What metaverse? Meta says its biggest investment now is “advancing AI” | CNN Business
About a year and a half after Facebook renamed itself “Meta” and said it would focus on creating a future version of the Internet called the metaverse, the tech giant now says its top investment priority will be advancing the artificial intelligence .
In a letter to staff on Tuesday, CEO Mark Zuckerberg announced plans to lay off 10,000 more employees in the coming months and redoubled his new “efficiency” focus for the company. The pivot to efficiency, first announced last month at Meta’s quarterly earnings call, comes after years of investing heavily in growth, even in areas with unproven potential like virtual reality .
Now, Zuckerberg says the company will focus primarily on cutting costs and streamlining projects. Building the metaverse “remains critical to defining the future of social connection,” Zuckerberg wrote, but that’s not where Meta will put most of its capital.
“Our biggest investment is advancing AI and building it into each of our products,” Zuckerberg said Tuesday. He noted how AI tools can help users of his apps express themselves and “discover new content,” but also said that new AI tools can be used to increase internal efficiency by helping “the engineers to write better code faster.”
The comments come after what the chief executive described as a “humbling tone” last year as “the global economy changed, competitive pressures grew and our growth slowed considerably”.
Meta and its predecessor Facebook have been involved in AI research for years, but the observations come amid an intense AI frenzy in the tech world, which began in late November when OpenAI, backed by Microsoft, publicly released ChatGPT. The technology quickly went viral for its ability to generate convincing, human-sounding responses to user prompts and then started an apparent AI arms race among tech companies. Microsoft announced in early February that it was incorporating the technology behind ChatGPT into its search engine, Bing. A day before Microsoft’s announcement, Google unveiled its own AI-powered tool called Bard. And not to be outdone, Meta announced late last month that it was forming a “top-tier product group” to “turbocharge” the company’s work in AI tools.
“I think it’s good to focus on artificial intelligence,” Ali Mogharabi, senior equity analyst at Morningstar, told CNN of Zuckerberg’s comments. Mogharabi said Meta’s investments in AI “have benefits on both ends” because they can improve the efficiency of engineers building products and because adding AI features to Meta’s application line can lead to more engagement for users, which can generate advertising revenue.
And in the long run, Mogharabi said, “A lot of the AI investments, and a lot of the improvements that come from those AI investments, could be applicable to the whole metaverse project.”
But Zuckerberg’s emphasis on investing in AI and using the technology’s tools to make the company more efficient and increase its bottom line is also “what shareholders and the market want to hear,” Mogharabi said. Many investors had previously complained about the company’s metaverse ambitions and spending. In 2022, Meta lost more than $13.7 billion in its “Reality Labs” unit, which houses its metaverse efforts.
And investors seem to welcome Zuckerberg’s shift in focus from the metaverse to efficiency. After taking a beating in 2022, Meta shares are up more than 50% year-to-date.
Angelo Zino, senior equity analyst at CFRA Research, said Tuesday that the second round of layoffs at Meta “makes us officially convinced that Mark Zuckerberg has completely changed, altering the narrative of the company to one focused on efficiency in rather than seeking to grow the metaverse at any cost.”