BitDepth#1399

MARK LYNDERSAY

IT HASN’T been a good month for tech as the fallout from the shrinkage in the US technology sector creates continuing contractions and fractures in a growth surge that seemed unstoppable just a year ago.

On March 10, Microsoft closed Altspace VR as part of its retreat from non-core investments and projects operations.

Virtual reality worlds haven’t been doing particularly well lately, despite covid19 boosts for the technology.

I visited a local Altspace world in January 2021 at the invitation of Caesar’s Army, who commissioned the creation of a Caribbean beach party environment in the virtual space as a temporary pivot from its normal business of encouraging people to misbehave in public.

It proved a glitchy, surrealistic experience to meander around as an avatar with no legs and disembodied hands (https://bit.ly/3JzLR8z), but intriguing in a cooly distant way. In many ways, despite the familiar music and buzz of Trini party conversations, it felt like the dream-state version of a meat world Carnival party.

While Altspace proved to be a poor substitute for a soca jam, it turned out to be an inviting nexus for groups of young people with niche interests. LGBTQIA gatherings, church groups and independent music listening parties were quite popular spaces on the platform, measured by the e-mails notifications I saw.

An early social VR platform, Altspace opened its digital doors in 2015 and was bought by Microsoft in 2017.

Microsoft began laying off 11,000 workers in January and the refocus of the company’s business has also brought doubts about the corporate version of Altspace, Microsoft Mesh, as well as the company’s development of its Hololens technology.

Virtual reality has also been costing Meta big money. The company is reshuffling its Reality Labs R&D division after losing $10 billion in 2022.

The ripples of rationalisation also washed ashore at Amazon, which has announced 27,000 job cuts for the year

One of the products that’s been affected is the popular website DPReview, known for its in-depth reviews and testing.

Amazon bought the website in 2007, but announced last week that it would be shuttering the 25-year-old resource on April 10.

Beyond the reviews is a deep collection of discussions on the DPReview forums, where professionals and amateurs shared experiences and practical tips.

The closure is an odd move for Amazon, which also owns The Washington Post and certainly has the online server resources to maintain DPReview as an archived collection.

What’s causing all this shrinkage?

Concerns about excessive investment and irrational optimism about technology adoption during the covid19 epidemic might account for the layoffs, but there is an element of hard reality underpinning these reversals.

The failure of the Silicon Valley Bank (SVB), followed within days by the closure of Signature Bank by New York regulators, signalled concerns about the proximity of the volatile cryptocurrency market to traditional banking.

The SVB collapse, the second largest in US history, was precipitated by unprecedented withdrawals of uninsured deposits, a run that happened so quickly that it took only 24 hours for week-long negotiations with Goldman-Sachs to fall apart.

It took just seven days for the negotiations between Goldman and SVB to be neutered by a collapse of trust and another seven for the company to declare bankruptcy and be put into receivership by the Federal Deposit Insurance Corporation.

The kernel of the collapse, fuelled by fast-moving news about crypto contamination and rapid electronic withdrawals, happened in just 24 hours.

Why did a carefully managed portfolio sale (https://prn.to/3Z7Wx3X) lead to a major bank collapse?

It was announced on the same day that Silvergate Bank, a crypto-based lender, itself crippled by the collapse of crypto trader and hedge fund FTX, closed its doors. Four days later, regulators closed Signature Bank, which opened for cryptocurrency transactions in 2018.

That’s how long it took for a bank holding $209 billion US worth of assets, sitting at the centre of Silicon Valley venture capital strategy and representing at least half the venture capital invested in tech, to disappear as a business.

Altspace’s disappearance will shake confidence in the viability of virtual worlds as we experience them now.

Photographers are talking about taking their shopping elsewhere in the wake of the DPReview closure. The shake-up to the US banking system is almost certain to have consequences.

The world is more interconnected than we think.

Mark Lyndersay is the editor of technewstt.com. An expanded version of this column can be found there.