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Key Takeaways
- One of the top stories for the technology industry in 2023 was the continued trend of layoffs. More than 1,100 tech firms cut a combined 250,000 workers through November.
- In March 2023, major tech financial institution Silicon Valley Bank unexpectedly failed, leading many startups and other tech companies to scramble to attract reticent investors.
- After last year's collapse of crypto exchange FTX, founder Sam Bankman-Fried was convicted on multiple counts of fraud and conspiracy in November 2023.
- Microsoft completed its $69 billion purchase of video game maker Activision in October, following 20 months of regulatory oversight and antitrust battles.
- Legislators in the U.S. and abroad made renewed efforts throughout 2023 to ban the social media platform TikTok, based on an argument that its parent company poses a security threat.
- In November, ChatGPT maker OpenAI announced the sudden ousting of co-founder Sam Altman, who jumped to Microsoft—a top OpenAI investor—before returning to OpenAI in days.
The top stories in the technology sector for 2023 include collapsing banks, continued waves of layoffs, the fallout from the demise of the cryptocurrency exchange FTX, and more—all within the context of a broader, sector-wide recovery that has sent some of the biggest names in the industry to all-time high stock prices.
A few dire 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 climbed by more than 50% in the past year, far outpacing the rise in the broader Standard & Poor's (S&P) 500 of nearly 25% as of Dec. 19.
Below, we take a closer look at some of the most notable tech-sector stories of this year.
Industrywide Layoffs Continued
Layoffs in tech are nothing new, but an industrywide trend took off in 2022 as companies reconciled a return to many pre-pandemic consumer behaviors after hiring sprees became commonplace early in the COVID era. In 2023, layoffs across the sector have only accelerated. As of November 2023, tech firms had laid off a total of more than 240,000 employees this year, up 50% from job reductions the year before.
This includes both smaller startups and established major players, as leaders like Microsoft (MSFT) and Meta Platforms (META) fired thousands of workers. Trimming costs in this way may have contributed to a significant rally for the shares of many tech firms throughout 2023, potentially providing a boon to investors.
Silicon Valley Bank Collapse
In early March, Silicon Valley Bank became the largest bank to fail in a decade and a half. More so than Signature and First Republic, two other banks that also collapsed early in 2023, Silicon Valley Bank was known for being a financial institution of choice across many tech companies and venture capital firms.
In the aftermath of this bank failure, many tech startups found themselves scrambling—not only to secure funding from once-eager investors who were now increasingly hesitant to let go of their money—but also just to complete basic financial functions like payroll.
Fallout for SBF
Traditional bank failures plagued many tech firms in 2023, but the ongoing fallout from the late-2022 collapse of cryptocurrency exchange FTX also has remained a major story this year. Sam Bankman-Fried (SBF), FTX's founder, spent part of 2023 on trial for his potential role in the collapse of the exchange. In the end, a jury convicted him of seven counts of fraud and conspiracy surrounding the events of November 2022. Sentencing is expected to take place in March 2024, and Bankman-Fried faces a maximum term of more than 100 years in prison.
For everyday tech investors focused on the crypto space, the impact of FTX's collapse has continued. The failure of FTX tarnished the broader reputation of crypto exchanges and sent prices of some tokens plunging.
Microsoft Buys Activision
Back in early 2022, Microsoft announced plans to buy video game developer Activision Blizzard in a deal likely to be the tech giant's largest ever. About 20 months later, in October 2023, Microsoft finally closed on the $69 billion purchase. Throughout 2022 and most 2023, Microsoft faced a number of regulatory hurdles and antitrust scrutiny, although it eventually emerged victorious.
The purchase is a major step for Microsoft in the rapidly growing video-game space. It also could have lasting effects for other tech firms looking at similar types of acquisitions in the future. Regulators around the world have used the deal as an opportunity to revisit antitrust legislation, with some looking to completely overhaul the way they scrutinize potential mergers going forward.
Banning TikTok?
Throughout 2023, lawmakers in the U.S., Europe, and Canada made efforts to restrict access to the massively popular social media platform TikTok on the argument that its Chinese parent company, ByteDance, posed potential security threats. The increased scrutiny led to House of Representatives testimony by TikTok's chief executive, Shou Chew, in March.
As of late November, TikTok is banned on some government devices and college campuses in parts of the U.S., but it remains widely accessible elsewhere. A potential ban on TikTok would shake up 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 OpenAI, the company behind generative artificial intelligence (AI) chatbot ChatGPT, unexpectedly ousted the firm's CEO and co-founder, Sam Altman. Within days, Altman had joined Microsoft, which previously invested $13 billion in OpenAI and has worked in 2023 to integrate AI capabilities into many of its existing products and services. Just days later, OpenAI announced that Altman would return as its CEO and that the company's board had been shuffled.
OpenAI is a major player in the burgeoning AI industry, and the executive shake-up could to lead to other developments, with AI likely to keep dominating tech news in 2024.
6 Biggest Tech Stories of 2023 - Investopedia
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