💡 Layoffs take tech toll

Plus: Retail comeback | Monday, February 13, 2023

Open in app View in browser   Presented By SiriusXM   Axios What's Next By Alex Fitzpatrick, Jennifer A. Kingson and Joann Muller · Feb 13, 2023 Some of Big Tech's most intriguing projects have suffered major layoffs recently, Alex reports today, potentially slowing the next generation of gadgets and products. 💥 Axios is hosting our second annual What's Next Summit next month. See below for more info. Today's newsletter is 908 words ... 3.5 minutes.     1 big thing: Layoffs take toll on tech's most interesting projects Illustration: Sarah Grillo/Axios   The recent wave of tech layoffs has hit some of the industry's most innovative departments and projects particularly hard, Alex Fitzpatrick writes. Why it matters: As tech companies tighten their belts, some of those working on their riskiest — yet most intriguing and futuristic — bets are first on the chopping block. What's happening: Microsoft last week cut 10,000 jobs, including some from its HoloLens mixed reality team, Bloomberg reports. Those layoffs "throw into question whether the company will produce a third iteration" of the HoloLens headset, Bloomberg added. ("There are no changes to HoloLens 2 and our commitment to mixed reality," a Microsoft spokesperson told Axios.) Amazon's recent layoffs struck its robotics and drone delivery wings, CNBC reports, among other departments. ("Innovation is core to everything we do, and we remain excited about the progress we've made in robotics, drone delivery, and newer initiatives like Prime Video, Alexa, Grocery, Kuiper, Zoox, and Healthcare," Amazon spokesperson Brad Glasser told Axios.) Several of Alphabet's "Other Bets" have also undergone layoffs this year, per the Wall Street Journal, including Verily Life Sciences (a health care research organization) and Intrinsic (an AI and robotics software firm). Even Facebook parent Meta — which remains committed to bringing about its vision of a "metaverse" — is trimming headcount at its department most focused on that effort, Reality Labs. Driving the news: Rising interest rates and other macroeconomic factors are forcing the world's biggest tech companies to rethink their approach of continually funding "moonshot" projects with uncertain returns. Instead, they're doubling down on proven projects, or those they view as surer short-term bets. And they're trimming jobs in part to please investors. What they're saying: "The next two years are probably going to be the most challenging," Microsoft CEO Satya Nadella said in a recent interview, Axios' Hope King reports. Yes, but: Layoffs don't necessarily mean the end of all these teams or projects. Plus, there's still plenty of interesting innovation happening, broadly speaking — especially in generative AI projects. Microsoft, for instance, just revealed a new version of its Bing search engine powered by AI darling ChatGPT. The company's hope is that the move will finally break Bing free of its perennial second-place position behind Google search, as Axios' Ina Fried wrote. Reality check: There's no guarantee any of the moonshot projects suffering cuts would have ever borne fruit, even with all the staffing in the world. The bottom line: Layoffs are always painful, especially for those with the least financial cushion. That said, some of the tech world's biggest and most influential companies and projects were launched by people laid off from the previous generation's giants. There's no telling what kind of innovative projects will be launched in the coming months and years by those just set loose from the Googles and Microsofts of the world. Share this story.     2. Announcing the 2023 What's Next Summit   Axios is hosting our second annual What's Next Summit on March 29, 2023, in Washington, D.C. The What's Next Summit is our crystal ball, illuminating the innovations, trends and people that are breaking boundaries and shaping our world. What's happening: In our second annual daylong event, Axios journalists will lead interviews with newsmakers across several key themes, including AI, the future of work, space travel and much more. Confirmed speakers include... United Airlines CEO Scott Kirby, Vimeo CEO Anjali Sud, music producer Timbaland and more. Click here to watch live — and check out last year's programming here.     3. Ford's Rivian split continues A Rivian R1T Truck and R1S SUV. Photo: Kevin Dietsch/Getty Images   Ford has sold a majority of its stake in electric vehicle maker Rivian, according to an SEC filing, Axios' Megan Hernbroth reports. Why it matters: The automaker invested $500 million in Rivian, but has appeared to lose confidence in the company after a series of challenges and disappointing earnings. Driving the news: Rivian's recent filing was prompted by Ford dropping below a 5% ownership stake. It now owns 1.15% of Rivian's stock, or 10.5 million shares. In a May 2022 filing, Ford said it owned 87 million shares. Zoom in: Ford's annual report showed the automaker took a $7.4 billion mark-to-market net loss on its Rivian investment in 2022. What we're watching: Rivian is expected to report its Q4 earnings on Feb. 28. Share this story.     A message from SiriusXM Stream SiriusXM now and get 3 months for free     Stream more than 425 channels on your devices for free on the SXM App, including expertly curated ad-free music, live sports, personalized stations and more. Next steps: Sign up now to get 3 months free. Cancel anytime. Learn more about the offer and start streaming. See offer details.     4. 📈 Stores aren't dead yet Data: Coresight; Chart: Axios Visuals Physical store openings exceeded closings on an annual basis last year for the first time since 2016, Axios' Richard Collings reports based on data from Coresight Research. Retailers are on pace to open even more stores this year than last, at a rate of 3 to 1. The big picture: Robust e-commerce platforms helped retailers manage the pandemic — but retailers and consumers have both realized the limitations of doing business entirely online. State of play: A big driver of store openings: Shoppers seeking bargains, especially at dollar stores with a limited or nonexistent online presence, Coresight managing director Marie Driscoll tells Axios. The top six retailers opening stores in 2022 were dollar chains and discounters, including Dollar General, Family Dollar, Dollar Tree, Five Below, TJX Cos. and Aldi, in that order. Subscribe to Axios Pro: Retail Deals.     5. 📸 The Ekranoplan rides again Rendering courtesy of Aurora Flight Sciences   DARPA, the U.S. Defense Department's R&D wing, is working with two firms — Boeing subsidiary Aurora Flight Sciences and General Atomics Aeronautical Systems — on new seaborne heavy-lift aircraft concepts. Such planes would fly in what's called "ground effect" — essentially a cushion of air that provides extra lift when an aircraft is close to the ground (or, in this case, the sea). The "Liberty Lifter" program, as DARPA calls it, "aims to demonstrate a leap-ahead in operational capability by designing, building, floating, and flying a long-range, low-cost X-Plane capable of seaborne strategic and tactical heavy lift," per a release. Flashback: The Soviet Ekranoplan was based on similar principles.     A message from SiriusXM Get free access to music, sports, news and more     Subscribe to SiriusXM Streaming and get access to 3 months of free: Expertly curated ad-free music. Pandora artist stations. Live sports. Celebrity hosts, comedians and newscasters. Howard Stern and more. More info: Listen on your phone, at home and more with the SXM App. See offer details.   Big thanks to What's Next copy editor Amy Stern. Was this email forwarded to you? Get your daily dose of What's Next by signing up here for our free newsletter. Are you a fan of this email format? Your essential communications — to staff, clients and other stakeholders — can have the same style. Axios HQ, a powerful platform, will help you do it.   Axios thanks our partners for supporting our newsletters. Sponsorship has no influence on editorial content. 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