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Some of the tech magic is gone

    At this point in 2021, technology was eating the world and the stock markets.

    Right now… ehhh, not so much.

    A Nasdaq index of about 100 technology stocks is down 14 percent since late December, significantly more than the declines for collections of U.S. stocks that aren’t quite as tech-heavy. Tech superstars, including Facebook, Alibaba and Tesla, have fallen into the ranks of the world’s most valuable companies.

    More and more governments are trying to control the way tech companies operate. Some tech investors and observers are beginning to wonder if a decade-long boom of start-ups is losing momentum, and this time for real. Cryptocurrencies should have their moment, but are falling in price instead. IPOs are usually on hiatus.

    At multiple times over the past decade, many people (myself included) have asked if the tech bubble is over, and they were mostly wrong. I’m not going to predict the future, but instead try to estimate this moment for technology. Some strange things are happening.

    At this point, some faith in technology’s ever-upward advance seems to have evaporated. It’s not exactly a bursting bubble. It’s more of a (perhaps temporary) lack of faith in the great magic of technology.

    So what’s going on?

    Look, the world is mobilizing to stop the invasion of Ukraine, the coronavirus pandemic continues into its third year and governments are trying to deal with rising consumer prices. Those forces and other disturbing events are making investors think more carefully about where they put their money, and in some cases tech companies, start-ups or Bitcoin have lost their sense of good bets.

    Previous tech freakouts, including during the early months of the pandemic, have turned out to be temporary and this one could be. But again, something does to feel different this time. Could be.

    Every other day, a tech company whispers that sales won’t grow indefinitely and that its stock price will plummet into a crater. Zoom Video Communications, one of the technology companies that previously proved vital in the pandemic with its stock price rising, has now slipped back to its February 2020 stock price.

    That is a powerful symbol. People with money now say no to buying stocks in hopes of blockbusters in the future. That has also contributed to the loss of confidence in recently publicly traded companies, including stock trading app Robinhood, electric vehicle startup Rivian and Chinese on-demand ride-up start-up Didi.

    Dan Ives, a technical investment analyst at Wedbush Securities, told me he believed the world’s digital transformation was just beginning and that technology companies would continue to grow bigger and stronger.

    But he said investors were rethinking the ability of some fledgling companies to continue growing at the rate they were a year or two ago. In some corners, Ives said, “the foam has clearly come off the tech market.”

    The waning optimism is hitting young technology companies that are just getting started. Prices investors pay for early-stage start-ups peaked in the second half of 2021, according to a recent financial presentation from startup investment firm Redpoint Ventures.

    Dan Primack, a journalist at Axios, said two months ago that the “go-go era is over” for tech start-ups and other types of young companies.

    Primack knows that similar predictions have been repeatedly wrong, but he cited evidence that investors were no longer throwing cash at someone who uttered the word “innovation.” Recklessness or even being financially irrational has long paid off for start-up investors, and Primack’s point was that wealth wasn’t as great as it used to be.

    Again, all of this could be an outlier, and technology could continue to add wealth as well as importance. I also know that not many of you are shedding tears over the cracked stock prices for Facebook and Netflix. Fair. A blind faith in technology isn’t great for us, but faith in technology has also been beneficial.

    That optimism in technology has given companies the money and freedom to bring us fast laptops, Doritos delivered in 15 minutes and more options for working outside the office. If and when the tech party gets less lavish, the changes we’ve taken for granted could disappear, in ways that can be both potentially disruptive and healthy. We will see.

    Tip of the week

    Brian X. Chenothe consumer technology columnist for The New York Times, recommends a personal security step for our smartphone cameras.

    When you use your iPhone or Android camera, Apple and Google ask for your permission to share your location with the camera software. This is for ‘geotagging’ or locating the exact location where you took a photo.

    This information is used to automatically create photo albums based on your whereabouts, such as your trip to Spain. This can be helpful, but it’s important to consider whether it’s worth the privacy risks to mark the location on every photo you take.

    Imagine you met someone through a dating app and you text that person a selfie from your favorite coffee shop. If you’re there every morning, you might not want a near-stranger to have the exact location of a place you visit regularly.

    My general advice is to leave the location tagging feature off by default and only enable it for certain occasions, such as when you’re on vacation and want to remember where you were when you took a photo.

    To check if geotagging is enabled on an iPhone, open the Settings app, tap Privacy, select Location, and tap Camera. Click “Never” to disable geotagging.

    On an Android, open the Camera app, tap Settings (or the image that looks like a gear), and disable the Location Tagging option.

    • Digital help for Ukraine: An urban transport app in Kiev was repurposed within 24 hours to warn residents of incoming Russian attacks and help them find shelter and essential supplies, The Guardian reports.

      And from The Washington Post: How the West is Breaking the Russian Propaganda Wall, including technology to avoid Russia’s internet censorship and texting strangers in Russia with information disproving the Kremlin’s official line on the war† (A subscription may be required.)

    • How Google learned to lobby: Ten years ago, an uprising by everyday people and small web companies helped sink the congressional bills over online copyright. Protocol writes that from that episode, Google learned how to use the power of angry internet users, and the need to be insiders in Washington. The company is now using those strategies to fight congressional antitrust proposals that would affect it.

    • It is the first international blockbuster from the Chinese video game industry. And it’s a near-perfect replica of an existing role-playing game from Japan, according to my colleagues Ben Dooley and Paul Mozur.

    Look at this tiny lemur† It hugs a hug while being weighed. (Thanks to an On Tech reader, Tim Hunter in Durham, NC, for suggesting this one.)

    A correction: Wednesday’s newsletter Tasty’s deal with Instacart is incorrectly described. Viewers will have the option to purchase ingredients through Instacart’s app, not through TikTok.

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