Editing Dot-com bubble (section)

==Bursting the bubble==
{{see also|Early 2000s recession}}
[[File:U.S. Treasuries.svg|thumb|400px|right|Historical government interest rates in the United States]]

Nearing the turn of the 2000s, spending on technology was volatile as companies prepared for the [[Year 2000 problem]].  There were concerns that computer systems would have trouble changing their clock and calendar systems from 1999 to 2000 which might trigger wider social or economic problems, but there was virtually no impact or disruption due to adequate preparation.<ref>{{cite web |author1=Marsha Walton |author2=Miles O'Brien |author2-link=Miles O'Brien (journalist) |date=1 January 2000 |title=Preparation pays off; world reports only tiny Y2K glitches |website=CNN |url=http://archives.cnn.com/2000/TECH/computing/01/01/y2k.weekend.wrap/index.html |archive-url=https://web.archive.org/web/20041207152504/http://archives.cnn.com/2000/TECH/computing/01/01/y2k.weekend.wrap/index.html |archive-date=7 December 2004}}</ref> Spending on marketing also reached new heights for the sector: Two dot-com companies purchased ad spots for [[Super Bowl XXXIII]], and 17 dot-com companies bought ad spots the following year for [[Super Bowl XXXIV]].<ref>{{Cite web |last=Beer |first=Jeff |date=2020-01-20 |title=20 years ago, the dot-coms took over the Super Bowl |url=https://www.fastcompany.com/90453258/20-years-ago-the-dot-coms-took-over-the-super-bowl |url-status=live |archive-url=https://web.archive.org/web/20200302153230/https://www.fastcompany.com/90453258/20-years-ago-the-dot-coms-took-over-the-super-bowl |archive-date=2020-03-02 |access-date=2020-03-02 |website=Fast Company |language=en-US}}</ref>

On January 10, 2000, [[America Online]], led by [[Steve Case]] and [[Ted Leonsis]], announced a [[mergers and acquisitions|merger]] with [[Time Warner]], led by [[Gerald M. Levin]]. The merger was the largest to date and was questioned by many analysts.<ref>{{cite news |url=https://money.cnn.com/2000/01/10/deals/aol_warner/ |title=Thats AOL folks |first=Tom |last=Johnson |work=[[CNN]] |date=January 10, 2000 |access-date=October 29, 2018 |archive-date=December 11, 2017 |archive-url=https://web.archive.org/web/20171211200333/http://money.cnn.com/2000/01/10/deals/aol_warner/ |url-status=live }}</ref> Then, on January 30, 2000, 12 ads of the 61 ads for [[Super Bowl XXXIV]] were purchased by dot-coms (sources state ranges from 12 up to 19 companies depending on the definition of ''dot-com company''). At that time, the cost for a 30-second commercial was between $1.9 million and $2.2 million.<ref>{{Cite news |url=https://www.sfgate.com/business/networth/article/Dot-Com-Super-Bowl-Advertisers-Fumble-But-Down-2739134.php |title=Dot-Com Super Bowl Advertisers Fumble / But Down Under, LifeMinders.com may win at Olympics |last=Pender |first=Kathleen |website=[[San Francisco Chronicle]] |date=September 13, 2000 |access-date=March 2, 2020 |archive-date=March 2, 2020 |archive-url=https://web.archive.org/web/20200302153229/https://www.sfgate.com/business/networth/article/Dot-Com-Super-Bowl-Advertisers-Fumble-But-Down-2739134.php |url-status=live }}</ref><ref>{{Cite news |url=https://nymag.com/intelligencer/2019/02/ads-2000-dot-com-super-bowl.html |title=Revisiting the Ads From 2000's 'Dot-Com Super Bowl' |last=Kircher |first=Madison Malone |work=[[New York (magazine)|New York]] |date=February 3, 2019 |access-date=March 2, 2020 |archive-date=March 2, 2020 |archive-url=https://web.archive.org/web/20200302153232/https://nymag.com/intelligencer/2019/02/ads-2000-dot-com-super-bowl.html |url-status=live }}</ref>

