With the world increasingly feeling like an episode of Black Mirror, Mark Zuckerberg and his crew at Meta* are taking us a step closer to a dystopian future. The promise is to bring personal superintelligence to your sunglasses with the new Muse offering.
This feels very sci-fi, but it’s happening.
Is it a good thing? Probably not. The young generation already seems to have forgotten how to have fun, thanks to the proliferation of smartphones and the long memory of the internet. I’m not sure that a world of always-recording sunglasses is where we want to be.
But this is the direction that Meta is taking us in. There are few people who have shaped the modern world quite like Zuckerberg, so it’s best that we brace ourselves accordingly.
Meta shareholders are stumping up a lot of cash to make this vision possible (pun shamelessly intended). Reality Labs’ operating losses are expected to come down to about $15bn next year.
Let me put that in perspective for you. Meta expects to burn a further R250bn in operating losses in that part of the business in a single year. Shoprite’s entire market cap, as the retail doyen of Africa, is just more than R200bn.
Put differently, Meta could acquire Shoprite instead of driving the Reality Labs strategy next year. These are not competing uses of capital, but it’s a useful way to understand the sheer scale of it all.
The prize on the other side? Zuck refers to an “extremely capable personal agent” that can help you with anything from relationships to money issues. This feels like the “bring back lost lover” lamppost ads you see on the streets.
With more than 10-million users in the US and Canada, Muse occupies the No 1 position in the App Store; the era of personal agents is here and people are curious enough to try it. In case you’re wondering, the most common use case at the moment is shopping.
This supports the early-stage monetisation. The intention is for Muse to be free to use, with merchants paying fees for the sales made by the agent. This creates immediate questions around conflict of interest, but what else is new in Meta’s products?
More sophisticated usage in the form of extra tokens would attract additional fees. There’s even talk of a connector for e-mail and a calendar that Zuck says would benefit from Muse Confidential VM, a product so secure that even Meta cannot see your content. A careful read of the Ts & Cs would no doubt be advisable here.
Will it be profitable? That depends on the cost of compute, an area of extensive investment by Meta. Cost efficiency for Muse is expected to improve more than 10 times in the next year.
This strategy is made possible by the Family of Apps business, a cash cow of note with 3.64-billion daily users. Revenue for the quarter was up by an impressive 26% year on year, with underlying drivers such as a 10% increase in ad impressions and a 14% hike in the global average price per ad.
Record highs in engagement on both Facebook and Instagram have been recorded as the creator-focused strategy for the algorithms has worked. Zuckerberg claims that Threads has overtaken X in monthly active users, a statistic that may come as a surprise.
WhatsApp has reached record highs in messaging. Aside from the value of the data (and nobody knows that better than Meta), the business model is based on taking advantage of the ubiquitous nature of this communication channel by getting companies to pay for WhatsApp Business.
The Family of Apps business is clearly working. It generates an incredible amount of cash, putting Meta in an enviable position where it can self-fund the investment in AI technology and infrastructure.
This could be the differentiating factor if the tide goes out for AI-related project funding. The world is jittery, with many questions being asked about Anthropic’s IPO and whether global data centre expansion can continue at such a frenetic pace. Being able to self-fund an AI strategy instead of relying on external capital could help Meta create an even more commanding position in how we use the internet.
Perhaps most importantly, Zuck has shown a willingness to pivot. The compute is being built anyway. Whether it ends up being used for Muse or other AI-related activities will only become apparent down the line. When you have more than half the world’s population regularly using your apps, you’ve got optionality.
* The writer holds shares in Meta
