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Big Tech, But Bigger

The current AI boom looks a lot like the tech industry's rebound 30 years ago, when the commercialization of the internet ended an earlier period of malaise. But whereas the internet era fundamentally disrupted the technology industry, AI promises to make Big Tech stronger than ever.

SEATTLE – In November 1991, Time magazine released a special issue assessing the state of California, and the prognosis was grim. The cover featured a blood-red sunset sinking into a sea of rolling coastal fog, and one dispatch after another lamented the state’s faltering economy, political strife, fires and earthquakes, and the perennial rivalry between San Francisco and Los Angeles.

Gloomier still was Time’s dissection of Silicon Valley. After riding high on the personal-computer boom of the 1980s, the region was experiencing a “wrenching mid-life crisis” thanks to post-Cold War defense cuts, a plateauing PC market, and Japanese competition in chipmaking. The recession had swamped Boston and other high-tech regions, too, but the Valley’s decline seemed particularly painful. “The whole world would be wise to pay close attention to the drama of incipient decline and resistance now unfolding in California,” the editors warned. “For the future that begins there tends to spread across the world.”

At the start of 2023, Silicon Valley was in a similar funk. Tech companies were weathering sagging stock prices, mass layoffs, a burst crypto bubble, and a metaverse that had turned out to be rather “meh.” Antitrust suits were gaining momentum, and billionaire CEOs were being chastised for their excessive wealth and mocked for their extreme hobbies. The collapse of Silicon Valley Bank in March felt like a flashback to the early 1990s, when plummeting housing prices eviscerated SVB’s real-estate-heavy investment portfolio.