Can Facebook’s AI dream solve its revenue nightmare?

Facebook owner Meta is rolling out a new “generative AI” product group as it strives to recoup revenue from tough market conditions. It comes after investment in the so-called Metaverse – which has yet to pay off – and Apple’s privacy changes that impact Facebook’s ability to track users for advertising purposes.

As ChatGPT continues to grab headlines, tech companies are accelerating their focus on AI. Microsoft has announced plans to integrate chatbot functionality into Bing, while Google is in the process of launching a chatbot called Bard.

So it’s no surprise that Facebook is publicly pushing its own AI strategy, which has been in the works for some time.

Generative AI can be used to create new text, images, video, audio, code or synthetic data. Describing the new decision in a Facebook post, Meta CEO Mark Zuckerberg said, “We’re starting by bringing together many teams working on generative AI across the company into a single group focused on creating pleasant experiences around this technology in all our different products. In the short term, we will focus on building creative and expressive tools.

Why Facebook needs AI to solve its problems

While Facebook owner Meta has been focusing on AI for some time, the technology is crucial to solving several issues with its business model. He knows the old algorithm no longer works for him or his advertisers, and Facebook and Instagram feeds have gradually changed to look more like TikTok.

“Facebook and Instagram are no longer organized solely around the people and accounts you follow to show more and more relevant content recommended by our AI systems. This covers all content formats, which makes our services unique Zuckerberg said on a recent earnings call, adding that the company is “particularly focused on short-form video since Reels is growing so rapidly.”

Zuckerberg explained how Reels placed on Facebook and Instagram have “nearly doubled over the past year,” while people sharing Reels have more than doubled on both apps over the past six months.

However, the monetization efficiency of Reels is lower than Feed, so Facebook needs to make progress here, Zuckerberg said.

The “revenue headwinds” plaguing the company, namely Apple’s privacy changes, will be neutral by the end of this year, according to Zuckerberg, and then Meta wants to expand Reels.

Of course, Facebook’s business model is based on data and advertising, and it wants to be able to do more with less information about its users. Amid a privacy-conscious landscape driven by Apple’s iOS privacy push, Facebook has been forced to adapt. He says AI can actually help protect privacy and is investing in research around privacy-preserving machine learning technologies. Meta also releases its Large Language Model Meta AI (LLaMAI) to researchers.

Facebook says investments in AI and ML have so far paid off, with advertisers benefiting from performance and efficiency improvements across the platform. In the last quarter, he says advertisers saw more than 20% more conversions than the previous year and, combined with the lower cost of acquisition, this resulted in lower costs for ad spend.

The end of the metaverse?

As all of these announcements happen, it wouldn’t be strange to wonder what’s going on with The Metaverse. A year ago, that was all the company could talk about – Mark Zuckerberg’s rather creepy avatar was everywhere.

According to financial news site The Street, Meta’s focus on AI is a diversion from the real news: In announcing the AI ​​team, Mark Zuckerberg “just buried the metaverse”, writes The Street.

In 2021 and 2022, Reality Labs, the division housing metaverse projects, recorded a cumulative loss of nearly $24 billion, including $13.7 billion last year, The Street points out.

“The legacy of the metaverse remains because Meta will continue to develop remnants of this virtual world, like headsets, but it will be more for a target audience, like video gamers and the crypto world,” he predicts.

However, Meta says he remains “committed to the vision we set for the metaverse.”

“We were clear that this is a long-term investment, and we continue to advance the metaverse in a variety of areas, including Quest, mixed reality, and the next generation of social experiences,” m said a Meta spokesperson.

This echoes Mark Zuckerberg’s comments during last month’s earnings call: “Our priorities haven’t changed since last year. The two big technology waves driving our roadmap are AI today and longer term, the metaverse.”

Can Facebook’s AI dream solve its revenue nightmare?

There’s no doubt that discussions about AI are everywhere right now, and the rapid success of ChatGPT has been a catalyst for the technology in 2023 so far.

While there’s a lot of buzz around AI, it’s also worth considering the risks. The more people rely on AI-based algorithms, the more they can be abused or exploited, says Jake Moore, Global Cybersecurity Advisor at ESET. “Our data that drives AI will continue to feed into the system and people need to be careful what they enter, which could be sensitive or even confidential,” he warns. “People need to be aware of what companies can do with their data, especially when apps are free.”

AI is a useful technology, with efficiencies and even possible privacy improvements when used in the right way. But can AI save Facebook? Probably not, because AI alone cannot save anyone. Even so, Facebook needs to drastically change the way it does business and investing in technology is a smart move.