Meta's Push into AI Leads to Increased Expenditures Amid Wider Concerns About Ethical Use
Meta, the parent company of Facebook, Instagram, WhatsApp, and Messenger, announced on Wednesday that its revenue for the current quarter may fall below Wall Street expectations. It also revealed plans to invest heavily in artificial intelligence (A.I.), a move that requires substantial computing power and funds.
The tech giant reported first-quarter revenue of $36.5 billion, marking a 27% increase from the previous year. Profit for the same period was $12.4 billion, more than double the $5.7 billion in the previous year. Despite this strong performance, Meta's prediction of lower-than-expected revenue for the current quarter and increased spending on A.I. led to a drop in its stock value.
Meta intends to spend between $35 billion and $40 billion this year, up from a previous forecast of $30 billion to $37 billion. This increased spending is primarily focused on developing A.I. infrastructure, including data centers, chip designs, and research and development.
The company's emphasis on A.I. is part of CEO Mark Zuckerberg's strategy to integrate the technology across Meta's empire, enhancing features such as Instagram's and Facebook's search tools, image-generation software, and smart glasses. Meta also introduced new versions of its A.I.-powered smart assistant software across its apps.
However, Meta's ambitious investments in the metaverse remain costly. Reality Labs, Meta's hardware division, lost approximately $3.8 billion in the first quarter while generating just $440 million in revenue. The division is focused on building virtual and augmented reality goggles, software, and the company's Horizon operating system for VR headsets.
Zuckerberg acknowledged Meta's focus on creating new products that maximize user engagement before prioritizing profitability. He cited features like Reels and Stories as examples of products that initially showed little promise for revenue but eventually became profitable.
Over the years, Facebook has undergone significant transformations in design and functionality, such as the introduction of the news feed, often rolling out these changes rapidly and with some hiccups. Users initially resisted these shifts but ultimately adapted to them over time.
As Meta increasingly integrates generative AI into daily user experiences, there is a greater risk that these AI tools could exacerbate longstanding issues with misinformation and spam on the platforms.
Meta's dual responsibilities to both advertisers and users create a challenge in balancing its development of AI technologies. While AI could aim to keep users engaged on its platforms, it may not necessarily prioritize helping them complete tasks efficiently and move on.
Moreover, generative AI's ability to aggregate extensive personal data could lead to highly targeted advertising, potentially swaying individuals persuasively and raising concerns about privacy and ethical use.