Meanwhile, [[Alan Greenspan]], then [[Chair of the Federal Reserve]], raised interest rates several times; these actions were believed by many{{Weasel inline|date=October 2024}} to have caused the bursting of the dot-com bubble. According to [[Paul Krugman]], however, "he didn't raise interest rates to curb the market's enthusiasm; he didn't even seek to impose margin requirements on stock market investors. Instead, [it is alleged] he waited until the bubble burst, as it did in 2000, then tried to clean up the mess afterward".<ref>{{cite book |first=Paul |last=Krugman |author-link=Paul Krugman |title=The Return of Depression Economics and the Crisis of 2008 |url=https://archive.org/details/returnofdepressi00krug |url-access=registration |publisher=W.W. Norton |year=2009 |isbn=978-0-393-33780-8 |page=[https://archive.org/details/returnofdepressi00krug/page/142 142]}}</ref> Finance author and commentator [[E. Ray Canterbery]] agreed with Krugman's criticism.<ref>{{cite book |first=E. Ray |last=Canterbery |title=The Global Great Recession |publisher=World Scientific |year=2013 |isbn=978-981-4322-76-8 |pages=123–135}}</ref>

On Friday March 10, 2000, the NASDAQ Composite stock market index peaked at 5,048.62.<ref>{{cite magazine |url=https://www.wired.com/2010/03/0310nasdaq-bust/ |title=March 10, 2000: Pop Goes the Nasdaq! |first=Tony |last=Long |magazine=[[Wired (magazine)|Wired]] |date=March 10, 2010 |access-date=March 8, 2018 |archive-date=March 8, 2018 |archive-url=https://web.archive.org/web/20180308234508/https://www.wired.com/2010/03/0310nasdaq-bust/ |url-status=live }}</ref> However, on March 13, 2000, news that [[economy of Japan|Japan]] had once again entered a [[Lost Decades|recession]] triggered a global sell off that disproportionately affected technology stocks.<ref>{{cite news |url=https://money.cnn.com/2000/03/13/markets/markets_newyork/ |title=Nasdaq tumbles on Japan |work=[[CNN]] |date=March 13, 2000 |access-date=October 29, 2018 |archive-date=October 30, 2018 |archive-url=https://web.archive.org/web/20181030035814/https://money.cnn.com/2000/03/13/markets/markets_newyork/ |url-status=live }}</ref> Soon after, [[Yahoo!]] and [[eBay]] ended merger talks and the Nasdaq fell 2.6%, but the [[S&P 500]] rose 2.4% as investors shifted from strong performing technology stocks to poor performing established stocks.<ref>{{cite news |url=https://money.cnn.com/2000/03/15/markets/markets_newyork/ |title=Dow wows Wall Street |work=[[CNN]] |date=March 15, 2000 |access-date=October 29, 2018 |archive-date=October 30, 2018 |archive-url=https://web.archive.org/web/20181030111050/https://money.cnn.com/2000/03/15/markets/markets_newyork/ |url-status=live }}</ref>

On March 20, 2000, ''[[Barron's (newspaper)|Barron's]]'' featured a cover article titled "Burning Up; Warning: Internet companies are running out of cash—fast", which predicted the imminent bankruptcy of many Internet companies.<ref>{{cite news |url=https://www.barrons.com/articles/SB953335580704470544 |title=Burning Up; Warning: Internet companies are running out of cash—fast |first=Jack |last=Willoughby |work=[[Barron's (newspaper)|Barron's]] |date=March 10, 2010 |url-access=subscription |access-date=March 30, 2018 |archive-date=March 30, 2018 |archive-url=https://web.archive.org/web/20180330001927/https://www.barrons.com/articles/SB953335580704470544 |url-status=live }}</ref> This led many people to rethink their investments. That same day, [[MicroStrategy]] announced a revenue restatement due to aggressive accounting practices. Its stock price, which had risen from $7 per share to as high as $333 per share in a year, fell $140 per share, or 62%, in a day.<ref name=micro>{{cite news |url=https://money.cnn.com/2000/03/20/companies/microstrategy/ |title=MicroStrategy plummets |work=[[CNN]] |date=March 20, 2000 |access-date=October 29, 2018 |archive-date=October 11, 2018 |archive-url=https://web.archive.org/web/20181011172038/https://money.cnn.com/2000/03/20/companies/microstrategy/ |url-status=live }}</ref> The next day, the Federal Reserve raised interest rates, leading to an [[inverted yield curve]], although stocks rallied temporarily.<ref>{{cite news |url=https://money.cnn.com/2000/03/21/markets/markets_newyork/ |title=Wall St.: What rate hike? |work=[[CNN]] |date=March 21, 2000 |access-date=October 29, 2018 |archive-date=October 11, 2018 |archive-url=https://web.archive.org/web/20181011162024/https://money.cnn.com/2000/03/21/markets/markets_newyork/ |url-status=live }}</ref>

