The industry had a monumental 2016, but now it has to deal with the Trump disruption.
On Sept. 12, 2016, there was a momentary realignment in the constellation of global business. For the first time, the five largest public corporations in the world by market capitalization were all technology companies: Apple, Alphabet, Microsoft, Amazon.com, and Facebook. The celestial anomaly lasted only seven weeks, because of the rise in oil prices and natural vicissitudes of the stock market, which eventually propelled ExxonMobil and Berkshire Hathaway past Facebook and Amazon. But it’s easy to conclude that a portal had opened briefly to the future—a future in which Silicon Valley dominates everything.
Like so much of 2016, the moment surprised a lot of onlookers. But while it was a bad year for prognosticators, it was by and large a very good year for high tech. If you put aside exploding Samsung smartphones, the massive hacks at Yahoo!, fake news on Facebook, and all the business implications of a Donald Trump presidency, the tech industry produced some astounding results in 2016—and not just of the financial variety.
In January, the Alphabet division DeepMind announced it had developed a computer program capable of beating the best human players in the intricate Chinese board game Go. In April, after repeated failures, SpaceX successfully landed an unmanned rocket on a drone ship floating in the Atlantic Ocean. In August, Uber’s self-driving cars hit the road in Pittsburgh; two months later, Microsoft said computers were transcribing speech as quickly and accurately as humans. And in December, Amazon announced it had conducted its first commercial delivery via drone, sending a set-top box and some popcorn to a customer near Cambridge, England.
Each advance carried the whiff of corporate stagecraft, but taken together they suggested the inexorable migration of software and machine intelligence into the real world, where they’re destined to transform industries and augment or replace people. “When properly deployed, machines can now outthink humans,” says Chamath Palihapitiya, a venture capitalist and former Facebook executive. “This was not a concept that was well-defined even back in 2015.”
Big business used to be shielded from Silicon Valley’s full impact by the industry’s boom and bust cycles. Yet despite repeated predictions of doom by skeptics, this time no tech bubble has popped, after eight years of robust growth. The Bloomberg U.S. Startups Barometer, a measure of the overall fitness of private technology companies, which considers factors such as venture capital investment and mergers and acquisitions, is up 14 percent since the beginning of the year, a sign of relative health.