Stratechery The Four Horsemen of the Tech Recession
Feb 6, 2023
Dive into the intriguing dynamics of the tech recession, where juxtaposed job growth battles against significant layoffs. Discover the challenges faced by cloud giants like Amazon as they adapt to a post-pandemic reality. Explore the cyclical patterns in tech hardware and its parallels to wartime strategies. Examine how rising interest rates are reshaping SaaS valuations and investor expectations. Finally, uncover the fallout from Apple's App Tracking Transparency on digital advertising, affecting major players and small businesses alike.
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Tech Recession's COVID Hangover
- Tech companies face unique headwinds due to a "COVID hangover".
- They thrived during the pandemic but now face decreased consumer spending and overbuilt infrastructure.
Amazon's Cloud Computing Slowdown
- Amazon's cloud computing business, AWS, is experiencing slower growth due to reduced customer spending.
- Customers are optimizing their cloud expenses in response to economic downturn.
Pandemic's Impact on Cloud and E-commerce
- The pandemic accelerated cloud computing investments, potentially leading to a pull-forward of demand and subsequent slowdown.
- Amazon overbuilt its fulfillment network during the pandemic, contributing to current inefficiencies.