Mark Zuckerberg’s Pivot to AI Is Blowing Up in His Face Spectacularly

FotoField / Shutterstock / Futurism Sign up to see the future, today Can’t-miss innovations from the bleeding edge of science and tech Despite having almost nothing to show from his enormous spending on AI, Meta CEO Mark Zuckerberg is doubling down. Earlier this week, the social media company announced during its second quarter earnings call that it was raising capital expenditures from $125 billion to at least $130 billion, a clear sign that it’s not taking its foot off the pedal. Yet amid renewed concerns that the tech industry may be nearing the edge of a cliff thanks to its obsession with building out enormously expensive data centers without a clear path to profitability, investors sent back a clear signal in return. Meta’s shares nosedived following its announcement, plummeting over 11 percent over the last five days alone. According to Zuckerberg, all that extra AI spending was “accelerating every part of our core business.” He also claimed that some of the tech would be sold off to other businesses. But whether the company will have anything compelling to offer them remains dubious at best. Meta has been burning through its funds at an alarming rate. Even strong revenue numbers — a 28 percent increase this latest quarter compared to the same period last year — couldn’t stem the bleeding, with free cash flow sinking to the lowest level in at least five years thanks to AI spending. Despite committing well over $100 billion to the tech, Meta has been practically absent from the frontier AI model race. Its so-called Superintelligence Lab has turned into a “soul-crushing gulag” plagued with rock-bottom morale — and most importantly, it’s not getting results. Its efforts to develop an in-house frontier model, dubbed Muse Spark, have been mired by setbacks, with Meta continuously shifting back the timeline of its release to developers. On July 11, the company released version 1.1 of its AI to little fanfare, with Axios noting that it’s still easily outdone in most tasks by competing models from OpenAI, Anthropic, and Google. At the same time, Meta released an image-generation model called Muse Image, which felt like an afterthought and a too-little-too-late attempt to catch up with its competitors. The latest news has given some analysts a feeling of déjà vu. Zuckerberg has garnered a reputation for making major strategic missteps since long before AI. Case in point was the company’s heavily criticized pivot to the “metaverse,” an ill-fated attempt to sell customers on the idea of spending their workday inside a hollow and cartoonish virtual reality world, which feels like the perfect precursor to Meta’s current pains. “There’s a bit of similarity to Meta’s metaverse missteps in that Meta is once again spending ahead of proven product demand,” Forrester analyst Mike Proulx told the BBC. Meanwhile, Meta’s platforms have descended into a practically unrecognizable ocean of clickbait and AI slop, something the company has yet to meaningfully address as user numbers and engagement continue to slide. For his part, Zuckerberg remains infatuated by the concept of AI agents “that can work 24/7 on your behalf,” as he told investors this week, and growing its Muse Spark model into a “large business for large businesses.” But considering Meta is entering a game with much bigger players who’ve seen far more success in attracting customers and growing AI revenue so far, the company’s long-term success is anything but guaranteed. And investors who’ve already shaken their heads after both Amazon and Google’s parent company Alphabet announced major spikes in AI spending this month haven’t taken kindly to Zuckerberg’s lofty vision. Judging by how little the billionaire has to show, who can blame them? More on Meta: Is Mark Zuckerberg Actually TRYING to Destroy Meta?