Ambitious goal

Zuckerberg wants to make Meta the number one in AI

Mark Zuckerberg has a new ambitious goal.

(Bild: APA/AFP/Brendan SMIALOWSKI)

Mark Zuckerberg has a new goal: he wants to make his Facebook company Meta the number one in artificial intelligence (AI). The Facebook founder announced on Wednesday that the in-house assistant Meta AI should become the "world's leading AI service in terms of both quality and usage".

At the same time, Zuckerberg warned investors that the AI offensive would be expensive with investments in software and technology. It could take years for the company to earn money with it. Wall Street was shocked to hear such AI ambitions: The share price plummeted by a good 15 percent in after-hours trading, even though the advertising business continued to run at full speed in the past quarter.

Two and a half years after Zuckerberg had the company renamed from Facebook to Meta in order to emphasize its focus on the loss-making virtual metaverse worlds, the prospect of another upheaval seems to be making investors sweat with fear.

Seeking a leap of faith
Zuckerberg's speech in a conference call with analysts came across as a bid to gain the trust of the stock market. He pointed out that the Facebook Group's approach of first building services that are popular with users and only then thinking about making money has worked time and time again. He sees business opportunities in communication between companies and their customers on meta platforms such as Facebook, Instagram and WhatsApp, among others.

Zuckerberg also envisions "AI agents" that, unlike today's chatbots, not only answer individual questions, but could also take on more complex tasks for users that require their own action and research in the background.

A competitive market
Zuckerberg's big AI plans will bring the company into greater competition with chatGPT developer OpenAI and other tech heavyweights such as Microsoft, Google and Amazon, who all want to play a leading role in artificial intelligence. At the same time, Meta has the strategic advantage of a base of 3.24 billion users who recently accessed at least one of the Group's apps every day. The company needs to find scenarios that integrate AI into their everyday lives in a meaningful way.

Buttons that activate the AI assistant have been appearing in Meta apps in the US and several other countries since last week. Zuckerberg also has high hopes for the connected glasses with camera, microphone and speakers developed in collaboration with Ray-Ban. The AI in the glasses can, for example, answer questions about what a user is currently looking at. "Glasses are the perfect device for an AI assistant because they can see what you see and hear what you hear," said Zuckerberg.

VR division continues to make losses
The Ray-Ban glasses were developed in the Reality Labs division, which also works on the Metaverse platform and virtual reality headsets. Reality Labs is a chronic loss-maker in Meta's balance sheet. In the last quarter alone, the division posted operating losses of 3.85 billion dollars. This was marginally better than the operating loss of just under four billion dollars in the same quarter of the previous year.

Zuckerberg now argued that since Reality Labs also enriched other services, for example with the AI in Ray-Ban glasses, a better way had to be found to present their contribution. There was grumbling among investors for a while in view of the division's years of high losses. But Zuckerberg stuck to his guns - and when the advertising business picked up again after a brief dip, the critics fell silent.

Profit more than doubled
In the last quarter, advertising dollars flowed back into Meta's coffers. Turnover rose by 27 percent year-on-year to 36.45 billion dollars. Profits more than doubled to around 12.4 billion dollars (approx. 11.6 billion euros).

However, investors found a drop of bitterness in the outlook: Meta predicted sales of between 36.5 and 39 billion dollars for the current quarter. Analysts had expected an average of 38.4 billion. In addition, the costs of the AI offensive are already becoming apparent. Meta now puts the range for expenditure this year at 96 to 99 billion dollars. The previous forecast was 94 to 99 billion dollars.