Meta's record-shattering Thursday stock drop — the company formerly known as Facebook lost a quarter of its market value, or more than $200 billion, in a flash — capped a crazy tech earnings season that left two seemingly contradictory takeaways: Tech firms now sit at the economy's core, yet they also can still be risky bets.

Why it matters: The first two years of the pandemic served to further accelerate the tech giants' climb after a decade of unprecedented growth. But we all know what they say about "what goes up."

Driving the news: Facebook shares dropped 26% on Thursday, a day after the company reported its first-ever drop in daily active users and offered a downbeat forecast for the coming year, thanks to mobile-advertising privacy changes Apple has introduced. The remaining four tech behemoths all had a better time of it.

• Amazon broke out numbers for its advertising business for the first time Thursday, as it reported healthy results on top of a long pandemic-driven growth spurt.
• Apple reported its biggest quarter ever, with an 11% sales jump and revenue up in every part of the world. The company also said its supply-chain problems were waning.
• Google parent Alphabet posted better-than-expected earnings, with annual revenue topping $200 billion for the first time.
• Microsoft exceeded expectations and issued a rosy forecast as well, buoyed by strength in the PC market.

Be smart: Investors long viewed tech as a sector with high growth potential and high risk, too — one prone to bubbles and stomach-churning drops.

• But as tech started grabbing bigger slices of the broader economy, the big five started looking more like blue chips than upstarts.

But nothing grows forever, and as these giants have saturated their markets, they've also stirred regulatory scrutiny that limits their ability to make big acquisitions. With nowhere else to go, they've begun to step on one another's turf.

• Facebook, for example, has lashed out at App Store restrictions by both Google and Apple and has also warned that Apple's privacy-related app tracking limitations could cost it $10 billion in revenue this year.

Facebook's humbling comes at a pivotal moment for the company, which has changed its name to Meta and its focus to an AR- and VR-driven future.

• At the same time, it's facing a hostile climate in Washington in the wake of years of controversy over misinformation, privacy problems and complaints of censorship.
• It also faces inevitable generational shifts, as younger users flock to newer rivals like TikTok. In the past it was able to buy rivals, such as Instagram, but that path is likely blocked amid greater regulatory scrutiny.

Yes, but: Plummeting share prices don't always deter tech CEOs.

• Amazon's Jeff Bezos famously stuck to his guns through years of painful drubbings by Wall Street, and look where he, and the company, are now.
• Don't bet on Meta changing course. The company remains a monarchy in which Mark Zuckerberg wields absolute voting control, and Zuckerberg has pledged an all-in approach to its metaverse-based future.

Amazon said yesterday it made more than $31 billion in advertising last year, a huge feat for the tech giant, which for years kept the size of its budding ad empire under wraps, Axios' Sara Fischer reports.

Why it matters: Amazon has one of the fastest-growing advertising businesses in the world. It now makes more money than Microsoft, Snapchat and Twitter combined on advertising annually.

Catch up quick: Amazon first began taking its ad business seriously around 10 years ago when it launched its first ad exchange. Its business has grown significantly in the past four years, amid renewed investments in its strategy.

Be smart: While analysts have long suspected Amazon's ad business was massive, they haven't been able to say with certainty exactly how big it was, until now.

• It previously reported its ad revenue as a part of a wider segment labeled "other."

By the numbers: Amazon made nearly $9.7 billion in advertising in the fourth quarter of 2021, likely boosted by the holiday shopping rush. The company said it had its biggest-ever Black Friday to Cyber Monday holiday shopping weekend ever last year.

Yes, but: While Amazon's ad business is huge, it's only a tiny fraction of its overall business, which includes e-commerce and cloud. Its ad business made up around 7% of its $137.4 billion in revenue last quarter.

How it works: Amazon sells many different ad units, including video ads and banner ads. But the bulk of its ad revenue comes from sponsored product ads that appear at the top of search results.

• Because Amazon's ad business is tied to search and not social media, it's not as vulnerable to Apple's privacy changes that are having a big impact on Facebook's ad business.

Microsoft gaming CEO Phil Spencer's career origin story — a chance encounter with a college classmate's dad, who was a VP at Microsoft and offered him an internship — plays differently these days, and he knows it, Axios Gaming's Stephen Totilo reports.

Why it matters: As head of Xbox since 2014, Spencer is already one of the most influential and powerful people in gaming, but he finds himself at a pivotal point both in his career and in the industry at large.

• There's an obvious reason: Microsoft's $69 billion bid to buy the massive, but scandal-ridden Activision Blizzard.
• And there's something subtler: the executive's apparent efforts to recognize his privilege and to extend support to those who didn’t have his advantages.
• Both come as he prepares to be honored for a lifetime achievement award from the Academy of Interactive Arts & Sciences later this month.

Read the rest.

A bill that would upend how Apple and Google run their mobile app stores easily made it out of the Senate Judiciary Committee yesterday, with support from both parties, Axios' Ashley Gold reports.

Driving the news: Senators on the committee voted to pass the Open App Markets Act 20-2, with Sen. John Cornyn (R-Texas) and Sen. Thom Tillis (R-N.C.) voting no.

• If the bill passes the full Senate and is signed by President Biden, Google and Apple would essentially have to give up full control of their app stores.
• New rules could require them both to allow app side-loading — installing apps from non-sanctioned marketplaces — and alternative payment processing systems. Apple and Google have argued vehemently against the bill.

Why it matters: The 20-2 vote shows there's increasing support in Congress for the kinds of bills that aim to reel in Big Tech companies.

On Tap

• I've been watching women's hockey for a couple of days, but the Winter Olympics officially kick off today with the Opening Ceremony.

Trading Places

• Educational tech firm Osmo (now owned by Byju's) named Kar-Han Tan as its head of computer vision and machine learning. Tan previously founded Helpful Robotics and was also at HP Inc.

ICYMI

• Snapchat parent Snap turned its first profit. (Axios)
• Amazon also announced in its earnings report that it is hiking the annual price for Prime by $20, to $139 per year. (GeekWire)

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