The new reality of big techs: crisis or market adjustment?

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Technology giants have lower results in 2022 and resort to layoffs to face a challenging scenario of global recession, end of the pandemic and war

They were once the dream of any new graduate and the bet of many investors around the world. Reality, however, comes to everyone. After another wave of growth with the Covid-19 pandemic, 2022 was the year that technology giants like Google, Amazon, Apple, Meta / Facebook suffered a reality shock. 

There’s no reason to panic, however. Tech companies are not in crisis, but adjusting to reality. When the Covid-19 pandemic arrived about three years ago, big techs were prepared to offer, in the face of confinement, what humanity needed, classes, meetings, shopping, food, entertainment, all within reach of a screen. 

It is not a coincidence that during this period several of them reached a market value of over US$ 1 trillion: Apple, Tesla, Alphabet, Amazon. The evolution of digital business has been enormous. 

That moment, however, passed. It was replaced by a global economic crisis with inflation, recession, high interest rates and, as the icing on the cake, a war between Russia and Ukraine in the heart of Europe. 

The retraction in market values ​​and the wave of layoffs are indicators of this scenario. Amazon, this month, lost US$ 1 trillion in market value, after disclosing a 9% drop in profit for the third quarter of this year and announcing a layoff policy, which could reach 10,000 jobs by 2023.

After 18 years, Facebook/Meta went through a mass layoff process for the first time. There were 11 thousand employees worldwide and the hiring freeze until the first quarter of 2023. No wonder, the company lost 70% of the value of its shares in 2022 and more than US$ 3 trillion in market value, in the accumulated of the year.

Not even Google and Apple are out of this shrinkage scenario. With a devaluation of 15% of shares in the year, Apple announced a slowdown in hiring and promoted a hundred layoffs in the area of ​​recruitment. Alphabet, parent company of Google, which felt less the effects of the global economic crisis, also preferred to protect itself and announce a retraction in hiring in 2022.

Even so, Facebook, Instagram, WhatsApp, some of Meta’s main businesses, are far from disappearing. Amazon continues to be the main e-commerce hub for physical and digital products in the world, Apple TV continues to excel in streaming and Google remains the ‘oracle’ of the 21st century.

What we are seeing are the signs that technology companies, which were born from disruptive ideas, aggressive management and voracious acquisitions, are losing the ‘startup’ agility and feeling the ‘weight’ of becoming giants. It couldn’t be otherwise. Growing is a need for organizations that changes the relationship with risk. 

This fact does not change the promising future for technology companies. Investors’ interest is growing in solutions to the challenges posed by increasingly complex scenarios. Digital transformation is a reality and continues to expand opportunities.   

If there is a lesson to be learned, it is that the phases of organizations will follow and they are necessary. Reality knocked on the door of big techs, their employees and users. It’s time to accept the bitter medicine and renew the projects. 

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