3 trillion burned in 2022- Corriere.it
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2022 ends with a negative balance for large tech companies in general. After experiencing a heyday in the decade to 2021 that saw their revenues and profits grow at a rate five times the US GDP, capped off the leap even during the pandemic, big techs have experienced a sharp contractionsubsequently accompanied by a hiring halt and followed by massive waves of layoffs.
According to the calculations ofThe Economist, the five tech giants Apple, Alphabet, Meta, Microsoft and Amazon, lost about three trillion dollars of market value. In 2019, major Silicon Valley companies were growing steadily as web traffic increased due to restrictions. Not only have the revenues of many of these tech companies skyrocketed, but so have their headcounts, which, as profits plummeted, then turned into redundancies translated into announcements of layoffs. More than 150,000 jobs will be cut in 2022 in technology companies around the world (data from Layoffs.fyi).
After Meta, the holding company of Facebook, Instagram and Whatsapp, which had announced 11,000 redundancies globally in November, the CEO of Amazon, Andy Jassy, had also announced the start of the layoff campaign of 10,000 units, equal to 1% of the total workforce, about 1.5 million people. Layoffs could also come for Alphabet, the parent company of Google which, with the collapse of the digital advertising market in October, recorded profits falling by 27% in the third quarter of 2022 compared to the previous year, to 13.9 billion dollars.
The Nasdaq, which represents the stock index of high-tech companies, has lost a third of its value. Among the five, Meta suffered the greatest losses, burning nearly two-thirds of its value, leaving its market capitalization at just over $300 billion.
There are several reasons for the end of the unstoppable growth of the sector. Among these is the drop in advertising sales. In recent years the budgets that were allocated for traditional media such as TV and newspapers have been moved to online platforms. A migration that today can be considered as having almost completely taken place: Two-thirds of America’s spending is already on digital. Meta reported its first quarterly drop in revenue in July followed by a second in October.
A next challenge for big tech will be competition and market regulators. Concentration of markets like the one characterized by the monopoly of Google in search and Meta in social media is bound to end. An example of this is the success of TikTok, which has “incorporated” part of the Meta users. And the boundaries of skills are no longer so clear: Amazon’s cloud computing branch has slowed down due to Google investing billions in its cloud service. Added to these causes are other “unfavorable” events, such as the Federal Reserve’s rise in interest rates to 4.5% to counter inflation and the availability of semiconductors for which demand has now decreased due to the drop in PC and smartphone sales.
As reported by Wired, in 2022, Amazon’s shares lost all the value accumulated thanks to the pandemic, falling by 49% during the year compared to 2021. On the other hand, the share collapse of Meta amounts to 66%, also due to the drop in profits. Only Tesla is worse: in December its shares reached their lowest level since 2020 (-69% compared to last year). Declines for more content for Microsoft which marks a -26%, probably attributable to the decline in sales of video games and software. While Microsoft and Alphabet attribute much of the decline in profits to the slowdown in their cloud computing businesses.
Indeed, the wave of losses engulfs all biggest tech scrooges in Silicon Valley which, together, they saw $433 billion go up in smoke, more than double Greece’s GDP (214.87 billion in 2021 according to World Bank data). For Elon Musk 2022 was a annus horribilis, during which he lost $132 billion on Tesla’s thud on Wall Street. Amazon founder Jeff Bezos lost $84.1 billion as shares in the retail giant fell nearly 50%. As reported by the Washington Post, the situation is not improving for Zuckerberg who, criticized by many for his bets on the metaverse, has accumulated 80.7 billion losses. But he nevertheless enjoys a fortune of 44.8 billion, which is worth more than Iceland’s GDP. Other losses were also recorded by the two founders of Google: Larry Page and Sergey Brin who saw a total fire of almost 88 billion (44.8 billion Page and 43.4 billion Brin) and are now worth just over 80 billion each. Bill Gates, on the other hand, became impoverished by 28.7 billion and his fortune now stands at 109 billion.
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