23 Predictions for 2023: Tech, Policy and Economics Forecast
This year, I had the opportunity to take Joe Simmons’ Managerial Decision Making course as part of my MBA at the Wharton School. Among other approaches to improving judgments and decisions, the course includes a module on forecasting. I had a chance to try my own hand at it as the class competed to estimate the likelihood of about 50 events. Forecasting, it seems, is all the rage these days as we wind down the year 2022, so I thought, why not attempt a few more predictions about stuff that I actually know something about (tech, media, economics, and foreign policy) though I’m hardly an expert.
I’ll admit that some of the forecasts are bolder than others, but the more predictable events give me an opportunity to note some of the interesting things that are likely to happen that are worth keeping an eye on. To further negate the effect of so-called “obvious” predictions, I’ve also included my estimate of the percentage likelihood of the event occurring. This is not to “hedge” but actually adds additional value to the prediction. When I grade my predictions a year from now, I’ll use a scoring methodology called Brier scores to assess my accuracy (I’ll do a follow-up post about how these work). As very few of the articles and Twitter posts that make predictions actually talk about the dependencies, underlying assumptions, and sensitivities of their forecasts, I thought I would include a few notes on them as well. Now, onto the forecast:
Tech, Media & Apps
1. TikTok won’t be banned in the US (80% likely)
Though there is a lot of chatter about this, the past actually shows very little precedent for banning consumer apps across the board. There isn’t much support for a flat-out ban of one of the country’s most popular digital products. Though some politicians will inevitably see it as a way to score points with their constituents, I’d actually see the potential downside as being higher. Of course, if this does happen, it would be a boon for potential competitors such as Meta (Instagram Reels) and Alphabet (YouTube Shorts).
2. Web3 finds use cases in advertising and marketing (70%)
2022 was the year for the Web3-skeptic. I don’t know that the vibe will change any time soon, but if there’s one use case I had to bet on delivering meaningful innovation, it would be marketing and advertising. The space is still in limbo with its new privacy paradigm, and blockchain does offer real promise, whether as an engine for ad attribution, publishing or digital collectibles. This one’s hard to measure, but I have a sense at least one major tech company deploys a solution in this space, a start-up reaches a $xxxM valuation, or gets acquired.
3. Sports streaming finds a home at Amazon (70%)
If I learned anything from this year’s stunning World Cup, it’s that sports streaming is still woefully inconvenient at best. Sure, you can get the major channels through digital TV bundles, but none of the 10 largest streaming services offers significant sports content, meaning yet another subscription for most consumers at a time of subscription fatigue. At a minimum, I’m expecting a major move in this space. For the sake of being bold, I could really see Amazon making a major play here (reinvigorating a declining ESPN, perhaps?). The biggest threat to this by far is likely to be regulatory risk — more on that later.
4. More premium content will sell ads or bite-sized purchases (90%)
Speaking of subscription fatigue, 2022 was also a year of substantial changes in the publishing and streaming media space. Subscriber growth slowed down for most of the major services, and I expect this to continue. Even non-subscription premium services, such as Uber or Doordash, saw core revenue growth slow, but both have significant opportunities selling media on billions of impressions worth of traffic. As Eric Seufert writes, everything is an ad network.
Disclaimer: My company, Keye, helps companies grow revenue by selling flexible subscriptions on our marketplace.
5. Disney sells its stake in Hulu (70%)
In 2024, Comcast will have the contractual right to make Disney buy its minority stake in Hulu, which Disney will likely want to avoid. Though Bob Iger, who led Disney’s expansion into streaming with both Disney+ and Hulu, may want to grow the company’s footprint, I think he’ll see more financial sense in boosting the company’s valuation via a divestiture on the distribution side. Now is the time to hunker down, invest in content and strengthen the brand platform.
6. BeReal tries to sell at a discount to its $600M valuation (70%)
The breakout social app of 2022 is in the rare position of being flush with money during a cash crunch in the world of consumer apps. It’s quite possibly past its prime in terms of user growth and seems to be unwilling to ship new features quickly. If it can’t improve retention soon, I don’t think it will be able to maintain its latest series B valuation. In fact, it should be willing to sell to any number of firms looking to improve their footprint with Gen Z. But if regulation and financial conditions continue to tighten, will a deal actually come together?
