- From the White House to Wall Street, American technology companies extended their reach in 2017.
- SoftBank, Uber, Facebook and Amazon were among the most dynamic companies during the year.
From the White House to Wall Street, American technology companies extended their reach in 2017.
Amazon went from our mailboxes to our grocery stores and living rooms. Apple is nearly a trillion-dollar company with a bigger than General Electric and a services division the size of a Fortune 100 company. Google's search has become so dominant that it got by the European Commission. Facebook's billions of users are now accessing essential services like voter registration and suicide prevention through the platform. Entrepreneurs like Peter Thiel and Elon Musk are household names.
But the technology sector's runaway growth has also earned it significant pushback. Films like "The Circle" and "Ingrid Goes West" and TV shows like "Mr. Robot" and "Black Mirror," have depicted a burgeoning distrust of the industry. Real-life fumbles like a $400 juicer, and criticism from President Donald Trump, didn't help Silicon Valley's image.
Here are some of the top stories that shaped the sector's year.
10. SoftBank upends Silicon Valley venture capital and reinvigorates the start-up world with $100 billion
Japanese billionaire Masayoshi Son ended 2016 with a proclamation that then seemed outlandish: ambitions to launch a $100 billion technology fund. The idea (plus a rich commitment to create 50,000 U.S. jobs) landed Son a meeting with then president-elect Trump.
Outspoken venture capitalist Jason Calacanis joked that Silicon Valley start-ups were forgoing IPOs and looking to Son as their savior instead.
A year out, however, his SoftBank Vision Fund has climbed well above the punchline.
SoftBank has committed money toward everything from Slack to satellites to semiconductors, making giant funding rounds the "new normal" in Silicon Valley, even for mature companies. Nary an industry has been left untouched: insurance, ridesharing, co-working, robotics and even dog-walking.
Just one of SoftBank's investments — a $3 billion round in WeWork — counted for 17 percent of all investment in venture-backed companies in the third quarter, according to the National Venture Capital Association and PitchBook. Each of the top 3 rounds to U.S. companies in the third quarter were made by SoftBank, according to a report from PwC and CB Insights.
It was the best of times, it was the worst of times.
2017 was a year of have and have-nots among publicly traded technology companies. The so-called Big Five — Apple, Amazon, Microsoft, Facebook and Alphabet — all hit all-time high stock prices several times over in 2017, carrying the S&P technology sector beyond its previous dot-com bubble high in March 2000.
Apple, in particular, was virtually untouchable on Wall Street, reaching a valuation of almost $900 billion at one point, the highest of any publicly traded company in the world. Although the company was practically minting money, the prospects of the GOP tax reform and the launch of the much-anticipated iPhone X meant that analysts more or less overlooked Apple's major quarterly earnings reports for most of the year.
But investors did not extend that favor to up-and-comers like Snap, a social media darling that was expected to revive the market for technology IPOs. Shares shot up 44 percent in the March trading debut. But the stock tumbled, eventually falling below the IPO price, after disappointing quarterly earnings reports, as Facebook moved aggressively into disappearing messages and augmented reality, Snap's bread and butter.
While IPOs as a whole outperformed the S&P 500 this year, other venture-backed companies didn't fare much better against the Big Five. Blue Apron shares fell as low as $2.94 a share from a high of $11, as Amazon plunged headfirst into the grocery business with its purchase of Whole Foods. Stitch Fix was a rare bright spot, so far up 43 percent so far this month as of Wednesday's close.
"2017 has definitely been a very subdued year for IPOs," EquityZen CEO Atish Davda told CNBC's "Closing Bell." "People were expecting a roaring IPO year out of the gate."
While wide-eyed consumers watched dark shows like "Stranger Things" and "Black Mirror," executives were agonizing over a much scarier task — writing $1 billion checks.
Netflix said in October it expects to spend up to $8 billion in 2018 on content, $1 billion more than previously planned, amid an uptick in subscribers. Netflix — alongside rivals like YouTube, HBO Now and Hulu — is consistently among the top-grossing apps in the App Store.
That left rivals with a choice: Beat 'em or join 'em.
Disney was the highest-profile detractor, announcing in August that it would pull all its movies from Netflix and stand-alone video streaming services. And CEO Bob Iger wasted no time after the move was set in motion, agreeing to buy many parts of Twenty-First Century Fox for $52.4 billion in stock. Combined, the companies present a portfolio that includes "Star Wars" and "The Simpsons."
The competition for Netflix didn't stop there, as more and more companies have dabbled in "original content," among them Facebook, Apple and Snap.
Indeed, CEO Reed Hastings said, the market for content is so vast that the real competition for Netflix is sleep.
As Intel's 50th birthday approaches, the predictions of the company's co-founder, Gordon Moore, still echo.