Tangentially to all of speculation, Judge [[Thomas Penfield Jackson]] issued his conclusions of law in the case of [[United States v. Microsoft Corp. (2001)|''United States v. Microsoft Corp.'' (2001)]] and ruled that Microsoft was guilty of [[monopolization]] and [[tying (commerce)|tying]] in violation of the [[Sherman Antitrust Act]]. This led to a one-day 15% decline in the value of shares in Microsoft and a 350-point, or 8%, drop in the value of the Nasdaq. Many people saw the legal actions as bad for technology in general.<ref>{{cite news |url=https://money.cnn.com/2000/04/03/markets/markets_newyork/ |title=Nasdaq sinks 350 points |work=[[CNN]] |date=April 3, 2000 |access-date=October 29, 2018 |archive-date=August 11, 2018 |archive-url=https://web.archive.org/web/20180811164801/https://money.cnn.com/2000/04/03/markets/markets_newyork/ |url-status=live }}</ref> That same day, [[Bloomberg News]] published a widely read article that stated: "It's time, at last, to pay attention to the numbers".<ref>{{cite news |url=https://www.bloomberg.com/news/articles/2000-04-02/commentary-earth-to-dot-com-accountants |title=Commentary: Earth To Dot Com Accountants |first=Catherine |last=Yang |work=[[Bloomberg News]] |date=April 3, 2000 |access-date=2017-05-04 |archive-date=2017-05-25 |archive-url=https://web.archive.org/web/20170525120209/https://www.bloomberg.com/news/articles/2000-04-02/commentary-earth-to-dot-com-accountants |url-status=live }}</ref>

On Friday, April 14, 2000, the Nasdaq Composite index fell 9%, ending a week in which it fell 25%. Investors were forced to sell stocks ahead of [[Tax Day (United States)|Tax Day]], the due date to pay taxes on gains realized in the previous year.<ref>{{cite web |url=https://money.cnn.com/2000/04/14/markets/markets_newyork/ |title=Bleak Friday on Wall Street |work=[[CNN]] |date=April 14, 2000 |access-date=February 10, 2020 |archive-date=November 27, 2020 |archive-url=https://web.archive.org/web/20201127013703/https://money.cnn.com/2000/04/14/markets/markets_newyork/ |url-status=live }}</ref> By June 2000, dot-com companies were forced to reevaluate their spending on advertising campaigns.<ref>{{cite news |url=https://www.adweek.com/brand-marketing/iq-news-dot-coms-re-evaluate-ad-spending-habits-38208/ |title=IQ News: Dot-Coms Re-Evaluate Ad Spending Habits |first=Jennifer |last=Owens |work=[[AdWeek]] | date=June 19, 2000 |archive-date=May 25, 2017 |archive-url=https://web.archive.org/web/20170525091820/http://www.adweek.com/brand-marketing/iq-news-dot-coms-re-evaluate-ad-spending-habits-38208/ |url-status=live }}</ref> On November 9, 2000, [[Pets.com]], a much-hyped company that had backing from Amazon.com, went out of business only nine months after completing its IPO.<ref name="pets">{{cite news |url=https://money.cnn.com/2000/11/07/technology/pets/ |title=Pets.com at its tail end |work=[[CNN]] |date=November 7, 2000 |access-date=October 29, 2018 |archive-date=July 27, 2018 |archive-url=https://web.archive.org/web/20180727024448/https://money.cnn.com/2000/11/07/technology/pets/ |url-status=live }}</ref><ref>{{Cite news |url=https://www.msnbc.com/msnbc-originals/watch/the-pets-com-phenomenon-789155395746 |title=The Pets.com Phenomenon |work=[[MSNBC]] |date=October 19, 2016 |access-date=June 28, 2018 |archive-date=June 12, 2018 |archive-url=https://web.archive.org/web/20180612135928/https://www.msnbc.com/msnbc-originals/watch/the-pets-com-phenomenon-789155395746 |url-status=live }}</ref> By that time, most Internet stocks had declined in value by 75% from their highs, wiping out $1.755 trillion in value.<ref>{{cite news |url=https://money.cnn.com/2000/11/09/technology/overview/ |title=The $1.7 trillion dot.com lesson |first=David |last=Kleinbard |work=[[CNN]] |date=November 9, 2000 |access-date=October 29, 2018 |archive-date=October 24, 2018 |archive-url=https://web.archive.org/web/20181024163116/https://money.cnn.com/2000/11/09/technology/overview/ |url-status=live }}</ref> In January 2001, just three dot-com companies bought advertising spots during [[Super Bowl XXXV]].<ref>{{cite news |url=https://www.nytimes.com/2001/01/08/business/media-business-advertising-super-commercial-bowl-xxxv-not-coms-are-beating-dot.html |title=In Super Commercial Bowl XXXV, the not-coms are beating the dot-coms |first=Stuart |last=Elliott |work=[[The New York Times]] |date=January 8, 2001 |url-access=subscription |access-date=August 26, 2017 |archive-date=August 31, 2017 |archive-url=https://web.archive.org/web/20170831223012/http://www.nytimes.com/2001/01/08/business/media-business-advertising-super-commercial-bowl-xxxv-not-coms-are-beating-dot.html |url-status=live }}</ref> The [[September 11 attacks]] accelerated the stock-market drop.<ref>{{cite news |url=https://money.cnn.com/2001/09/11/europe/markets_europe/ |title=World markets shatter |work=[[CNN]] |date=September 11, 2001 |access-date=February 10, 2020 |archive-date=September 20, 2020 |archive-url=https://web.archive.org/web/20200920203418/https://money.cnn.com/2001/09/11/europe/markets_europe/ |url-status=live }}</ref> Investor confidence was further eroded by several [[accounting scandal]]s and the resulting bankruptcies, including the [[Enron scandal]] in October 2001, the [[WorldCom scandal]] in June 2002,<ref>{{cite news |url=https://money.cnn.com/2002/07/19/news/worldcom_bankruptcy/ |title=WorldCom files largest bankruptcy ever |first=Luisa |last=Beltran |work=[[CNN]] |date=July 22, 2002 |access-date=October 29, 2018 |archive-date=October 30, 2018 |archive-url=https://web.archive.org/web/20181030111043/https://money.cnn.com/2002/07/19/news/worldcom_bankruptcy/ |url-status=live }}</ref> and the [[Adelphia Communications Corporation]] scandal in July 2002.<ref>{{Cite web|title=SEC Charges Adelphia and Rigas Family With Massive Financial Fraud|url=https://www.sec.gov/news/press/2002-110.htm|access-date=2021-04-18|website=www.sec.gov|archive-date=2010-11-09|archive-url=https://web.archive.org/web/20101109160208/http://www.sec.gov/news/press/2002-110.htm|url-status=live}}</ref>

