — more people have come online, more businesses have been desperate to modernise ahead of rivals, and investors have found few places other than tech to make good money.
But another foundation was the faith that tech would continue to have uninterrupted expansion. Once that feeling wanes a little, it isn’t always easy to get it back.
NYTNS
