Silicon Valley Tech News Roundup – February 5th

President Biden confirms the military shot down alleged Chinese spy balloon – 2/5

On Saturday, President Biden confirmed to the reporters the U. S. military shot down what they allege is a Chinese spy balloon. The military deployed Air Force fighter jets and ships to dispose of the balloon and recover as much debris as possible. The balloon went down about six nautical miles off the coast of South Carolina. President Biden approved the plan to shoot down the balloon on Wednesday. However, Pentagon wanted to wait until it was over water to avoid risk to the general population. The object was flying over the state of Montana, which is home to several nuclear missile sites.

On Friday, the Chinese Foreign Ministry denied the balloon was a spy balloon but a “civilian airship” designed to study meteorology. The ministry also apologized for the intrusion: “The Chinese side regrets the unintended entry of the airship into U.S. airspace due to force majeure.” After the military shot down the balloon, the Chinese Foreign Ministry released another statement: “The Chinese side has repeatedly informed the US side after verification that the airship is for civilian use and entered the US due to force majeure – it was completely an accident.”

Anthony Blinken (the Secretary of State) canceled his trip to China over the incident. In a phone call to Wang Yi (a senior Chinese diplomat) on Friday, Blinken said sending the balloon to the U. S. was: “an irresponsible act and that (China’s) decision to take this action on the eve of my visit is detrimental to the substantive discussions that we were prepared to have.”

PayPal layoffs 2,000 people – 1/31

In a statement released this Tuesday, PayPal announced it plans to cut 2000 jobs or 7% of its workforce. Dan Schulman (PayPal’s Chief Executive) stated: “We must continue to change as our world, our customers, and our competitive landscape evolve.”

PayPal is the latest big tech company to let go of workers. Big tech is struggling with the rough economy, slower growth following pandemic expansion, and a drop in revenue.

Amazon will cut 18,000 jobs, while Alphabet (Google’s parent company) announced it would lay off 12,000 workers (or 6% of its workforce). Microsoft plans to fire 10,000 workers between mid-January and the end of March. It is the second-largest wave of layoffs in the company’s history. Meanwhile, Salesforce plans to cut 8000 jobs (or 10% of its workforce). In June last year, Coinbase laid off 1,100 people due to the current volatile nature of the crypto market. In January, it cut 950 jobs.

Meta shares go up 23% – 2/2

On Thursday, Meta shares went up 23%. They sit at the highest point since September 2022.

In the earnings report released on Wednesday, the revenue topped the estimates, with the expected revenue for the first quarter between $26 and $28.5 billion. As of December 31st, 2022., Meta had a headcount of 86,482 (an increase of 20% year after year).

In a statement, Zuckerberg said: “Our community continues to grow and I’m pleased with the strong engagement across our apps… Our management theme for 2023 is the “Year of Efficiency” and we’re focused on becoming a stronger and more nimble organization.” Zuckerberg also said the company plans to be more “proactive on cutting projects that aren’t performing or may no longer be crucial.”

Meta is also cutting spending. It expects its expenses will be between $30 and $33 billion (down from the previous estimate of between $34 and $37 billion).

Elon Musk found not guilty of fraud – 2/4

On Friday afternoon, the jury found Elon Musk not guilty of fraud over his 2018 tweet that alleged he secured the funding to take Tesla into private ownership at $420 per share. It never materialized. The trial lasted for three weeks in San Francisco. Musk claimed he would not get a fair trial in San Francisco and wanted it moved to Texas.

The shareholders filed the class action lawsuit claiming they lost money due to stock fluctuations following Musk’s tweets. Musk would have to pay billions in damages, if the jury found him liable. Following the verdict, Musk tweeted: “Thank goodness, the wisdom of the people has prevailed! I am deeply appreciative of the jury’s unanimous finding of innocence in the Tesla 420 take-private case.”

While the jury found him not guilty over the tweets, the Securities and Exchange Commission sued Musk for misleading investors. He settled for $20 million and had to step down as Tesla’s Board chair.