The Week in Tech: Coronavirus Disrupts the Industry

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Companies are telling investors that sales are slumping because of the outbreak, conferences are being canceled, and workers are being instructed not to travel.

Each week, we review the week’s news, offering analysis about the most important developments in the tech industry.

Hello there, loyal technology newsletter subscribers. It’s Mike Isaac, tech correspondent for The New York Times, bringing you this week’s news digest. Let’s dive right into it.

The biggest story of the moment is the rapid spread of the coronavirus, which can cause a potentially fatal flulike illness and originated in China. The virus — and the global attempts to contain it — has rocked the business world, sending financial markets into correction territory, down more than 10 percent.

In the tech industry, companies with direct exposure to China were the earliest to feel the effects. Apple, for instance, warned investors that the supply of iPhones — the company’s marquee product, which accounts for the bulk of its revenue every quarter — would be hampered by the spread of the coronavirus. Apple relies heavily on factories in Shenzhen, China, and Chinese consumers are an enormous segment of the company’s customer base.

Days later, Microsoft rang the alarm bell. The tech giant depends on customers who install its Windows software on laptops and buy Surface tablets, and those products are also being hammered by closings and slowdowns in China. Personal computing accounts for roughly a third of Microsoft’s revenue.

While hardware companies seem to be the most obvious candidates to face trouble, the impact is starting to ripple outward to other, less obvious internet companies.

Expedia, the travel aggregator, declined to provide a full-year financial outlook because of the coronavirus’ disruption of travel. Companies like Didi, the Chinese ride-hailing giant, have started providing drivers with plastic barriers to place between the front and back seats, offering another layer of protection from the virus.

Dun & Bradstreet, the business research firm, said about 51,000 companies had one or more suppliers in regions of China affected by the virus, almost certainly leading to a broader impact in the months ahead.

To try to keep their employees safe, some companies are taking preventive measures. Organizers called off MWC Barcelona, the annual global telecommunications trade show in Spain. But the giant RSA security conference still went on in San Francisco this past week, even though big companies like IBM, AT&T and Verizon pulled out of it.

Facebook canceled one of its advertising events, which is attended largely by employees, and its annual F8 conference — one of the company’s most anticipated events. That’s where it showcases its products and plans for the future to software developers. Mark Zuckerberg, the chief executive, is a mainstay at the event, giving a regular state-of-the-industry keynote address.

Karen Weise, my colleague in Seattle, had this tidbit to share: Employees at Amazon’s worldwide operations — the company’s largest division, which runs the technology and operations for warehouses, deliveries, Prime membership and physical stores, among other things — were told that they should not travel domestically or internationally “until further notice,” according to emails viewed by The New York Times.

Dave Clark, the senior vice president who runs worldwide operations, wrote in one of the emails that no group or team meetings requiring travel should be planned until at least the end of April, “by which time hopefully we have a better sense of the virus, its spread and impact.”

Amazon confirmed that Mr. Clark had emailed his organization on the matter. “We are watching this situation closely with a focus on the safety of our teams and ensuring we can meet customer promises,” an Amazon spokeswoman, Kelly Cheeseman, said in a statement. “We are closely following local and international health authority guidance as this situation progresses.”

The company had already been scrambling to make sure it doesn’t run out of popular products that are made in China, and has urgently emailed suppliers to see if they expect to have enough of their best sellers for its all-important Prime Day this summer.

Rather than forecasting the apocalypse, I’ve been engaging in a different thought exercise over the past few weeks: What less obvious companies might the coronavirus affect in ways we hadn’t anticipated?

Will Netflix, for example, see a drastic uptick in hours of streaming television watched, given people aren’t leaving their homes anymore? Or consider delivery companies like Uber Eats, DoorDash, Instacart, even Amazon. In a world where people are increasingly hesitant to go outside and mingle with others, will consumers start to rely more heavily on others doing the shopping for them?

Investors seem to be doing the same: Shares in Zoom, the teleconferencing software company, skyrocketed over the past week as more white-collar workers telecommute from home.

I find this Zoom anecdote highly relatable. I’ve sent my boss more Slack and G-chat messages in the past few weeks than I can remember ever sending before.

  • Intuit, the tax-preparation and financial-data company, announced a $7.1 billion deal to buy Credit Karma, a major move into creating a financial-services and personal-data-collection behemoth. The idea is to serve as a kind of online financial assistant for people, our reporters Nathaniel Popper and Michael de la Merced wrote, helping consumers get their credit scores, file their taxes and find new loans and other financial products.

  • Uber plans to start paying drivers to display advertising on digital signs mounted to the tops of their cars, because apparently not enough surfaces in the world contain advertising on them.

  • LinkedIn is testing its own “Stories” product, hopping on the bandwagon of companies that have ripped off Snapchat’s pioneering way of showing disappearing status updates to friends and followers.

  • Speaking of Expedia: The company slashed more than 3,000 jobs, about 12 percent of its work force. An internal email announcing the move said the cuts were due to Expedia’s history of pursuing growth in an “unhealthy and undisciplined” way.

  • Bob Iger, the chief executive of the Walt Disney Company, abruptly stepped down, replacing himself with another Bob (Chapek, who ran the company’s entertainment theme parks division). Though Mr. Iger had long expressed his desire to leave the company, spectators immediately wondered what his next move would be. A Democratic vice-presidential pick, perhaps?

  • And finally, if you somehow missed it, you absolutely have to read The Wall Street Journal’s corker of a story on the cutthroat squabbles at the top of SoftBank, the Japanese megaconglomerate, which has billions of dollars in investment spread throughout Silicon Valley and beyond. Having started making waves in the Valley years ago, SoftBank has fallen from grace in recent months after some of its highest-profile investments have turned out to be flops.

by nytimes.com