We are in a strange moment for technology. do you feel it? The powerful forces of unstoppable change and technological wealth roll on, but mixed together there is an ounce of something else: doubt.
Some of the titans of the digital age, including Netflix and Facebook, are simultaneously ubiquitous, disruptive digital supernovas and degraded stars plunging into existential growth challenges.
The war in Ukraine, government efforts to contain rising consumer prices, and the uncertain economic and social effects of the pandemic have halted a number of digital advertising and tech purchases. Money professionals betting on the promise of fledgling technology companies are losing some confidence.
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, as of week’s end. (Facebook’s soaring stock price on Thursday had only retreated a little bit from the epic 2022 collapse.)
The past decade has been an almost continuous celebration for technology as we digitized our lives. And while there’s been periodic technical panics before, including briefly when the coronavirus began to spread in early 2020, it feels harder than it’s been in years to predict the fate of technology and the industry’s leading companies.
Casual optimism is out and realism is in. It’s so untechnical.
Perhaps this nervous period is just a lull, and the near future will resemble the years since 2010, when technology became more important, tech companies generated crazy dollars and tech investors wallowed in wealth. Or maybe we’re on the cusp of something else — not a collapse, but maybe a sadder phase for technology.
At the moment, things are still very rosy in tech land. We need technology in our personal and professional lives, and many creators of those technologies are still incredibly wealthy. Supporters of Facebook’s parent company Meta were relieved on Wednesday when the company, which lost users in late 2021, reported that more people have returned to the habit of using Facebook or the company’s Messenger app. Facebook shares rose 15 percent on Thursday.
But many of the technology leaders struggle to replicate past successes. Netflix lost subscribers for the first time in a decade in the first quarter of this year. Facebook predicted that quarterly revenue could fall soon compared to 2021. It’s not shocking, in part because last year was a weird year for Facebook, but a tech company’s revenue shouldn’t be shrinking.
We’ll get more data points from Amazon and Apple later today, which will report their earnings for the first three months of 2022. Young tech companies, including stock trading app Robinhood this week, have announced layoffs because their investors want them to squat.
There has also been a more nuanced reassessment of the belief that the pandemic would boost technology. Many retail sales shifted back to brick-and-mortar 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. Companies that panicked buying work-from-home technology in 2020 may not need it for a while.
Twitter symbolizes this period of shaky ground. Perhaps Elon Musk, who agreed to buy the company this week for $44 billion, will help Twitter realize a potential that always seemed just out of reach. Or maybe he’s driving the company into the ground.
And if there is a recession in the US, as some economic observers consider, all bets are off. The last time there was a prolonged global recession — barring the brief pandemic-related downturn in the US in early 2020 — technology was a pipsqueak compared to today. Many tech companies now basking in success have never experienced lean times.
In a recent conversation with a veteran tech investor, who declined to be named in order to speak more freely, he outlined what a dark tech phase might look like, especially for the companies that sell technology to corporations.
Companies have invested money in buying technology for the past decade, usually with few financial constraints. But when a recession breaks out, he envisioned executives looking closely at budgets and cutting back on unnecessary technology. If that happens, tech companies that assumed they would continue to grow rapidly for a long time will be rudely awakened, this investor warned.
We’re not there yet. But the fact that investors are imagining dire scenarios points to a mood swing. The tech boom is largely based on hard facts: more people have come online, more companies have desperately modernized ahead of rivals, and investors have found few places other than technology to make good money.
But another foundation was confidence that the tech sector would continue to grow uninterrupted. If that feeling wears off a bit, it’s not always easy to get it back.
Before we go…
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Elon Musk Is Hard To Like, But He Also Has helped improve the condition of humanityFarhad Manjoo wrote for the Opinion section of the New York Times. “For example, I’m excited to see what he comes up with,” wrote Farhad, the next owner of Twitter.
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More on social media: New European regulations can improve social media sites without hindering free speech, and the US can do the same, writes Frances Haugen, the former Facebook product manager who released documents detailing his views on the damage it caused.
And my colleague Brian X. Chen was impressed with his experience with Truth Social, the social media app backed by former President Donald J. Trump.
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Competitive Typing: It’s one thing, and the hobby has found a new lease of life in online communities.
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Today in exceptional multitasking: this man caught a baseball without crowding the baby it was feeding†
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