At the start of every new year, I like to reflect on the state of the economy and general business climate. Looking back on 2018, and the last several years, it’s increasingly clear that something big is changing. The darling of American industry is in trouble, and there’s more turmoil on the horizon.
Over the last decade plus, Big Tech companies like Google, Facebook, Netflix, Twitter, etc. have exploded in value, users, and popularity. They have disrupted other industries left and right, making money hand over fist, while also coming to dominate popular culture. Looking back, 2018 seems like the crest of a wave, where Apple and Amazon became the first companies to ever reach $1 trillion in market capitalization and the technology industry drove American stock markets to record highs. But that wave is now crashing back down to earth.
From its peak in summer 2019, the tech-heavy NASDAQ is now down some 25%, erasing hundreds of billions of dollars of investor value. A parade of scandals and public outrages are turning popular opinion against these former crowd favorites, with Facebook and Twitter at the front of the firing line. They might still be highly desirable places to work — after all, they pay well and offer plenty of perks. But people have started catching on to the hidden costs of tech, and the pubic beating they took in the second half of 2018 will probably only get worse in 2019.
In some ways, Big Tech’s comeuppance is an unfortunate drag on the US economy. The Wall Street beatdown is hurting everybody’s retirement accounts, and any pullback on hiring and investing by these companies could have a broader impact too. From the perspective of other businesses, lower social media engagement could impact marketing strategies across the economy.
But in other ways, I’m not sure any of this is so bad. Despite the public criticism, Big Tech remains very profitable, and they can almost certainly weather the storm. Technology continues to create value and make living and doing business easier than ever, so the industry as a whole should be fine. While tech stocks are way down, they’re still trading at historically high multiples.
Businesses may need to rethink their marketing strategies to rely a little less on social media advertising. But there are many other proven strategies in the business toolkit, from email lists to traditional media advertising to old-fashioned real-world interaction. Maintaining a healthy mix of marketing channels is probably good strategy for business in general. And lower social media use might not even mean lower sales. Facebook’s targeting data is still just as good, and people still need to buy stuff. A customer who genuinely wants a product or service will still be interested if he sees an ad ten times or just twice.
There’s also a silver lining here. The general public is starting to get how harmful Big Tech, and social media in particular, can be. If that means less time on Twitter, or less screen time overall, that’s probably a good thing. Getting off our devices and back into the real world means more time for friends, family, and ourselves. Less sitting and more exercise; fewer likes and more conversations.
A big sector of the economy is taking a hit, but for most of us, it’s an opportunity to reflect on what really adds value to our lives and businesses. Big Tech’s 2019 backlash could be an opportunity for real-life experiences and relationships to make a comeback.