The “dotcoms” laid off 100,000 workers when their bubble burst. The Big Tech have 120,000 this year

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Last February, investor George Schultz published an article in Forbes titled ‘Dot-Com Déjà Vu?’ in which he stated that the behavior of the technology sector market was similar to that experienced by the dot-com bubble. Now, the annual losses of technology companies, which amount to 2 trillion dollars according to Five Daysand the massive layoffs that many of them are carrying out, make that idea spread: Are we facing the bursting of a second dotcom bubble?

Dotcom 2.0 threat. Debarghya Das, founder of the Glean company and a former Google worker, published a tweet on November 14 in which he listed the layoffs made by the big technology companies this year. The data, analyzed by layoffs.fyi, amounted to more than 120,000 layoffs. He then compared them with the number of jobs that the bursting of the dotcom bubble took away between 2000 and 2001, which reached 107,000 and also warned that the layoffs being announced now they were the prelude to a “brutal technological winter”.

The perfect Storm. The reason for this massive staff cut is, according to journalist Sam Tonkin of the Daily Mail, in a “triple whammy” made up of the slowdown in the economy, inflation and the end of growth experienced by technology companies during the pandemic; growth linked, among other things, to the rise of e-commerce and teleworking.

To this are added, according to Retail Banker International, the consequences of the Russian invasion of Ukraine, the threat of greater regulation of the activity of technology companies and the increase in interest rates.

Big tech is coming off a party that has lasted for more than a decade.  Now comes the mother of all hangovers

By surprise. This situation, on the other hand, has caught the technology industry by surprise, as Mark Zuckerberg acknowledged in the post that he published on November 9, announcing the layoff of 11,000 workers: “Many people predicted that there would be a permanent acceleration that would continue after the end of the pandemic. I also (…). Unfortunately, this did not happen as expected. In fact, Meta’s stock market losses throughout this year are evaluated by Axios as one of the proofs that certify the existence of a new dotcom bubble. However, there are those who disagree with this approach.

are changes. Enrique Dans, a professor at IE Business School, recently ruled out in the Chain Being that a second dot-com bubble was bursting, and stated that what is happening is a change in the economic and regulatory climate. Specifically, he spoke of the US government’s intention to impose greater control on big tech companieswhich creates a more hostile climate for Big Tech, and gave the example of what happened in China, where some important technology companies have lost a lot of value this year.

To all this we must add the change in privacy policies carried out by Apple, which affected the advertising revenue of large technology companies, as stated by Zoe Kleinman, BBC journalist. On the other hand, each tech company has its own problems: for example, Meta, owner of Instagram, has to deal with competition from Tik Tok; and Twitter, for its part, is experiencing the consequences of the possibility of becoming a paid social network.

It’s hard to believe that Big Tech would suffer the same fate as the dotcoms at the turn of this century. The logical thing to do is to think, as Enrique Dans states, that Big Tech is in a transitory period. Time will tell.

Image: Pixabay

Last February, investor George Schultz published an article in Forbes titled ‘Dot-Com Déjà Vu?’ in which he stated that the…

Last February, investor George Schultz published an article in Forbes titled ‘Dot-Com Déjà Vu?’ in which he stated that the…

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