7. AI takes center stage at Google I/O (80%)
This is perhaps the most boring prediction here, as AI has all the buzz going into the new year. I’d join the chorus of those estimating that Google has a powerful, uncommercialized base of capabilities in AI and ML, which it will now be under more pressure to bring to light. Alphabet’s biggest strength versus competitors such as OpenAI? Its product breadth and developer community, both of which lead me to think it will make a big push to shift capabilities from the enterprise cloud business to the broader consumer and SMB market at its signature conference. Disclaimer: I don’t actually know what’s going to happen here, and it’s been nearly 2 years since I left Alphabet.
Tech Policy
8. Section 230 gets a second (third?) look in Congress (80%)
February is the month to watch SCOTUS, then Congress. Two major big tech cases (Twitter and Google) are finally scheduled for arguments, both regarding Section 230, and its implications for platform safety and responsibility. This is sure to kick up the usual dust of quotes and sound bites from members of congress wanting a new look at the statute — and I think they might get it. With Congress in a stalemate, this might be the one area where bipartisan committees can get something done next year.
9. Brussels loses influence as the world’s tech regulator (80%)
Starting with GDPR, the European Commission has driven the tech regulation narrative since at least 2016. With DMA gatekeeper status coming into effect in May 2023, there is still more to come next year. That said, much of the momentum is now shifting to Washington, where a divided government is slated to review everything from antitrust to Section 230. I think the EU will still be a pioneer — for example, they could propose new regulation for AI platforms — but the media narrative will shift to Washington, and these decisions will have greater impact.
10. US-EU collaboration in data regulation will increase (90%)
Between data privacy, taxes and antitrust, the EU’s tech agenda is simply too ambitious to continue to go it alone. Take the new US-EU Data Privacy Framework — I expect it will be approved by the European Court of Justice and come into effect by mid-year. The DMA will continue to roll out, but delivering meaningful change to consumers will require input from the EU’s American counterparts. I’m doing more work in this space and will share more in a few months’ time.
11. The FTC sues Amazon — at least once (90%)
With outstanding cases against Meta and Google, it’s only a matter of time before the FTC’s investigations of Amazon over deals like MGM lead to a major suit against the e-commerce giant. If anything, it would be ironic if Chair Lina Khan didn’t take action on the company that essentially served as her platform (no pun intended) for nomination to the office in the first place. In the meantime, I don’t think this threat will stop big tech companies from continuing to try to grow through acquisition, as the rules for antitrust in tech remain relatively undefined.
12. The FTC loses its case against Microsoft’s purchase of ABK (80%)
This lawsuit parallels Facebook in that Microsoft isn’t actually anything close to a monopolist in the industry in which its acquisition takes place. Of course, taking a harder tack against horizontal purchases wouldn’t be so extreme, as the EU and UK have taken more of a consumer welfare approach to antitrust for some time. I’m just not sure the current US courts are ready to make that leap. If the FTC does indeed lose, this case could end up being a major blow to the administration’s desire to expand the definition of antitrust to go beyond traditional monopolies.
Economics
13. US tech companies increase hiring overseas (60%)
The effects of a strong dollar will dovetail with higher growth rates overseas and the implications of scalable AI solutions. Pressure to improve margins, whether from Wall Street or VCs, could drive a combination of scaling revenue growth globally with outsourcing driven by the desire to cut costs. We’ve just started talking about the effects of greater automation on the workplace, but an important outcome could be that outsourcing becomes even more efficient. The biggest threat to my prediction might be a global recession, which would slow hiring across the board.
14. The “new FAANG” gains broader acceptance (fuel, agriculture, aerospace, nuclear, green energy) (80%)
In the fallout of the crypto collapse and decreased confidence in tech stocks, I see a narrative forming around a desire for “real” growth. If 2021–2022 was a speculative bubble based on ideas and yet-to-be-proven business models, economists and politicians seem to be agreeing more and more that future growth will come from things that matter today. Infrastructure, whether relevant to energy, food, or industry, is receiving levels of investment unseen in the last 20 years. I think this trend will continue for some time.
