The recession drums are beating ever closer with energy shortages and inflation taking a toll on homes, businesses and economies around the world. Not even the tech giants are safe from their clutches, leaving many to wonder if Silicon Valley’s golden age is over.
The region, which encompasses the area south of San Francisco, has been a benchmark for innovation for almost a century, although it was with the arrival of the giants of social networks -Facebook, LinkedIn, Whatsapp and Twitter, among others- that the 2000s when it reached its maximum splendor. In the years that followed, the expansion of these platforms and low interest rates meant that these and other companies experienced almost constant growth, with astronomical revenues and dazzling future prospects. During that time, numerous startups achieved unicorn status -those with a valuation of more than 1,000 million dollars-, many others went public and million-dollar operations were carried out, such as the purchase of Tumblr by Yahoo! for $1.1 billion.
However, things have changed after the momentum experienced as a result of the pandemic. In recent months, tech giants have been forced to board, as well as freeze salaries and new hires, to cope with already falling valuations. According to Margaret O’Mara, a professor at the University of Washington, to The Guardian, it is “the return to normal after a huge bull run during which everything has been oversized.”
It should be noted that energy and rising prices are not the only ones responsible for the slowdown that has taken hold in Silicon Valley. Also contributing to this was the collapse of WeWork, which reached a stratospheric valuation of 47,000 million before everything collapsed in little more than a month, and the Theranos scandal, . Without forgetting, the accusations against Facebook for or the improper use of data of its users by the consulting firm Cambridge Analytica.
Another determining factor is the change in the position of US legislators regarding these companies, their financing and the power they have over citizens. Among the latter, the perception has also increased that the technological giants accumulate too much influence in the economy. In 2018, the percentage barely exceeded 50%, while now it stands at 68%.
Despite all this, there are those who believe that it is early to consider Silicon Valley dead. This is the case of Nicholas A. Bloom, an economics professor at Stanford, who considers that “it is still incredibly robust”. Furthermore, none of his rivals “come even close to his prominence in the industry.” Which O’Mara agrees with, noting that his golden age may be over, “but it’s unlikely to be the end of him.”
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