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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.
This is Hillicon Valley, detailing all you need to know about tech and cyber news from Capitol Hill to Silicon Valley. Send tips to The Hill’s Rebecca Klar and Ines Kagubare. Subscribe here.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.
