Silicon Slump

We’re looking back at the year in tech ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

December 27, 2022

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TOGETHER WITH

Good morning and welcome back to The Daily Upside. We hope you had a wonderful holiday.

For the final week of 2022 we will be bringing you some retrospectives on the biggest stories of this year, and on Friday, we’ll present our Winners and Losers of 2022 special.

For now, let’s reflect on how this year went for the tech industry.

Labor Shakeups

Spring 2022 saw a big upset in Bezosland when workers in a Staten Island warehouse called JFK8 voted to form the first ever Amazon union in the US. Amazon is not a complete stranger to unions, as it operates in many countries where unions are far more common and powerful — but it has typically fought tooth and nail to keep union activity to a negligible minimum.

The JFK8 union drive hasn’t had an explosive domino effect on other warehouses, but it locks into a broader worker activism trend across the US and has galvanized workers in other tech companies in particular. Workers in two Apple stores voted to unionize this year and one organizer cited JFK8 as an inspiration.

Death by >20,000 cuts

This year the tech industry realized its bottomless money pit actually had a bottom, and companies used to throwing cash around like rice at a wedding began to make sweeping cuts.

Netflix was the first to bite the bullet in May and went on to announce a second round of layoffs in June, meaning it axed around 450 people in total. That was a mere trim compared to the haircuts administered by other Silicon Valley giants:

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Meta cut 11,000 jobs, 13% of its workforce, in November.

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Amazon cut 10,000 jobs, 3% of its corporate headcount, just a week later.

And of course job cuts came to Twitter, the tech journalist’s dream-slash-nightmare of 2022…

The Inevitable Elon

We here at The Daily Upside sympathize with readers suffering from Twitter fatigue. The saga of Elon Musk’s on-again-off-again acquisition has spanned most of this year — and the last few months in particular have contained a dizzying number of U-turns.

So let’s take a step back and look at how Musk’s other companies have performed this year while he was brutalizing Twitter:

Tesla has suffered a stock hangover from the Twitter furor with investors worried that Musk’s attention is being monopolized by the big blue bird. Musk said in August he wanted fully-self driving cars to be on the market by Christmas — a timeline he’s been steadily pushing back since 2015 — but Tesla did forge ahead in some areas this year:

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It opened its first European factory in Grünheide, Germany in March, despite holdups caused by local environmental activists.

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Pepsi received Tesla’s first-ever semi trucks in early December (just three years after deadline but to be fair, a chunk of that time was eaten up by a pandemic and supply chain crisis).

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Who could forget when Tesla’s bipedal Optimus robot waddled onto stage in October. The model received a lukewarm reception from roboticists, but Musk insisted the robot represents the company’s future.

Musk also won a $2 billion shareholder lawsuit relating to Tesla’s 2016 acquisition of SolarCity. While the plaintiffs alleged Musk had essentially bailed out SolarCity (which was run by his cousins) Musk emerged triumphant.

SpaceX has had a very busy year. Its satellite internet service Starlink burst onto the geopolitical stage by supplying much-needed internet service to Ukraine. There was a brief back-and-forth in October when Musk said the company was losing $20 million per month funding its Ukraine effort, but then declared “the hell with it “ and said the company would keep fronting the money. The Financial Times reported in December that Starlink terminals, the dishes that users need for its subscription service, had almost doubled in price in Ukraine from $385 to $700. It rounded off the year with the announcement of a new military project called “Starshield,” so the company clearly isn’t gun-shy.

Musk’s pet ventures The Boring Company and Neuralink stayed pretty quiet this year, although they both got a bit of December bad press. The Wall Street Journal reported The Boring Company was ghosting US towns and Reuters published an exclusive saying insiders at Neuralink were concerned with Musk’s impatience driving an unnecessarily high number of test animal deaths.

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Looking Ahead…

As 2022 segues into 2023, here are our recommendations for what stories to keep your eyes on in the world of tech.

Microsoft is going to be duking it out against the FTC this year, as the agency’s early Christmas present was to announce it wants to block its $69 billion acquisition of gaming giant Activision Blizzard. While Microsoft is facing a headache, Wedbush predicts tech M&A will in fact rise next year.

The analyst firm also sees increased shareholder activism in store for next year, especially at Tesla and Salesforce, which it believes will see pressure on margins, buybacks, and strategy.

While we gear up for Microsoft versus the FTC, this year will also see a resurgence of Apple versus… pretty much everyone. Major developers including Spotify, Epic Games and Facebook have been unhappy with Apple for years over how it runs its App Store, particularly the 15-30% tax it places on in-app purchases. Musk looked like he might enter the fray in November, but quickly un-declared war on Apple. This was no doubt a disappointment for stalwarts who saw Musk’s intervention as a kind of Han Solo moment that failed to materialize, but the beef is far from squashed.

Extra Upside

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This year in solutionism: Dyson released a pair of headphones with a supervillain-esque air filter bolted onto them for a mere $950.

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Not to be out-creepied, Oculus founder Palmer Luckey said in November he’d built a VR helmet capable of killing a person if they lost a videogame and called it a ”piece of office art.” Because why not.

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Don’t repeat your mistake from June, 2007. What happened in June? You didn’t buy Netflix stock, even though The Motley Fool flashed the “Ultimate Buy” signal to their members. Fast forward, and the stock’s value skyrocketed more than 11,188%. But that’s just one of the many moonshot stock picks by The Motley Fool’s Stock Advisor. Don’t miss out – they’re flashing the “Ultimate Buy” signal once more, though this time for the company they call “The Netflix Killer.”*

*Partner. Returns as of 12/22/2022.

Just For Fun

Candle Ice.

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Written by Isobel Asher Hamilton

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