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Roula Khalaf, editor of the FT, picks her favorite stories on this weekly newsletter.
Wednesday of this week must have been an enormous day for investors in social media company Meta. After a fast passage through Congress, President Joe Biden signed latest laws requiring Chinese web company ByteDance to sell its TikTok service to the US or be banned from the country's mobile app stores. The wildly popular viral video platform that when posed an existential threat to metas Facebook and Instagram appeared to have been defused.
At the tip of the day, nevertheless, this was long forgotten. An unpleasant shock from Meta's latest earnings report initially reduced the corporate's market value by $200 billion. Given its growing ambitions in artificial intelligence, the corporate warned of an unexpected increase in costs and capital investments, without saying exactly when the increased spending would repay.
The midweek whiplash for meta-shareholders speaks volumes about how quickly the main focus of competition within the tech world has shifted. Four years ago, before Meta (then Facebook) launched its own short-video service Reels, TikTok was seen as the largest threat to its dominance. But the opportunities – and threats – of generative AI have opened up a brand new wave of direct competition between the tech giants that might far surpass the perceived threat that TikTok once posed.
The undeniable fact that Meta's stock price has not responded to the lawsuit against TikTok is partly as a result of the uncertainties still surrounding the move. An try to ban the service in 2020 failed in court and a legal challenge is predicted on free speech grounds. This time, congressional leaders consider emphasizing the national security risks posed by the Chinese-owned service will win the day.
Even if the brand new law resulted in a whole shutdown of TikTok within the US, the financial impact for Meta can be minimal. According to digital promoting analyst Brian Wieser, TikTok generated about $6 billion from U.S. promoting last 12 months – a drop within the bucket in comparison with the $138 billion in promoting that Meta produced.
Meta CEO Mark Zuckerberg's focus isn’t any longer on TikTok. This week he made it clear what he plans to spend most of his time doing over the following two years: AI, a technology that he claimed would take meta far beyond its social media roots. Zuckerberg has a brand new pitch: “Creator AIs,” personalized chatbots and agents that he hopes will offer a way more engaging technique to reach customers.
The idea of chatbots isn’t latest – Facebook has already tried them without success. What was latest this week, nevertheless, was Zuckerberg's great enthusiasm for the thought and the extent to which he’s devoting his company's resources to the brand new wave of generative AI.
Meta was a latecomer to the big language model party dominated by OpenAI and Google. The decision last 12 months to open source its own model was seen as a clever technique to make up for lost time. By offering others within the technology world the chance to make use of the technology themselves, Meta increased its influence and potentially reduced the prices of maintaining the technology. But the corporate's CEO said this week that progress since then has given him a really different perspective.
In Zuckerberg's latest vision, the pursuit of AI isn’t any longer nearly finding latest ways to extend engagement on the corporate's social networks or improve the effectiveness of its promoting. Instead, it’ll have a way more dramatic impact, taking Meta far beyond the world of social networking that shaped the corporate in its first 20 years of existence. The company is now seeking to develop AI-powered agents able to carrying out complex tasks for its users, putting it in direct competition with Google and the partnership between Microsoft and OpenAI.
“We have shown that we will develop leading models and be the leading AI company on this planet,” said Zuckerberg.
No wonder Wall Street is spooked. Eighteen months ago, his insistence that Meta be all-in on his big bet on the Metaverse sent the stock price soaring. Since then, the stock has risen nearly fivefold, thanks largely to a turnaround by which Zuckerberg cut Metaverse spending and promised a brand new concentrate on cost efficiency.
This week every part modified again. Meta's latest pursuit of AI agents as the important thing to the following era of online activity has brought direct competition between the largest tech corporations one step closer. And for now, the meta boss is making no guarantees about when the payout will occur.
