Don’t look now but the tech industry has just had its worst year since the .com bubble burst between 2000 and 2006. It may come as a surprise, but yes, none of the 15 biggest tech companies turned a profit in 2022. Putting it another way Microsoft lost around $700 billion, Meta shed an astounding $600 billion.
What exactly is going on? Wasn’t the world just poised on a massive tech revolution? Weren’t these companies gearing up to take us into the science fiction future we’d all been dreaming of? It turns out that the world health crisis was both the biggest blessing, and the biggest curse the tech industry ever received.
The Tech Revolution Wrong Bet
During the world health crisis the entire planet underwent massive changes. Virtually everyone was forced to work from home, whether they wanted to or not. Big news and big also opportunity for tech companies.
Corporate giants like Meta decided to lean into the situation, committing almost entirely to what they perceived as being a tech revolution. Surely, Meta thought, even after the world health crisis subsided everyone would continue to work and play from home. Numerous other companies followed suite, pivoting their offerings to a world focused on working and playing from home.
But, putting it simply, the gamble did not pay off. In fact, now that the world health crisis has passed it’s almost as if it never happened. Most have returned to work, few have decided to keep working from home, and little to no long term social impact has been felt. If anything, most are only heading online to check out NFL sports betting, as they always did.
Not Since The .com Bubble
The tech industry is now in a freefall. Over a trillion has been wiped from NASDAQ, a loss so big as to have not been seen since the early 2000s. It was, of course, in the early 2000s that the .com bubble burst, throwing tech giants around the world into a tailspin. Interestingly, very similar circumstances unfolded in the .com disaster as to what we’re seeing right now.
Only in the case of the .com bubble it was companies leaning into the blossoming industry of the internet. Tech giants poured billions into internet technology, assuming that a revolution was on the horizon. Of course, the internet tech revolution was on the horizon, only it wouldn’t arrive for another decade.
It’s Not Over
So the tech industry is flopping hard, and Mark Zuckerberg has never had a redder face in his life. But saying anything as ridiculous as that the tech industry as a whole will collapse would be foolish. It seems certain that there is going to be some major contractions, and some tech giants may decide to tap out. But there is almost certainly going to be a bounce back.
Big companies may have bet on the wrong horse, but there is still room to turn the situation around. It’s likely just a matter of a few years, smarter investments, and better planning.