Tech's downturn is shining a spotlight on the industry's vulnerability to fast-moving trends and conflicts beyond its own boundaries, Axios' Scott Rosenberg writes.

Why it matters: Silicon Valley leaders and thinkers paint their companies and products as magical innovations that emerge from the inner logic of tech's disruptive dynamics. But the industry's cycles are usually driven by external forces.

Driving the news: Microsoft announce a new round of layoffs earlier today, with cuts affecting roughly 10,000 workers — significantly more than last year's cutbacks.

The big picture: Financial tides explain the beating tech is now taking — much more so than the product cycles and platform shifts that occupy so much of the industry's attention.

Rising interest rates represent the single biggest factor driving the current tech slowdown, many observers agree.

• Tech companies and products didn't suddenly become less useful or valuable overnight.
• But the relative return investors could get by putting money into far less risky alternatives to tech stocks skyrocketed in a matter of months — from zero to as high as 4%.
• Stocks plummeted, and inflated tech stocks took the steepest drop, with domino-effect impacts: layoffs, a startup-funding drought, a crypto crash, and more.

Other national and global trends are also casting shadows over tech's immediate future.

1. The "great decoupling": The slow but steady disentanglement of the American and Chinese economies is threatening all hardware makers — most prominently Apple, but really anyone who makes physical goods.

• The biggest global tech manufacturers put most of their eggs in China's basket over the past two decades.
• Now that security fears, political rhetoric and ethical concerns are driving a wedge between the U.S. and China, these companies face a potentially costly and disruptive shift in where they make their stuff.

2. Debt-ceiling brinksmanship: Hopeful signs that inflation's retreat might bring lower interest rates again are being overshadowed by the eruption of a new debt limit fight in Congress.

• House Republicans' determination to use the debt-ceiling weapon to force Social Security or healthcare cuts looks like it will run smack into a Democratic Senate and president's determination to protect those programs and preserve the nation's credit rating.
• Even the hint of a default on U.S. debt obligations could sow financial turmoil and raise the cost of borrowing all around — throwing a giant wrench in tech's, and everyone else's, recovery dreams.

3. Red and blue stalemate: Political polarization means Washington's deadlock will continue.

• Big companies often feel good about divided government, thinking that paralysis in D.C. limits government meddling.
• But tech also depends on lawmakers to modernize regulations and to kickstart broad national efforts — like last year's semiconductor funding measure.

Yes, but: Whatever role external forces have played in driving this downturn, the industry's penchant for hype is its own responsibility.

• Tech's giants have a long history of overpromising when markets are soaring. That only ends up deepening the severity of their crashes.
• It doesn't help that so many firms expanded and hired too fast during the pandemic.

What's next: Tech's biggest firms begin reporting earnings next week, providing more of a sense of how long, and how bad, this down cycle will be.

Prepare to hear a lot of debate in Washington on whether a secretive government surveillance power should continue to exist beyond 2023, Axios' Sam Sabin reports.

The big picture: Congress is faced with deciding whether to reauthorize Section 702 of the Foreign Intelligence Surveillance Act — which allows intelligence agencies to conduct warrantless surveillance of non-American citizens outside the U.S. — before it expires at the end of the year.

• But with a divided Congress and growing Republican scrutiny of intelligence agencies, the federal government's path to reauthorization will face hurdles.

How it works: Little is known about the true extent of 702's use within the intelligence community, but at a bare minimum, it allows agencies like the CIA, the NSA and the FBI to spy on people abroad through backdoors in telecommunications networks and other online communications systems.

• U.S. Army Gen. Paul Nakasone, head of the NSA and the U.S. Cyber Command, said during an event last week that 702 powers have helped the U.S. government stop planned terrorist plots and cyber espionage campaigns before they happen.
• However, unlike other FISA provisions, 702 doesn't require a target to be a suspected terrorist, spy or other foreign agent. And often, conversations with U.S. citizens get lumped into 702 data collection.

Between the lines: The lack of public disclosures about how 702 is used behind closed doors will be a huge theme in the debate.

The intrigue: With a strong, vocal conservative faction in the House, legislative reforms to the 702 program are more likely.

• Conservatives, progressives and advocates are expected to push for several reforms, like limiting the scope of who can be investigated, requiring a warrant for surveillance, and restricting how long collected information is stored.

Sign up for Axios' cybersecurity newsletter Codebook here.

The U.S. hopes to take the success of an e-governance app used in Ukraine and replicate it in other countries, USAID administrator Samantha Power told Axios' Dave Lawler on the sidelines of the World Economic Forum's annual meeting.

Driving the news: Ukraine rolled out its Diia app in 2020 to allow citizens to access ID documents, register a business and obtain various government services from their smartphones. Since Russia's invasion began last year, the app has been expanded to include additional tools like reporting damage from Russian strikes.

• As of last month, nearly 18.5 million people — more than half the adult population — were using the latest version of the mobile app, Ukrainian officials say.

State of play: USAID provided funding to Ukraine's Ministry of Digital Transformation to help develop Diia and improve its cybersecurity, and allocated another $8.5 million to help expand the app's services during the war, Power said in an interview on Tuesday.

• Ukraine is willing to share its approach and technology with other countries, and USAID plans to begin discussions with countries about potentially using Diia as a template to build their own apps, Power added.
• That will start Wednesday in Davos, when Power and Ukrainian Vice Prime Minister Mykhailo Fedorov are set to discuss the idea with a handful of countries and potential private sector partners who could help scale it.

The big picture: Power views this as part of a broader effort to help democratic reformers around the world deliver for their people, and says countries would be selected accordingly.

• "We want to look at the bright spots, at the countries that are committed to transparency and an anti-corruption agenda, that are bucking the global trends," Power said.

Yes, but: It’s not hard to envision a government using such an app to track a citizen’s movements and activities, or manipulating the provision of government services via the app for political gain.

On Tap

• More billionaires slipping on the streets of Davos.

Changing Lanes

• Dashlane has hired Donald Hasson as its new chief product officer. Hasson joins Dashlane from Swimlane, where he was senior vice president of product. 

ICYMI

• Google's spam filters did not discriminate against emails from Republican politicians, the Federal Election Commission found. (Wall Street Journal)
• A draft report by the House's committee investigating the Jan. 6 Capitol insurrection explored the role social media platforms played in those events. (Washington Post)

Speaking of video, who wants to see a slow-speed police chase of a John Deere tractor?