15. Commodity and durable prices remain high (80%)
Because of this, the underlying materials are becoming more important. Notably absent from my predictions is inflation. I’ll let the Fed do its job. But I will make one claim in this realm — commodities and durable goods will keep inflation a bit higher than it would normally be. While supply chain issues have vastly improved, the global trade network is still undergoing massive rewiring. The re-opening of China will place additional upward pressure on oil and gas demand, where supply is already looking constrained for next winter.
16. US government budget increases as a % of GDP (90%)
A confluence of factors stemming from an expected recession will cause GDP growth to dip and relative public spending to increase. If the recession is bad, this ratio will get even bigger. In 2022, the Biden administration cut its spending proposals as inflation dominated the narrative, but if the Fed gets this under control, we could end up in a new high government investment environment.
17. House prices come down more than expected, especially in the UK and Canada (90%)
All of the data points toward a cheap money-fueled housing boom during the pandemic. For better or worse, this is coming to an end as interest rates go up. New construction looked surprisingly strong in the latest reports, so I could see this leading to 10%+ drops in prices in areas where home prices were especially inflated.
18. The S&P500 ends the year above 4,100 (60%)
This estimate is an optimistic one by most measures. My hope is we are well underway having tamed inflation. The Fed has to keep reiterating its commitment to keeping rates high, but a pivot will happen at some point next year, especially if signs of a recession become clearer, which should translate to a better-than-expected recovery in prices. I also think some tech stocks were hit unfairly hard (Tesla, for example, is nearly back to pre-pandemic valuations, though that’s another story).
Politics, Foreign Policy & Energy
19. Solar energy falls below $1.50/Watt in the US (80%)
New investment highs from the Inflation Reduction Act and European Green Deal will deliver breakthroughs in energy technologies that converge with climate policy to break the energy trilemma. Solar energy, in particular, will establish itself as the cheapest source of energy globally, and supply chain issues will free up production. Batteries, however, will need to move front and center as both a new source of jobs but also a realm of debate for improved economics, sustainability, and ethics.
20. De-globalization drives fintech innovation and weakens sanctions (70%)
This is a multilayered one. In short, the way the global financial system intersects with diplomacy is changing. China, Russia, and Iran are hardening themselves to sanctions such as SWIFT removal. In response, institutions such as the UN or another major NGO will look at digital currencies and crypto more closely. Fragmentation in financial systems may also lead to new startups addressing use cases such as remissions payments.
21. A successor to Joe Biden emerges (60%)
Honestly, I think there’s a good chance the Democrats will re-nominate Joe Biden. That said, I think it’s more likely we’ll see a clear successor emerge within the year in the form of endorsements from leadership. If Biden’s first term was about getting us back to normal, the party will want a fresh face to bring the country back to economic growth and prosperity. Given the mess of the 2020 primaries and the expected closeness of the race, the party needs to consolidate behind a clear leader sooner rather than later. As to who it will be, I’ll leave that to the pundits.
22. In Ukraine, progress towards peace, but not the final chapter (70%)
Given the wartime fatigue that is now entrenched among both combatants (and their backers), I think the calls for a push for peace will grow ever stronger. Unfortunately, I also think both sides will want to find ways to keep fighting. Historic conflicts in Chechnya and the Caucasus tell us these are rarely one-year affairs. I hope escalation can be avoided, but new fronts may be opened, such as via increased cyber attacks.
23. Wins for democracy around the world (90%)
If some of these predictions were bold for the sake of boldness, call this one optimistic for the sake of optimism. People in China and Iran will accrue new freedoms through peaceful protest, and narratives of election fraud will fade from major Western nations, especially the US. Several nations totaling nearly 3 billion people, including India, Pakistan, Nigeria, Bangladesh, Turkey, and Argentina, will transition power peacefully. While democracy around the world will continue to be tested, I think we’ll see many institutions prove themselves to be both stronger and more democratic than we thought.
I’m looking forward to seeing how accurate I turn out to be, and I’ll be sure to follow up with a post on my Brier scores next year. In the meantime, I’ll be keeping an eye on these events and seeing how they play out in 2023.