By the end of the [[stock market downturn of 2002]], stocks had lost $5 trillion in [[market capitalization]] since the peak.<ref>{{cite news |url=https://www.latimes.com/archives/la-xpm-2006-jul-16-fi-overheat16-story.html |title=Fears of Dot-Com Crash, Version 2.0 |first1=Chris |last1=Gaither |first2=Dawn C. |last2=Chmielewski |work=[[Los Angeles Times]] |date=July 16, 2006 |access-date=February 10, 2020 |archive-date=December 18, 2019 |archive-url=https://web.archive.org/web/20191218173143/https://www.latimes.com/archives/la-xpm-2006-jul-16-fi-overheat16-story.html |url-status=live }}</ref> At its trough on October 9, 2002, the NASDAQ-100 had dropped to 1,114, down 78% from its peak.<ref>{{cite news |url=https://www.nasdaq.com/articles/3-lessons-investors-tech-bubble-2015-02-11 |title=3 Lessons for Investors From the Tech Bubble |first=James K. |last=Glassman |work=[[Kiplinger's Personal Finance]] |date=February 11, 2015 |access-date=2020-02-10 |archive-date=2020-04-04 |archive-url=https://web.archive.org/web/20200404062028/https://www.nasdaq.com/articles/3-lessons-investors-tech-bubble-2015-02-11 |url-status=live }}</ref><ref>{{cite news |url=https://www.theguardian.com/technology/2005/mar/10/newmedia.media |title=Looking back on the crash |first=Chris |last=Alden |work=[[The Guardian]] |date=March 10, 2005 |access-date=March 30, 2018 |archive-date=January 4, 2018 |archive-url=https://web.archive.org/web/20180104013428/https://www.theguardian.com/technology/2005/mar/10/newmedia.media |url-status=live }}</ref>