Looking Back on a Big Year in Silicon Valley

From an Inside the Times story by Soumya Karlamangla headlined “Looking Back on a Sobering Year in Silicon Valley”:

This was a busy year for the tech world.

Meta, the parent company of Facebook, laid off more than 11,000 employees, the most significant job cuts in the company’s history. Elon Musk bought Twitter for $44 billion, and has begun suspending the accounts of journalists and others.

Social media’s disinformation problems only got worse. National security concerns continued to mount over TikTok, the Chinese-owned viral video app. And the entire cryptocurrency industry plunged into crisis.

I spoke with The New York Times’s technology editor, Pui-Wing Tam, about her takeaways from these major tech stories in 2022, and what she and her team will be paying attention to in the coming year. Here’s our conversation, lightly edited:

Let’s start with crypto. Late last year, the Staples Center was renamed the Crypto.com Arena, seemingly a reflection of how much cryptocurrencies were dominating the business zeitgeist. But things feel very different a year later.

The price of all of these coins had been going through the roof in 2021. NFTs had become super popular. Everyone was talking about crypto like it was the next big thing that was going to take over the world.

Then in May this year, a popular cryptocurrency called Luna basically lost all of its value, which had a bit of a domino effect on the rest of the market because it exposed how fragile these so-called currencies really are. That led to some crypto companies filing for bankruptcy. And most recently, FTX, one of the largest crypto exchanges in the world, filed for bankruptcy last month. FTX owes about $8 billion to its customers. So all of that has very much been a wake-up call as to how real this industry is.

Do you see crypto coming back from this?

The industry is tremendously volatile. It rises like crazy, then it totally crashes. There’s a bit of a pattern of this. But it’s not going away. It’s much more mainstream than it used to be, even though there are a lot of people who would never buy this stuff.

Amazon, Meta, DoorDash, Lyft and many other companies announced layoffs this year. What’s driving that?

Tech had been one of the most resilient parts of the economy — pandemic hiring had been through the roof. Then this year, as things slowed down, a lot of these tech companies said they had overexpanded during the pandemic and needed to correct that. That’s sort of changed the tenor of what’s going on in Silicon Valley.

The caveat is that tech is still much bigger and more robust than it was a decade ago. So even though there’s a slowdown, it’s far from the end of the world for the tech industry. It’s just a shift in growth and in expectations, and it’s a bit more of a sober time, but tech is still humongous. It’s still incredibly rich.

Is there more to the economic slowdown beyond layoffs?

Hiring is the most evident, but at Amazon, for example, they’ve decided to put the brakes on some of the expansion of warehouses. So these companies are looking at costs writ large — it’s not just people, it’s expansion plans, experimental initiatives, property, etc.

The epitome of that, obviously, is what Elon Musk has done at Twitter, where he’s cut thousands of employees, more than 50 percent of the company’s staff. He’s just cutting costs left, right and center. I don’t want to place it exactly in the middle of this tech slowdown story, because it obviously has its own dynamics. But if you look at what he’s done, it’s not that far off from other companies — they’re not making as severe a number of cuts, but they’re making cuts.

Speaking of Musk, is he going to continue to dominate tech news in 2023?

Musk was definitely one of our big themes over the past year, and obviously a lot of that had to do with Twitter, but it also became much broader than that. It was about Starlink, Tesla, SpaceX — he was sort of everywhere. He’s upending the way that management of tech companies is being done. Of course we’re going to be watching that — and how he influences free speech — going forward.

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