Meta passes the Reality Labs rubicon. At the start of this year, when Meta revealed Reality Labs’ financials for the first time—and that it had lost $10.2 billion on mixed-reality projects in 2021—it did so with a certain confidence. After all, this was a company that made $118 billion in revenue and nearly $47 billion in operating profit last year. It could afford to burn a bit of cash to bring about the future. But the economic picture in 2022 was never brighter than at the time of that first earnings release, and Meta would go on to observe its first-ever year-over-year decline in revenue just a few months later. Now, the Silicon Valley icon is ending its first full year as a metaverse company on the defensive, cutting headcount, reigning in costs, and leaving some shareholders to wonder if its big, futuristic bet is worth making.—DM

VC funding starts to drop. After the record-setting year VCs had in 2021, it really did seem like the VC funding chart could only go up and to the right. But Q1 2022 shattered that exuberant illusion, with investment falling by 13% year over year. And as public markets crashed and exit opportunities dried up, the trend only accelerated: VCs invested 27% less in Q2 and a whopping 53% less in Q3, as recession predictions changed from a matter of if to when. Funding fell by more than 50% in October and 69% in November, and 2022 is on pace to post a bigger year-over-year decline in VC funding than after the dot-com bubble and the Great Recession. It’s worth noting that there was a tremendous amount of money invested in startups in 2022—and record amounts of dry powder are waiting in the wings—but even still, this year represented a G-force level shift for startups, from “grow, grow, grow” to “hunker down.”—DM

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The semiconductor industry gets mixed messages. Just after the president signed his Joe Biden on the CHIPS Act in August, making official $52 billion in subsidies for an industry that had gotten zero in the two decades before, the monthslong chip shortage began morphing into a glut. One analyst told Bloomberg at the time that the coming semiconductor downturn would be “the worst in at least a decade, and possibly two.” The fallout has continued since then, with major players like Intel, Micron, and UMC slashing capex, revenue forecasts, production, and headcount in the back half of 2022. Chipmakers began 2022 flying high on record-breaking expansion; now they’re staring down a potential contraction.—DM

Tech’s golden era of growth sputters out. Fall was a tough season for the tech industry: Meta slashed 13% of its staff, Twitter reduced head count by at least half, Amazon began layoffs that could cut ~10,000 jobs total, and companies from Salesforce to Stripe laid off thousands more, resulting in more than 145,000 tech workers losing their jobs in 2022, per Layoffs.fyi. But layoffs were just part of the picture. From Alphabet to Amazon, tech companies announced plans in the fourth quarter to deprioritize experiments and focus on tried-and-true profit drivers, slow hiring, and “do more with less.” Many tech companies have chalked up their decisions to a market slowdown, a decline in ad spending amid recession fears, and rising energy and material costs. But some experts pointed to another potential reason: Tech companies overexpanded in recent years and were “running much faster than they should have,” as tech analyst Azeem Azhar put it to us.—DM, HF

OpenAI caps off a watershed year for generative AI. Less than a week after OpenAI debuted ChatGPT, its CEO announced that the viral conversational AI model had surpassed 1 million users. In many ways, the new internet darling picked up where OpenAI’s GPT-3 left off, but with a more streamlined user experience, better core inference abilities, and, reportedly, a new interaction paradigm. So far, the tool has been used to generate movie scripts, write niche essays, and answer coding questions. But like any powerful tool, it has sparked concerns about some potential dangers: for one, exhibiting harmful biases. ChatGPT is just the most recent in a series of major generative AI tools released this year, from image-generation models like DALL-E 2, Stable Diffusion, and Midjourney to video-generation ones like Meta’s Make-A-Video. After years of debate over AI hype, generative AI may represent a new phase for applied AI—and there’s no sign of a slowdown.—HF

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Stat: We have sent, including this newsletter, precisely 150 editions of this newsletter in 2022. Whether you opened one or all 150, we appreciate you.

Note: Again, a sincere thanks to all of you, our dear readers, for nerding out with us about the intersection of business and technology for yet another year. We (literally) couldn’t do this without you, and we appreciate you letting us occupy some space in your inbox each week.—Dan McCarthy, Emerging Tech Brew editor, to readers

Read: Here’s our recap of 2021, if you’re into the longitudinal thing.

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It’s time for our miniature version of the Readers’ Choice Awards. Behold, Emerging Tech Brew readers’ favorite stories from 2022:

• A primer on vertical farming, which is growing like a weed
• What it means to be a smart city in 2022
• Meet the man building the future of quantum for IBM, qubit by qubit
• Before layoffs hit Google-owned Looker, workers unknowingly trained their replacements
• Building a ’smart’ transportation system will require thinking beyond cars

And just to end this issue on a slightly less navel-gazey note, here are three of the top stories from Retail Brew, Marketing Brew, HR Brew, IT Brew, CFO Brew, and Healthcare Brew this year, hand-selected by their editors. Whew. That’s a lot of Brews!

• Major publishers are buying ads in mobile games like ‘Subway Surfers’ to juice traffic (Marketing Brew)
• Where digital health investors are aiming their money in 2023 (Healthcare Brew)
• Biometric monitoring is booming in the workplace, raising ethical and legal questions for HR (HR Brew)
• Tech CFOs have different priorities than their traditional company counterparts (CFO Brew)
• We went for a ride-along with a DHL driver to see what he thinks of its electric-vehicle fleet (Retail Brew
• Tech workers would rather quit than work for big brother bosses (IT Brew)

Catch up on the top Emerging Tech Brew stories from the past few editions:

• Three inflection points for tech in 2022
• A breakout year for AI art brings as many questions as answers
• The under-the-radar tech at the core of Matter’s smart-home platform