After two decades of dominating and reshaping our lives, "Big Tech" is finally looking weakened.
According to Crunchbase, more than 46,000 staffers at U.S.-based tech companies lost their jobs in the first three weeks of 2023 alone, following a layoff tally of 107,000 in 2022.
This week, Microsoft gave a gloomy forecast of 2023 enterprise demand for its Azure cloud services, while the Department of Justice (DOJ) served Google with a lawsuit that could end its monopolistic advertising operation. Add to that the chaos at Twitter since Tesla owner Elon Musk took over and Meta's dismal stock performance as its earnings plunged in 2022, and we find broad-based malaise across the industry that brought us Web2.
The question is whether this is just a cyclical phenomenon or whether it's a secular shift, the end of an era for the titans of Web2. And if it's the latter, what comes next?
A cyclical phenomenon
The lax monetary environment before 2022 drove these firms to invest massively in new, pre-mainstream technologies such as AI and virtual reality. Now, as rising interest rates force their clients to reduce spending on these companies' cash-cow product offerings, such as online advertising and data storage, they're forced to curb their outlays.
Seen that way, this is just a downsizing exercise, one that will put Big Tech in a healthier position to capitalize on the advance of the new technologies once they gain mainstream application.
A secular shift
But it's noteworthy that cyclical financial weakness coincides with declining public trust in the tech industry, a trend that could portend a more lasting, secular decline in its prospects. After all, public opinion drives political response and, arguably, Big Tech's greatest vulnerability lies in Washington, D.C.
In April, the annual Edelman Trust Barometer showed that in aggregate, trust in technology industries remains higher than others worldwide (including lowly thought-of media businesses, sadly.) But the key takeaway was that in the U.S., whose policy making apparatus has the greatest power to determine the industry's fortunes, trust in tech hit an all-time low.
What's next
Those who want to see a Web3 economy in which centralized internet platforms have less influence over our lives and where people and businesses have greater control over their data and content are naturally hopeful Big Tech's woes are the precursor to a brighter future.
But it could just as well be that this moment of distress passes and we either return to the status quo or a new architecture arises around artificial intelligence (AI) and metaverse technologies that's overrun by the very same centralized firms dominant today. Consider the breakout AI platform, GPT Chat, founded by Elon Musk. While it could upend Web2 and Google, it has Big Tech investors like Microsoft.
Or consider that, even if these corporations lose, we could end up with a nominally decentralized entity dominating everything, such as Ethereum, the leading platform for NFTs and decentralized finance.
If we want a decentralized internet and don't want our lives manipulated by AI and by data-mining, centrally controlled public and private entities, we're going to have to band together and insist on it. We need laws, standards bodies and multi-stakeholder governance systems in place. There's a lot at stake.
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