Some of the Tech Magic Is Gone

At this point in 2021, technology was eating the world and stock markets.

Right now … ehhh, not so much.

A Nasdaq index of about 100 tech stocks has dropped 14 percent from the end of December, significantly more than the declines for collections of U.S. stocks that are not as tech heavy. Tech superstars including Facebook, Alibaba and Tesla have slipped down the ranks of the world’s most valuable companies.

More governments are trying to control how tech companies operate. Some tech investors and observers are beginning to ask if a decade-long boom in start-ups is losing steam, and for real this time. Cryptocurrencies should be having their moment but instead are falling in price. Initial public offerings are mostly on hiatus.

At multiple points in the past decade, many people (including me) have asked if the tech bubble is over, and they’ve been mostly wrong. I’m not going to predict the future but instead try to assess this moment for technology. Some odd things are happening.

Right now, a bit of faith in the ever-upward march of technology seems to have evaporated. It’s not exactly a bursting bubble. It’s more like a (perhaps temporary) shortage of belief in the great magic of technology.

So what is going on?

Look, the world is mobilizing to stop the invasion in Ukraine, the coronavirus pandemic is continuing into its third year and governments are trying to tamp down climbing consumer prices. Those forces and other unsettling events are making investors consider more carefully where they put their money, and in some cases tech companies, start-ups or Bitcoin don’t feel like good bets anymore.

Prior tech freakouts, including during the early months of the pandemic, proved temporary and this one could, too. But again, something does feel different this time. Maybe.

Every other day, some tech company whispers that its sales won’t grow to infinity, and its stock price falls into a crater. Zoom Video Communications, one of the tech companies that proved essential earlier in the pandemic with a soaring share price to match, has now fallen back to its February 2020 stock price.

That is a potent symbol. People with money are saying no right now to buying stock on the hopes of blockbuster sales years into the future. That’s a root cause, too, for a loss of faith in recently public companies including the stock trading app Robinhood, the upstart electric vehicle company Rivian and the Chinese on-demand ride start-up Didi.

Dan Ives, a tech investment analyst with the firm Wedbush Securities, told me that he believed the world’s digital transformation was just getting started and that technology companies would continue to grow larger and stronger.

But he said that investors were rethinking the ability of some young companies to keep growing at the rate they did a year or two ago. In some corners, Ives said, “the froth has clearly come off the tech market.”

Waning optimism is hitting young tech companies that are just getting started. The prices investors are paying for start-ups at early stages of development hit a peak in the second half of 2021, according to a recent financial presentation from the start-up investment firm Redpoint Ventures.

Dan Primack, a journalist at Axios, said two months ago that the “go-go era is history” for tech start-ups and other types of young companies.

Primack knows that similar predictions have been off base repeatedly, but he cited evidence that investors were no longer throwing cash at anyone who says the word “innovation.” Being reckless or even financially irrational has paid off for investors in start-ups for a long time, and Primack’s point was that the riches were no longer as great as they used to be.

Again, all this could prove a blip, and tech could continue to add both wealth and importance. I also know that not many of you are shedding tears over cratered stock prices for Facebook and Netflix. Fair. A blind faith in technology isn’t great for us, but the belief in technology has also been beneficial.

That optimism in technology has given companies the cash and freedom to bring us zippy laptops, Doritos delivered in 15 minutes and more options to work away from an office. If and when the tech party becomes less lavish, the changes that we’ve taken as a given may disappear, in ways that may be both potentially disruptive and healthy. We’ll see.

Tip of the Week

Just say no to photo locations

Brian X. Chen, the consumer technology columnist for The New York Times, recommends a personal safety step for our smartphone cameras.

When you use your iPhone or Android camera, Apple and Google ask for your permission to share your location with the camera software. This is for the sake of “geotagging,” or pinpointing the precise location where you took a photo.

This information is used to automatically create photo albums based on your whereabouts, like your trip to Spain. This can be useful, but it’s important to ask yourself if it’s worth the privacy risks to mark the location on every photo that you take.

Imagine that you’ve met someone on a dating app and you text that person a selfie from your favorite coffee shop. If you’re there every morning, you might not want a near-stranger to have the exact location of a place you frequent regularly.

My general advice is to keep the location tagging feature off by default and turn it on only for select occasions, like when you are traveling for vacation and want to remember where you were when you snapped a photo.

To check if you have geotagging enabled on an iPhone, open the Settings app, tap on Privacy, select Location and tap on Camera. Click “Never” to disable geotagging.

On an Android, open the Camera app, tap Settings (or the image that looks like a gear) and flip off the option for Location tagging.

Before we go …

• Digital help for Ukraine: A city transit app in Kyiv was repurposed within 24 hours to warn residents of incoming Russian attacks and help them find shelter and essential supplies, The Guardian reports.

  And from The Washington Post: How the West is breaking through Russia’s propaganda wall, including with technology to avoid Russia’s internet censorship and texts to strangers in Russia with information that refutes the Kremlin’s official line on the war. (A subscription may be required.)

• How Google learned to lobby: A decade ago, an uprising of ordinary people and small web companies helped sink congressional bills over online copyrights. Protocol writes that Google learned from that episode both how to marshal the power of angry internet users, and the necessity of being insiders in Washington. The company is using those strategies now to fight congressional antitrust proposals that would affect it.

• It’s the first international blockbuster from China’s video game industry. And it’s a nearly perfect replica of an existing role-playing game from Japan, according to my colleagues Ben Dooley and Paul Mozur.

Hugs to this

Look at this teeny tiny lemur! It’s hugging a stuffed toy while it’s being weighed. (Thanks to an On Tech reader, Tim Hunter in Durham, N.C., for suggesting this one.)

A correction: Wednesday’s newsletter described incorrectly Tasty’s arrangement with Instacart. Viewers will have the option to buy ingredients from Instacart’s app, not from TikTok.

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