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About a year and a half after changing its name from Facebook to Meta and making it clear that it would invest heavily in the metaverse, the company is changing its discourse. The Silicon Valley giant says it is now focusing on advanced artificial intelligence.

In a statement sent to employees on Tuesday, the company’s CEO Mark Zuckerberg announced plans to lay off another 10,000 employees in the coming months and doubled down on its new focus on “efficiency.”

The pivot to efficiency, first announced last month on Meta’s quarterly conference call, comes after years of heavy investment in growth, including in areas of unproven potential such as virtual reality.

Now, Zuckerberg says the company will focus primarily on cutting costs and optimizing designs. Building the metaverse “remains central to defining the future of social connection” Zuckerberg wrote, but that’s not where Meta will put most of its capital.

“Our biggest single investment is in advancing AI and incorporating it into each of our products,” said Zuckerberg. He agreed with 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 efficiency internally, helping “engineers write better code and faster”.

The comments come after what the CEO described as a “humbling awakening” last year when the “world economy changed, competitive pressures increased and our growth slowed considerably”.

Meta and its predecessor have been involved in AI research for years, but the remarks come amid a heightened AI frenzy in the tech world that started in late November when Microsoft-backed OpenAI publicly launched ChatGPT.

Not to be outdone, Meta announced late last month that it was forming a “top product group” to “supercharge” the company’s work on AI tools.

“I think it’s good to focus on AI,” Ali Mogharabi, a senior equity analyst at Morningstar, told CNN of Zuckerberg’s comments.

Mogharabi said Meta’s investments in AI “are beneficial on both ends” because they can improve the efficiency of the engineers who create products and because incorporating AI capabilities into Meta’s lineup of apps will potentially create more time engagement for users, which may generate advertising revenue.

And in the long term, Mogharabi said, “a lot of the AI investments and a lot of the enhancements that come from those AI investments can be applied to the entire metaverse project.”

But Zuckerberg’s emphasis on investing in AI and using technology 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 already complained about the company’s metaverse ambitions and spending. In 2022, Meta lost over $13.7 billion on its “Reality Labs” unit, which houses its metaverse efforts.

Investors seem to welcome Zuckerberg’s shift in focus from the metaverse to efficiency. After falling sharply in 2022, Meta’s shares have risen by more than 50% since the beginning of the year.

Angelo Zino, the senior equity analyst at CFRA Research, said the second round of layoffs at Meta “has left us officially convinced that Mark Zuckerberg has completely shifted gears, shifting the company’s narrative to one focused on efficiencies rather than looking to grow.” the metaverse at any cost.”

Source: Olhar Digital