“Tech companies in San Francisco and San Mateo counties lost 700 jobs from January to February and tech employment has dropped by 3,200 jobs since hitting a peak last August,” the New York Times observed, citing chief San Francisco economist Ted Egan. “Venture capital has peaked and has been going down steadily since 2015,” said Egan. “A lot of the employment in our tech sector is in companies that are not profitable. If they can’t secure new venture funding, some of them run out of cash. If we see a real downturn in the tech sector we could be in a situation where the U.S. economy is doing better than San Francisco’s.”

For months, Bay Area businesses and investors have had to adjust to unfamiliar economic terrain. “The drop continues a year-long slowdown of the economic machine that powers Silicon Valley’s tech sector, leaving some startups resorting to layoffs and other cost-cutting measures to make ends meet,” the San Jose Mercury News reported. “But analysts say they’d better get used to it — investment activity isn’t going to return to the highs the industry saw in 2014 and 2015 any time soon. Instead, they say, the lower numbers represent a new, more sustainable normal as investors become more selective.”

High stakes

The Valley’s outsized importance to California’s economic fortunes has shifted expectations for tech nationwide. “Nationwide, the number of angel and seed stage funding rounds — which generally mark a company’s first fundraising efforts — dropped 62 percent in the first quarter of 2017 compared with the first quarter of last year,” the Mercury News noted. “Though startups closed fewer funding deals, the amount of money investors spent actually ticked up in the first quarter of this year compared to the quarter before — largely thanks to Airbnb raising $1 billion this year, and Instacart and online personal finance company SoFi each raising more than $400 million. Smaller, early-stage startups suffered most in the slowdown.”

But larger, established tech firms have encountered new problems, too — including fierce challenges in potentially huge markets, like the one for driverless cars, that are now crowded with heavyweight competitors. “Google’s lawsuit alleging that Uber straight-up stole its autonomous vehicle technology won’t go before a jury until October, but Uber already finds itself on dangerous ground,” according to a Wired report on the conflict. Last week, the magazine observed, “the judge presiding over the civil case said he might just grant Google’s request for a preliminary injunction, which could force Uber to rein in or even stop testing its robocar technology testing until the case is resolved.”

Pumping the brakes

Prognosticators have altered their outlook accordingly. “Extrapolating from Q1, the full year 2017 is on track to hit the lowest level in terms of dollars since 2012, and in terms of deals since 2011,” Business Insider noted. “But it’s not for a lack of money. In 2016, VC funds raised $41 billion, the best year in a decade. In Q1 2017, they raised another $7.9 billion.”

According to some analysts, the combination of big war chests for funds and more modest pathways for founders was likely to translate into slower but more sustainable growth. Eric Buatois, veteran venture capitalist at Benhamou Global Ventures, told Marketplace that while a crash was unlikely, a cooling-off period would probably help avoid a hard landing. “Like most people in Silicon Valley, Buatois doesn’t use the words ‘tech bubble’ or ‘bust’ when describing the recent tech economy. Instead, he describes it as ‘frothy,'” according to the program. “‘Froth’ is the Silicon Valley term for when startups are valued at much more than they’re worth. Unlike a bubble, froth doesn’t pop — it subsides. Buatois thinks that could be a good thing for Silicon Valley.”

Privacy vs. productivity

The bill cleared both chambers of the state Legislature “despite bipartisan concern about regulating the budding drone industry,” Courthouse News reported. “If signed by the governor, the bill would make it a trespass violation to fly an unmanned drone over private property without consent.” Any drone flying below 350 feet above private property without “express permission” would run afoul of the would-be law.

Drone industry figures and pro-tech activists have warned that excessively restrictive regulations would throw a monkeywrench into the explosive, lucrative and potentially very useful application of UAV technology. In a joint statement reported by Courthouse News, the Association for Unmanned Vehicle Systems International and the Consumer Electronic Association lambasted the bill. “SB142 would damage California’s leadership and handcuff innovation, just as this largely California-based and dynamically expanding industry is poised to bring major job growth to the state — adding roughly 18,000 new jobs and more than $14 billion in economic impact in the first decade once federal guidelines are implemented,” they warned.

In remarks supplied to Inc. magazine, Mike Winn, CEO of San Francisco-based software developer DroneDeploy, complained that the bill “doesn’t meaningfully address privacy issues,” instead “arbitrarily reducing the ways drones can create value. We’d encourage California and other law makers to enforce existing laws that prevent trespassing and provide remedies for privacy violations and focus on the bigger issues in the states,” he suggested.

But Assemblyman Mike Gatto, D-Glendale, a supporter of the drone-curbing bill SB142 introduced by state Sen. Hannah-Beth Jackson, claimed that “the 50-foot zone between private property and federally controlled airspace could potentially be used as a corridor for commercial drones performing such functions as delivering packages,” McClatchy reported.

Drone politics have not divided neatly along party lines. In the Assembly, the bill drew opposition from both sides of the aisle.

Improvising solutions

In the absence of statewide guidance, law enforcement officials availing themselves of drones have had to improvise a public relations and public safety strategy.

In Ventura County, where the police force became the first in Southern California to receive FAA drone authorization, the sheriff’s department had to use “the reverse 911 system [in the] immediate area to notify residents we were about to deploy a UAV,” Cmdr. Chris Dunn told lawmakers in a hearing of the Joint Legislative Committee of Emergency Management, according to the area paper the Moorpark Acorn.

“We do that so that, one, they won’t be shocked at the sight of the device in their area, and two, in hopes that they don’t interfere in the operation of the device by throwing things at it or trying to launch their own device in support of our mission,” he said.

Although SB142 would lift the burden of sorting out drone protocols from city and municipal officials, critics insisted that the problem of inconsistent, confusing and conflicting law would only be pushed upward. Without nationwide standards of guidance supplied by the FAA, “states will continue to set laws that will inevitably conflict with each other and will cause confusion about where and how operators can fly,” Christian Sanz, CEO of San Francisco drone manufacturer Skycatch, told Inc.

The FAA has slowly turned its attention toward the nationwide commercial use of drones. “In April, the Federal Aviation Administration granted Amazon authorization to test drones outdoors for its yet-to-be-launched Prime Air service, which hopes to use drones to deliver products to a customer’s doorstep within 30 minutes of an online order,” as the Sacramento Bee reported. But the proliferation of drones among hobbyists, rather than corporations, has remained the foremost preoccupation of legislators in California and elsewhere.