Electoralism/Democratism

The end of Silicon Valley’s 20-year boom

The last month has seen a bunch of big technology companies—including Meta, Twitter, Lyft, Salesforce, Microsoft, and Stripe—announce layoffs. Now the New York Times is reporting that Amazon is preparing to lay off around 10,000 workers in its corporate offices.

These tech-industry job cuts have come in the face of new data showing that hiring in the broader economy remained strong in October. Companies added 261,000 workers, beating analysts’ expectations. So it looks like Silicon Valley is tightening its belt more than other industries.

I suspect this reflects a significant change in the economics of the sector. For the last 20 years, Silicon Valley has had the wind at its back thanks to rapid adoption of new technologies like the internet and smartphones. As a result, the industry fared better than the broader economy during and after the 2008 recession.

But the internet is maturing and as a result big tech companies don’t have the same growth potential today that they did in 2012 or 2002. Investors, recognizing that, are increasingly demanding that tech companies focus on profits rather than growth. And that means there could be even more pain ahead for Silicon Valley workers.

It also means that the phenomenal deals tech companies like Uber and Doordash offered to consumers in the 2010s are unlikely to come back. Back then, venture capitalists were willing to subsidize rides, deliveries, and other services in a bid to expand their market share. But now these markets are becoming saturated, and investors want to see a return on their past investments. All together, it could make for a less dynamic internet to live on—and, perhaps, a less lucrative industry to work in.

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