| | | | | | | Presented By Instagram | | | | Axios AM | | By Mike Allen · Jan 06, 2023 | | Happy Friday! Smart Brevity™ count: 1,497 words ... 5½ minutes. Edited by Noah Bressner. | | | | | | 1 big thing: Tech's new shock |  | | | Illustration: Shoshana Gordon/Axios | | | | Silicon Valley has always followed a boom-bust rhythm. But the most recent boom ran so long, many top players started to act immortal. - So this torrent of layoffs is a sharp, shocking comedown for an industry that stood on top of the world just a year ago, Axios' Ina Fried writes in her weekly column, "Signal Boost."
"It's been a more than decade-long party," said Margaret O'Mara, a University of Washington professor who studies the history of the technology industry. - There was an assumption, O'Mara says, that pandemic-related behavior changes, such as the shift to remote work and buying groceries online, would just continue.
- That led many tech companies to go on a hiring spree during the pandemic. The parent companies of both Facebook and Google grew more than 20% last year. Other large tech companies doubled during the pandemic.
🧮 By the numbers: Across the industry last year, more than 1,000 tech companies laid off more than 150,000 people, per Layoffs.fyi. What's happening: Inflation hit, the Fed raised interest rates and the economy softened dramatically — just as many people were returning to pre-pandemic methods of working and shopping. - Tech, for all its vast scale and high profit margins, was never going to be immune from that kind of shift.
- Online advertising has been hit particularly hard: Google, Meta, Microsoft and others saw a pronounced slowdown beginning in mid-'22. Many tech companies started by slowing or freezing hiring — but shifted quickly to layoffs once the broader downturn was clear.
🔬 Zoom in: The chip sector, whose products had been in short supply, is now having to deal with a glut. - Micron said in December it would cut 10% of employees, and Intel is said to be weighing cuts that could be even deeper.
- Intel has already made a small number of job reductions, and announced plans to cut billions of dollars in costs — which means more layoffs.
🥊 Reality check: This isn't the dot-com bust, especially for the biggest companies. While the job cuts are significant, large tech companies are still vital to the economy and they are still making lots of money. - The layoff numbers suggest retrenchment rather than collapse.
Share this story. |     | | | | | | 2. 🏛️ Dems link 1/6 to speaker fight | | Screenshot: CNN Today, Jan. 6, House Democrats are connecting the second anniversary of the Capitol insurrection to the speakership war by 20 House GOP rebels. - Why it matters: Dems contend the fight, which at noon enters Day 4, shows how little progress has been made toward congressional civility, Axios' Alayna Treene reports.
Axios talked to several members of the Gallery Group — roughly 20 House Democrats who formed an impromptu support group after huddling together in the House Gallery on Jan. 6, 2021. - "The whole campus is aware of this juxtaposition of these two dates and what they're attempting to do, which is to disrupt our democracy," said Rep. Annie Kuster (D-N.H.).
- Rep. Jason Crow (D-Colo.): "It was the government shutdown in '19, the insurrection of '21, and now the current chaos of '23."
 Data: Office of the House Clerk. Chart: Axios Visuals 🥊 I asked one key McCarthy ally the over-under on final number of ballots. The reply: "As long as it takes." What's happening: The House adjourned last night after the 11th failed ballots for House Republican Leader McCarthy — but with Republican leaders saying they're optimistic about a deal. - McCarthy said: "I'm not putting any timeline on it. We've got some progress going on. Members are talking."
The last time a speaker fight went this many ballots was 1859. | | | | | | | | 3. Banner year for prescription drugs |  | | | Illustration: Sarah Grillo/Axios | | | | A group of pricey breakthrough prescription drugs are poised to shake up the market this year — including an Alzheimer's treatment that could be approved today by the FDA, Caitlin Owens writes for Axios Vitals. - Why it matters: The drugs offer hope to patients with hard-to-treat conditions like Alzheimer's or sickle cell disease, or who struggle with obesity. But their potentially eye-popping prices are sure to create dilemmas for insurers, government programs and patients themselves.
⚡ What's happening: The FDA is expected to decide today whether to approve Eisai and Biogen's lecanemab — a treatment for Alzheimer's disease, setting into motion another round of debate over how much the drug should cost and whether Medicare should cover it. - That would become the second FDA-approved Alzheimer's treatment targeting amyloid plaques that are believed to contribute to the development of the disease. But it isn't likely to cause as much controversy as Biogen's Aduhelm did when it was approved in 2021.
🔮 What's next: The drug pipeline is brimming with other experimental cures that could make headlines this year. - Data for another promising Alzheimer's treatment by Eli Lilly, similar to lecanemab, is expected midyear, per a recent Cowen research note. Medicare will need to revisit coverage for the entire class of drugs.
