this post was submitted on 07 Jun 2023
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From everything I have observed, businesses are hunkering down for a recession in the next fiscal year. It explains the lay offs, the penny pinching, and puzzling decisions that look like business suicide.
For services that are free for users, advertising revenue and investment fund raisers are the only thing keeping them afloat. With banks like SVB getting seized by the FDIC, it's starting to scare investors. Advertisers are seeing the writing on the wall that people will stop spending as much as they used to. We are also probably seeing jacked up pricing across the board because businesses are taking what they can before it's gone.
So what's left? Squeeze users for money. Additionally, shed users that actually cost them money and these tend to be power users. The question, which everyone seems to be assuming is a foregone conclusion, is if this shedding strategy will end up killing the service. In reality, we don't know but the idealists would sure feel good if someone else ate their market share.
I'm just glad that federation is picking up steam in the social media space.
I agree with most of what you said. I would say classifying SVB as a seizure is probably not accurate. The FDIC only came in when it was clear SVB was going to fold and in fact insured far more than the 250k per account guaranteed. Mainly to try and stem a run on midsize banks because
Many companies had large holdings, undiversified in these banks
The banks were borderline negligent with how they handled those deposits, sticking them all in “safe” government bonds that ruins liquidity.
Once the interest rate on the bonds was lower than the base borrowing rate, no one would buy the bonds instead of just buying new bonds with a much higher guaranteed return.
So, given that, I would say the FDIC instead bailed out the banks. Something they would never do for you or I, or even a business with similar valuation as any of the banks customers.