The Federal Reserve hiked interest rates again on Wednesday. The trend is constraining tech firms of all sizes after a couple strong years for the industry during the height of the COVID-19 pandemic.
And the Biden administration is out with its latest show of support for antitrust reform, releasing a report calling Apple and Google gatekeepers in the mobile app market and urging legislative action.
What does rate hike mean for tech sector?
Rising interest rates fueled by the Federal Reserve’s rate hikes are constraining tech firms of all sizes.
- After more than a decade of low borrowing costs, rising interest rates are forcing tech companies to rethink their strategies, with companies needing to show their profitability over the possibility for growth.
- The change could be squashing nascent startups and be one factor in the widespread layoffs from industry giants.
Analyst Dan Ives with Wedbush, a wealth management and advisory firm, told The Hill the Fed’s “warpath to combat inflation” with raising interest rates created a “dark cloud for the tech sector.”
“Tech firms were spending money like 1980s rock stars the last four to five years, and now demand cracks are forming and we’re seeing layoffs across the board,” Ives said.
“I think many tech firms are ripping the Band-Aid off proactively to prepare for the oncoming economic storm,” he added.
The recent hit is a slide from a strong couple of years for the tech industry during the height of the pandemic. The tech sector fared well where others sectors faltered, boosted in part by a rise in work-from-home culture and consumers spending the stimulus checks received from the government coupled with low Fed rates at the time fueling the stock market.
Federal report slams Google, Apple app store policies
The Biden administration said Google and Apple serve as “gatekeepers” in the mobile app market and urged legislative action to even the playing field, a boost for lawmakers looking to revamp antitrust laws to target the nation’s largest tech companies.
- The National Telecommunications and Information Administration (NTIA) said Google’s and Apple’s policies could harm consumers by inflating prices and reducing innovation, according to a report published Wednesday.
- The agency said consumers broadly can’t get apps outside of the app store models controlled by Apple and Google.
Apple does not allow users to download apps on its iOS devices outside of the Apple App Store. Google does allow for other mobile app stores on Android devices, but the report found that more than 90 percent of app downloads on Android devices are through the Google Play Store.
The report also highlights hurdles the agency said Apple and Google put in place for app developers that restrict how apps can function or require developers to go through slow and opaque review processes.
ChatGPT maker to detect AI-written text
- The “classifier” the company created, by its own admission, is not always 100 percent accurate in distinguishing between the text.
- “While it is impossible to reliably detect all AI-written text, we believe good classifiers can inform mitigations for false claims that AI-generated text was written by a human: for example, running automated misinformation campaigns, using AI tools for academic dishonesty, and positioning an AI chatbot as a human,” the company said in a blog post.
The announcement comes after ChatGPT rose quickly in popularityespecially among students, for its ability to give human-like responses to questions and turning the responses into things such as essays or emails.
The program also brought a wave of controversy in education as ChatGPT gives different answers to the same questions, making it impossible to tell if a student used ChatGPT to write their essay or assignment.
VIRTUAL EVENT INVITE
Charging Ahead: EV/AV Summit; WednesdayFeb. 8 at 1 p.m. ET/10 a.m. PT
Reps. Bob Latta (R-Ohio) and Rick Larsen (D-Wash.), DoE’s Michael Berube, Auto Drive America’s Jennifer Safavian, ChargePoint’s Pasquale Romano and more join The Hill’s second annual EV/AV summit to explore the barriers to EV adoption, the future of autonomous vehicles and the critical infrastructure needed to make them both a reality. RSVP to save your spot.
BITS & PIECES
An op-ed to chew on: 10 AI trends to watch for in 2023
Notable links from around the web:
Meta Wins Court Nod to Buy Virtual Reality Startup in Loss for Khan’s FTC (Bloomberg / Leah Nylen)
GoodRx made money off your health data. The FTC is making it pay. (Vox / Sara Morrison)
Dissecting Elon Musk’s Tweets: Memes, Rants, Private Parts and an Echo Chamber (The New York Times / Sheera Frenkel, Martín González Gómez and Ella Koeze)
One more thing: FTC targets GoodRX
Telemedicine company GoodRx allegedly shared sensitive personal health information with Google, Facebook and other firms to target ads to users, according to a complaint filed by federal regulators on Wednesday.
The Federal Trade Commission (FTC) alleged that GoodRx, a company that lets users compare drug prices and receive coupons, shared sensitive information about users’ prescriptions and health conditions with advertising platforms that allowed them to target ads to users about specific health conditions and medications, despite claims that the company would not do so.
The order, filed by the Department of Justice on behalf of the FTC, seeks to ban GoodRx from sharing health data with advertisers. It would also require the company to direct third parties, such as Google and Facebook, to delete the data that was previously shared with them.
- In addition to the proposed actions, GoodRx agreed to pay a $1.5 million penalty, according to the FTC.
- The order is subject to approval from a federal court.
- GoodRX in a statement said it does not agree with the FTC’s allegations and does not admit to wrongdoing as part of the agreement.