Tech
The 6 biggest tech stories of 2023
Key points
- One of the biggest stories for the tech sector in 2023 has been the continued trend of layoffs. Over 1,100 tech companies have collectively cut 250,000 employees through November.
- In March 2023, major tech lender Silicon Valley Bank unexpectedly failed, leading many startups and other tech companies to scramble to attract reticent investors.
- Following the collapse of cryptocurrency exchange FTX last year, founder Sam Bankman-Fried was convicted of multiple fraud and conspiracy charges in November 2023.
- Microsoft completed its $69 billion purchase of video game maker Activision in October, after 20 months of regulatory oversight and antitrust battles.
- Lawmakers in the United States and abroad have made renewed efforts throughout 2023 to ban the social media platform TikTok, based on arguments that its parent company poses a security threat.
- In November, OpenAI, the maker of ChatGPT, announced the sudden ouster of co-founder Sam Altman, who moved to Microsoft, a major investor in OpenAI, before returning to OpenAI a few days later.
The most important stories of technology sector for 2023 include collapsing banks, continued waves of layoffs, the fallout from the demise of cryptocurrency exchange FTX and more, all amid a broader industry-wide recovery that has sent out some of the industry’s biggest names at all high stock prices over time.
A few terrible stories aside, 2023 has been a booming year for the tech sector. The benchmark Technology Select Sector SPDR Fund (XLK) exchange-traded fund (ETF) has risen more than 50% over the past year, far outpacing the broader Standard & Poor’s (S&P) 500’s rise of nearly 25% as of Dec. 19.
Below, we take a closer look at some of the biggest tech stories this year.
Layoffs continue across the industry
Layoffs in the tech sector are nothing new, but an industry-wide trend took off in 2022 as companies reconciled a return to many pre-pandemic consumer behaviors after hiring waves became commonplace early on of the COVID era. In 2023, layoffs across the industry have only accelerated. As of November 2023, tech companies had laid off a total of more than 240,000 employees this year, up 50% from the previous year’s job reductions.
This includes both smaller startups and established major players, such as leaders like Microsoft (MSFT) AND Meta platforms (HALF) fired thousands of workers. Cutting costs in this way may have contributed to a significant rally in the shares of many tech companies over the course of 2023, potentially providing an advantage to investors.
Collapse of Silicon Valley banks
In early March, Silicon Valley Bank it became the largest bank to fail in a decade and a half. More than Signature and First Republic, two other banks that collapsed in early 2023, Silicon Valley Bank was known to be a financial institution of choice for many tech companies and risk capital companies.
In the aftermath of the bank failure, many tech startups found themselves struggling – not only to secure funding from once-eager and now increasingly reluctant investors to let go of their money – but also just to complete basic financial functions such as pay book.
Fallout for SBF
Traditional bank failures plagued many tech companies in 2023, but the ongoing fallout from late 2022 collapse of the FTX cryptocurrency exchange this year too it remained an important story. Sam Bankman-Fried (SBF), the founder of FTX, spent part of 2023 on trial for his potential role in the exchange’s collapse. Ultimately, a jury convicted him of seven counts of fraud and conspiracy relating to the events of November 2022. Sentencing is expected to be delivered in March 2024 and Bankman-fried faces a maximum sentence of more than 100 years in prison.
For the everyday technology investor focused on cryptocurrency in space, the impact of the FTX collapse continued. The FTX failure has tarnished the broader reputation of cryptocurrency exchanges and caused the prices of some tokens to plummet.
Microsoft buys Activision
In early 2022, Microsoft announced plans to buy video game developer Activision Blizzard in a deal that is likely to be the tech giant’s largest yet. About 20 months later, in October 2023, Microsoft finally closed on the $69 billion purchase. Throughout 2022 and much of 2023, Microsoft faced a series of regulatory hurdles and antitrust scrutiny, even though he ultimately emerged victorious.
The purchase represents an important step for Microsoft into the fast-growing video game industry. It could also have lasting effects for other tech companies looking at similar types of acquisitions in the future. Regulators around the world have used the deal as an opportunity to review antitrust legislation, with some seeking to completely overhaul how they review potential future mergers.
Ban TikTok?
Throughout 2023, lawmakers in the United States, Europe and Canada have made efforts to restrict access to the wildly popular social media platform Tick tock on the basis that its Chinese parent company, ByteDance, posed potential security threats. The increased scrutiny led to TikTok CEO Shou Chew’s testimony to the House of Representatives in March.
As of late November, TikTok is banned on some government devices and college campuses in some parts of the United States, but remains widely accessible elsewhere. A potential TikTok ban would disrupt the social media space, potentially providing new avenues for competitors like Meta’s Reels to grab additional market share.
OpenAI CEO saga
In November the board of directors of OpenAI, the company behind generative artificial intelligence (AI) chatbot ChatGPT, unexpectedly ousted the company’s CEO and co-founder, Sam Altman. Within a few days, Altman had joined Microsoft, which previously invested $13 billion in OpenAI and has been working through 2023 to integrate AI capabilities into many of its existing products and services. A few days later, OpenAI announced that Altman would do so return as CEO and that the company’s board of directors had been shuffled.
OpenAI is a major player in the burgeoning AI industry, and the executive shake-up could lead to other developments, with AI likely to continue to dominate tech news in 2024.