- Several multimillion-dollar gene therapies have already been approved. But this year, the pipeline includes two treatments for sickle cell disease, which has a much larger patient population.
- Clinical trial results for Eli Lilly's obesity drug candidate are also expected in April, potentially ushering a new entrant to what could become a booming market.
Priscilla VanderVeer, vice president of public affairs at PhRMA, said: "We're fortunate there are so many treatments in the pipeline that promise to transform the quality of care for people with devastating diseases. While we recognize there are concerns about cost, the facts point to a health care system that can sustain this incredible innovation over the long haul." | | | | | | | | A message from Instagram | | Explore 30+ Instagram tools helping teens have positive experiences | | |  | | | | Teens' experiences on Instagram should be positive and supportive. That's why we have tools to help teens see less sensitive content and help them spend less time on our platform. Learn more about our tools and set them up with your teen today. | | | | | | 4. ✈️ Southwest meltdown could help fliers |  | | | Illustration: Shoshana Gordon/Axios | | | | Regulatory threats and competitive pressure after Southwest Airlines' disastrous holiday meltdown will make it easier for travelers to assert their rights, Axios transportation correspondent Joann Muller writes. - Why it matters: Nearly 1 in 4 U.S. flights was canceled or delayed in the first nine months of '22, according to Transportation Department data.
What's happening: Southwest's meltdown reignited drives for an Airline Passengers' Bill of Rights. - Sen. Richard Blumenthal (D-Conn.) is re-upping a bill he introduced in 2021 that would ensure that airlines give refunds and compensation for extra costs caused by delayed or canceled flights and lost luggage.
- "Rental cars, hotel, meals — no questions asked, money back," Blumenthal said.
Transportation Secretary Pete Buttigieg is threatening to crack down on Southwest if the airline fails to take care of affected customers. - "No amount of financial compensation can fully make up for passengers who missed moments with their families that they can never get back," Buttigieg wrote to Southwest CEO Bob Jordan.
In a "goodwill gesture," Southwest is awarding an undisclosed number of customers 25,000 "Rapid Rewards" points — worth $300 toward a future flight — on top of other refunds and reimbursements. | | | | | | | | 5. 🚘 Fewer cars, bigger profits |  Data: FactSet. Chart: Axios Visuals Automakers sold just shy of 14 million new vehicles in 2022 — well below the nearly 18 million annual sales rate in the years before the pandemic. - That was the lowest figure in over a decade — since 2011, The Wall Street Journal reports (subscription).
But through the third quarter — the last with available data — profits in the domestic-manufacturing category that includes automakers were at their highest level since 2016, Matt Phillips writes for Axios Markets. 💡 What's happening: The pandemic seems to have pushed the U.S. auto business away from its previous habit of over-producing cars — then discounting them to move them off the lot. - Car makers' new business model stresses low production, high prices and fat profit margins.
The bottom line: Consumers now have fewer choices at higher prices. | | | | | | | | 6. "Atmospheric river" swamps California | | Satellite view of atmospheric river storm approaching California on Wednesday. Image: CIRA/RAMMB With Northern California reeling from an extreme "atmospheric river" storm, multiple disturbances are set to spin up across the North Pacific in coming weeks, Axios' Andrew Freedman reports. - Raging seas damaged historic piers, rock and mudslides closed down highways, and deep snow piled up at ski resorts, in the latest in a series of atmospheric rivers — long plumes of moisture stretching far over the Pacific — to reach the drought-stricken state. (AP)
Photo: Josh Edelson/AFP via Getty Images A car navigates a flooded road yesterday in Sebastopol, Calif., in Sonoma County. | | | | | | | | 7. 💻 Delta to offer free Wi-Fi |  | | | Illustration: Sarah Grillo, Rebecca Zisser/Axios | | | | Delta is set to become just the second major U.S. airline to offer free Wi-Fi, after JetBlue, Axios' Herb Scribner writes. - Delta plans to start the service on domestic flights Feb. 1 — and says more than 700 planes in its fleet will offer the perk by the end of '23.
Share this story. | | | | | | | | 8. 🏈 Bills' Hamlin getting better | | An artist's portrait of Damar Hamlin hangs outside University of Cincinnati Medical Center, where he's being treated. Photo: Joshua A. Bickel/AP The NFL canceled the Bills-Bengals game it suspended on Monday after Buffalo safety Damar Hamlin went into cardiac arrest on the field, Axios' TuAnh Dam reports. - "This has been a very difficult week," commissioner Roger Goodell said, adding that the decision was "difficult, but necessary ... under these extraordinary circumstances."
Hamlin is now awake and making "substantial progress," his doctors at University of Cincinnati Medical Center said: - He can't speak, since he remains on a breathing tube. But he has been communicating through writing — and can move his hands, feet and head.
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