Apple lost 200 billion dollars in value, Alphabet’s figures dissapoint and Twitter is no longer hiring. The IT industry is under pressure worldwide. Western Europe faces consequences. “We are entering a period of great uncertainty”, warned Prins Constantijn, startup ambassador and brother to the king of the Netherlands.
The past two weeks have been tough on big tech. Amazon posted a loss for the first time since 2015. Apple’s market value fell by 200 billion dollars. Twitter and Meta stopped hiring. Many organizations presented disappointing quarterly figures, causing investor confidence to plummet.
Manufacturers, developers and IT service providers did well during COVID-19. But COVID-19 was temporary. Consumer demand for hardware and software fell. “Revenues are down, costs are up”, analyst Raj Shah told the Guardian. “Tech companies are going to do what every other company in this situation would do – cut costs through freezing hiring, get rid of costs like unused real estate, push for higher productivity and re-examine investments.”
The impact will be hardest on suppliers and employees working directly with affected organizations. Though most are US-based, Europe is unlikely to avoid the consequences. Prince Constantijn, startup ambassador and brother to the king of the Netherlands, forecasts a difficult period for Dutch tech startups seeking capital. “The ground is shaking”, he told local media. “Capital is under pressure.”
Constantijn is an ambassador for Techleap, an organization supporting Dutch startups with funding. Once in a while, Techleap receives a budget from the Dutch government. Techleap ensures that the money finds its way to promising startups. Constantijn is regularly involved, and therefore familiar with the national investment landscape.
According to Constantijn, finding capital will prove difficult in the coming period. “Companies will have to adjust their growth plans”, he said. “For example, by expanding less aggressively into new markets, and reviewing where savings can be made.”
As mentioned earlier, the US is likely to take the biggest blow. It’s unclear if and whether the market will recover. COVID-19 had an impact, but uncertainty about Ukraine and tensions with China undoubtedly play a role. As a result, large US-based organizations will be less inclined to invest internationally.
Fortunately, European tech startups rarely depend on US funding. Some member states have a national agency that helps tech startups apply for EU funding. Additionally, pressure on US enterprises can be advantageous for the recruitment of personnel. According to Constantijn, filling vacancies is a bigger challenge for tech startups than economic uncertainty. Whenever enterprises stop hiring, startups have a bigger pool to fish from.
“A company like Google can attract people from all over the world”, he said. “As a result, they are competing with new companies in the labour market. That competition may ease a little. The crisis can bring a bit of breathing room.”