Moore forecast explosive advancement as chipmakers put more and more components on smaller and smaller chips. But his namesake law came to be seen as a death knell for the semiconductor industry, with observers predicting that Moore's law had met its limits over the past five years.
But somehow, the semiconductor industry hasn't withered — indeed, it flourished this year.
If the tech industry has had a good year on Wall Street, the semiconductor field has had a better one. While the Technology Select Sector ETF is up 31.7 percent over the past year as of Wednesday's close, the iShares Semiconductor ETF and VanEck Vectors Semiconductor ETF are up more than 35 percent (both chip groups hit all-time highs at the end of November). Nvidia shares rose more than 80 percent over the past year, despite its triple-digit 2016 surge.
Analog Devices CEO Vincent Roche writes that the industry has been transformed by the fluid exchange of data between computing systems and the cloud, and by new business models of manufacturing. While PC sales are deflating, self-driving cars are putting the semiconductor industry on pace for its best year ever, according to electronics trade magazine EE Times.
Consumers are also playing a big role. AMD CEO Lisa Su told CNBC that gaming consoles, new Apple computers, and mining cryptocurrencies all have helped AMD's business. On Black Friday, she said, sales of AMD's Ryzen processors tripled from the previous year on Amazon and electronics retailing site Newegg.
And semiconductor companies are fighting hard for their share of the upside. Qualcomm is waging a battle against Apple on one hand, while it is embroiled in talks of a megamerger with Broadcom. Toshiba and Western Digital spent most of the year battling over chips, too. And some of Silicon Valley's top minds have abandoned big companies in search of the perfect AI chip.
Onlookers gave Uber a hard look this year amid sexual harassment allegations. That scrutiny uncovered deeper issues within the company that ultimately led to the departure of major executives and two prominent board members.
Even before former employee Susan Fowler posted a February blog entry about her negative experiences as a woman at Uber, the company was under a microscope.
The FTC fined Uber $20 million in January for misleading potential drivers. Critics on social media accused the ride-hailing company in January of undercutting taxi drivers protesting a controversial immigration policy enacted by Trump. Though Uber denounced the Trump travel ban, the company had already been criticized for "collaborating" with the president through Trump's Strategic and Policy Forum.
Then-Uber CEO Travis Kalanick stepped back from the president's council and pledged money toward fighting the travel ban. But that didn't stop the #deleteUber trend from taking off on social media.
Fowler's allegations fueled the fire. She wrote that her manager propositioned her, that complaints were consistently dismissed by human resources, and that even tasks like ordering branded leather jackets devolved into "comically absurd" diatribes on gender. February also marked the beginning of a vicious legal battle between Uber and Alphabet's Waymo over self-driving cars.
The bad news kept coming, including reports that Uber mishandled of a rape victim's medical records, allowed drug use at company events, and designed programs to mislead regulators. Other executives were also accused of misconduct, especially after a video in which Kalanick berated a driver. One executive was accused of sexual harassment at a previous job, others leased out cars that caught fire, and yet others took staffers to an escort bar, reports said.
More than 20 staff members were fired as part of an internal investigation. Regulators also stepped in to investigate some of the claims against Uber.
Kalanick and his top deputies ultimately resigned, as did board members David Bonderman and Bill Gurley, amid a lawsuit among several top investors. New CEO Dara Khosrowshahi revealed in the fall that a 2016 data breach affecting 57 million people had also been concealed by Uber.
The odds are pretty good that at least some of the private personal data you held dear at the start of 2017 is now in the hands of hackers — and the emails of some of the country's most prominent figures are, too.
Days before November 2016's presidential election, then-FBI Director James Comey announced the examination of new emails related to Hillary Clinton's personal email server.
Critics of the then-Democratic presidential candidate said her server was a cybersecurity risk and that she mishandled classified information. Clinton's proponents have pointed to the hacking of the Democratic National Committee's emails as Russian interference in the election, a debate that would continue into the new year.
In December 2016, consumers learned that more than 1 billion Yahoo users had their information stolen by hackers more than three years earlier. (Just a few months before the December announcement, Yahoo had disclosed a 2014 hack that affected 500 million user accounts).
In September, credit reporting firm Equifax revealed a breach exposing sensitive information of more than 145 million Americans — nearly half the country's population.
Hackers gained access to birth dates, Social Security numbers, credit card numbers, driver's license numbers and addresses. Several Equifax executives have since left the company, appeared before Congress and become the focus of federal investigations.
Once a leading internet company, Yahoo joined AOL at Verizon in June, and Yahoo chief executive Marissa Mayer exited the company. But the deal price was slashed by $350 million after the disclosure of the data breaches.
By October, Yahoo clarified the extent of previously reported hacks, and consumers learned that 3 billion users had been affected by its data breach — that's every single Yahoo user that existed in 2013.
