Anton Lucanus

The impact of COVID-19 on Tel Aviv’s tech industry

As the world grapples with the already devastating impacts of the COVID-19 pandemic which over the past 100 days has snaked its way throughout the world, prompting national lockdowns, infecting hundreds of thousands and killing more than 18,000, some are already speculating on what impact the novel coronavirus will have on industry – including the world’s fast growing, the tech industry.

While we already know that the rest of the global economy will be reeling from this pandemic for many months, if not years, it appears that in the early months of COVID-19 business is better than ever for the world’s biggest tech companies. Amazon announced early on in the crisis that it would hire 10,000 new warehouse employees, and traffic has soared in recent days on YouTube and Facebook. Netflix traffic has hit an all-time high, with demand so massive that the tech company has had to reduce the streaming quality across its platform to support larger audiences. Cloud platforms are supporting the workloads of millions of workers who have retreated to their homes to work remotely until this all boils over, and video meeting platforms like Zoom are absolutely booming. For Amazon in particular, its service offering is extremely popular within communities in lockdown, who are seeking entertainment and home delivery services more than ever before. As book clubs, dinner parties and family dinners become “virtual”, our computers and smartphones have become even greater in importance to us – they are, for now, our portal to the world.

From a business sense, then, tech is the best place to be right now, right? So what of the booming tech hub that has cropped up in Tel Aviv, Israel in recent years? Having earned the name of “Startup Nation” and “The Second Silicon” for its blossoming startup talent, the small population boasts the largest number of startups per capita in the world, with roughly one per 1,400 people. Of the big name businesses taking an interest in the Mediterranean coastal city, hi-tech companies form the majority. So what will the impact of the novel coronavirus be on Tel Aviv?

As it stands, roughly one-third of Israeli tech companies plan on firing employees due to the coronavirus pandemic, a survey by Israel’s Viola investment group has found. Five percent have already done so, and almost two-thirds froze new hiring processes, too. At the same time, the US is largely in lockdown, with New York cases alone topping 25,000 and with over 700 people having already died. The impact on its workers needs no elaboration – if New York is in lockdown, the country is in trouble. 

Israel on the other hand has slightly more lax restrictions in place, although things are changing on an hourly basis. As at 9am on 25th March, the number of infected in Israel was 1,238, with 24 people in a serious condition and one victim. But armed with highly advanced, intrusive cyber monitoring technology capable of tracking potential carriers of coronavirus, it appears the small nation may be able to handle the crisis better than most. Better yet, given that coronavirus is forcing tech giants to make a “risky bet” on artificial intelligence, Tel Aviv might just be in the best possible place to deliver the solutions required. 

Since the end of the 2010s, Israel has been synonymous with the development of AI, with a plethora of AI-focused startups popping up within urban hubs like Tel-Aviv. With predictions that AI will generate revenues in excess of $10 billion over the coming years, Israeli AI-based investments have simply exploded in recent years in Israel. So much so, that as much as 37 percent of the capital raised in recent years in the country was reserved for AI companies. Today, Tel Aviv is perfectly poised to take the lead on AI, and to see it flourish and become adopted in the mainstream.

Given that coronavirus is prompting companies to force the use of AI before they are ready, it could be the time for Tel Aviv to truly shine, what with its world-class capabilities in AI and its subsets: big-data analysis, natural-language processing, computer vision, machine learning and deep learning.

YouTube, for example, will begin to rely more on AI to moderate videos during the pandemic, since not only are many of its human reviewers being sent home to limit the spread of COVID-19, but more content is being uploaded on a daily basis than ever before. Facebook, similarly, has very quickly come to rely on automated systems that flag ‘fake’ or ‘inappropriate’ content. Both Facebook and YouTube have already admitted they are struggling with the imperfections of the technology though, leaving room for someone (cough, Tel Aviv) to swoop in and save the day. 

Already, e-commerce predictions for 2020 have been exceeded, with lockdowns around the world forcing consumers to shop big online instead of in the shops. 

When it comes to the tech industry on a broader scale, however, no one is quite sure what the future will look like. The $3.9 trillion global technology industry will certainly suffer this year, though exactly how much exactly remains unclear. Compared to industries like fashion, travel and hospitality, however, e-commerce and tech will thrive. And if Tel Aviv – and Israel – ensures that fears over declining sales, difficulties for startups to raise capital and a slowdown in hiring don’t override any prevailing optimism, then the tech hub will be just fine. 

About the Author
Scientist turned techie. Founder at Neliti & Reputio. Interested in sharing lessons learnt from Tel Aviv's bustling technology ecosystem.
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