And in November, Uber disclosed a hack affecting 57 million users and drivers on the pioneering ride-hailing app — a breach that the company had previously acted to cover up. The 2016 breach, performed by just two men, exposed the names, driver's license numbers, email addresses and phone numbers of both riders and drivers.
The year's stories about Russian-backed political ads — and other unsavory advertising practices — hit Facebook's reputation as the social network for friends and family.
After governmental inquiries, CEO Mark Zuckerberg was forced to apologize for saying the company could not have swung the presidential election. Facebook acknowledged at least 150 million Americans on Facebook and Instagram saw ads intended to influence the 2016 U.S. election bought by Russian groups. As a result, Congress has introduced proposals that could bring more scrutiny on Facebook, as well as other online companies.
Other troubling ad issues plagued the company, including allegations that its ad-targeting technology allows companies to racially discriminate and use derogatory terms to find potential customers. Facebook announced in September it would block ad targeting based on derogatory terms, and vowed to add more human reviewers to oversee the business.
On top of that, the company walked back a plan to change its ownership structure. Initially, the company proposed allowing Zuckerberg to sell millions of his shares but still have voting control. But shareholders filed a class-action lawsuit — and eventually, Facebook's proposal was withdrawn.
But perhaps worst of all for users? The company admitted in December that using the platform could be bad for your mental health under some circumstances. The study came after early investors, executives, and advertisers all commented publicly about Facebook's approach to mental health or addiction over the course of the year.
Uber whistleblower Fowler was one of the first in a series of sexual harassment allegations that became public in the business community in 2017. There had long been a "whisper network" among women in technology-related fields, and complaints from women like Ellen Pao had made headlines in the past.
But 2017 brought a new rawness to technology industry's gender imbalance.
Venture investors like Chris Sacca and Dave McClure were accused of sexism, and McClure resigned from 500 Startups, a tech incubator he co-founded. Binary Capital partner Justin Caldbeck also resigned after he was accused of making advances toward six businesswomen.
Still, the departure of many offenders did not leave Silicon Valley with a clean slate.
Google engineer James Damore penned an extensive document on the left-leaning culture of the company, using the biological differences in sexes as evidence that diversity training may have gone too far.
Google fired Damore, but he remains a divisive figure and a personification of the discord within technology companies.
The world ushered in its new richest man, Amazon founder Jeff Bezos, in 2017 — and it truly seemed like there was nothing he couldn't do.
Take it from Netflix, which competes with Amazon in streaming content:
"They are so scary," CEO Reed Hastings told CNBC. "Everything Amazon does is so amazing. How are they doing so many business areas so well? We are continuing to watch them and be impressed with them."
"They are awfully scary, I would say," he added.
Amazon's June agreement to purchase of Whole Foods took the world by surprise, but plenty of other milestones didn't.
Its e-commerce business posted its best "Prime Day," Cyber Monday and holiday season ever. And Amazon's dominance of the cloud industry continued, as Amazon Web Services snagged clients like Turner, Expedia, Disney and the NFL.
Not to mention a rush of new hardware inspired by the almost instant ubiquity of smart voice assistant Alexa. A couple of them — including the Amazon Fire HD 10 tablet and the Echo Spot — were among our favorite products of the year.
You probably know by now that bitcoin is on a ridiculous run this year, up 15-fold as of Wednesday, even after tumbling to $15,000 from its recent high of over $19,000. It's the digital asset that nobody knows how to value and, depending on who you believe, will either trade down to zero or reach $1 million by 2020.
But 2017 wasn't just about bitcoin. It was the year we learned all about ethereum, another blockchain-based platform that has its own skyrocketing cryptocurrency (up almost 100-fold in 2017). And there's this crazy thing about ethereum — it enables the creation of tons of new and niche cryptocurrencies, whether for buying and selling cloud storage, sharing virtual reality content, facilitating cannabis transactions or letting people get paid for offering up results of DNA tests.
According to research firm Autonomous Next, crypto projects raised over $3 billion this year in so-called initial coin offerings, up from just $222 million in 2016. Some start-ups raised tens or hundreds of millions of dollars in a matter of hours, with only a white paper, a following on chat app Telegram and the promise of building some wild new network.
The regulators have started hovering. China and South Korea have cracked down on ICOs, while the U.S. SEC has put the kibosh on some offerings and made clear that it won't stand for unregulated sales of securities.
Despite the volatility and many other risks that come with new forms of digital money, talk to a cryptocurrency enthusiast and you may come away convinced that decentralized currencies that are not reliant on the availability of dollars and euros, and that don't get revalued based on the whims of certain governments and strength or weaknesses of various economies, are a global inevitability.
If you're not careful, you may even start using the phrase, "internet of money."
— CNBC staff contributed to this report.
Disclosure: Comcast, which owns CNBC parent NBCUniversal, is a co-owner of Hulu.