• Mark Zuckerberg has recently become "more ambitious" about Meta's ability to win in AI.
• He now plans to spend around $40 billion this year, largely on AI investments.
• In the next few years, Zuckerberg sees three ways AI can become a "massive business" for Meta.

Mark Zuckerberg is now convinced that Meta is a top AI company, and he even knows how the technology will become a significant source of profit in the years ahead.

With the recent release of Llama 3, Meta's latest AI model, Zuckerberg said he became "more ambitious and optimistic on AI" and his company's ability to deliver on the tech.

He made it clear during a Wednesday earnings call with analysts that he intends to "invest significantly more over the coming years to build even more advanced models and the largest scale AI services in the world."

"With the latest models, we're not just building good AI models that are capable of building some new good social and commerce products," the CEO told analysts. "I actually think we're in a place where we've shown that we can build leading models and be the leading AI company in the world. And that opens up a lot of additional opportunities beyond just the ones that are the most obvious for us."

Heavy spending again

Such ambition does not come cheap. Meta increased its guidance on capital expenditure for this year, saying it now plans to spend between $35 billion and $40 billion, largely on AI investments. Its stock slumped 16% in after-hours trading.

The last time Zuckerberg got excited about a new technology (the metaverse), Meta spent wildly and freaked investors out. The stock collapsed and didn't recover until the company embarked on a "Year of Efficiency" marked by mass layoffs and a more business-minded CEO.

Zuckerberg on Wednesday made a concerted effort to head off Wall Street panic that his new AI enthusiasm is lacking in business acumen.

He sees "several ways" generative AI can make money, and laid out three specific paths to this becoming "a massive business" for Meta. Although getting there is a "long-term" prospect, he warned.

"Business messaging"

One of the ways AI can make money is by building up "business messaging," where companies pay Meta for generative AI tools, such as services that support automated interactions with users and customers. Zuckerberg envisions Meta's AI moving beyond just being a chatbot and becoming an AI "agent" that handles more complex tasks, and processes multiple queries to solve user problems, instead of coming back instantly with rote answers.

Revenue from AI business messaging is "one of the nearer term opportunities," Zuckerberg said. While it may not become a reality this year, he noted that it's less than five years away. The immediate goal on this front is to "get many hundreds of millions or billions of people to use Meta AI as a core part of what they do," he explained.

Ads appearing in "AI interactions"

Another way generative AI could make money for Meta is by "introducing ads or paid content into AI interactions," Zuckerberg said. Although brands and companies paying for products to show up in generative AI results is not yet the standard for AI chatbots, Meta's entire business is effectively driven by selling digital advertising. Inserting ads into its social and messaging products is at the core of Meta as a company.

AI is already being more widely deployed by Meta in its newer "unconnected content" algorithm for social content recommendations, which Zuckerberg said is leading to more app engagement. That, in turn, leads to more people seeing more ads. Right now, 30% of the content Facebook users see is recommended by AI, and the same goes for 50% of the content seen by Instagram users, he said.

Selling access to AI models

A third distinct way Meta may make money from AI is by selling access to models as they get larger. "Enabling people to pay to use bigger AI models and access more compute," as Zuckerberg put it on Wednesday.

Right now, Llama 3 and the Meta's other large language models are freely available to users and companies below a certain size threshold. Charging for access might be a move away from Meta's "open source" approach here.

"So if the technology and products evolve in the way that we hope, each of those will unlock massive amounts of value for people and business for us over time," Zuckerberg said. "I think it makes sense to go for it, and we're going to."

from All Content from Business Insider https://ift.tt/2S8enpg
via IFTTT

• Mark Zuckerberg appeared to take a jab at Apple's Vision Pro during Meta's Q1 earnings call.
• The CEO said he sees a mainstream market for AI glasses without a display.
• Meta's smart glasses, developed with Ray-Ban, feature AI, a camera, and built-in speakers.

Meta CEO Mark Zuckerberg seemed to take a hit at Apple's Vision Pro in Meta's first-quarter earnings call on Wednesday.

Zuckerberg said he didn't think augmented reality glasses would make it in the mainstream market until it had "full holographic displays." The comment appears to show his skepticism of the potential success of a product like Apple's Vision Pro.

"And I still think that that's gonna be awesome and is the long-term mature state for the product," the CEO said. "But now, it seems pretty clear that there's also a meaningful market for fashionable AI glasses without a display," Zuckerberg said.

Meta did not immediately respond to a request for comment to clarify Zuckerberg's comments.

Meta launched its latest version of Ray-Ban smart glasses in September. The device has a starting price of $299 and includes access to Meta AI, a camera, the ability to make calls, and built-in speakers.

"Glasses are the ideal device for an AI assistant because you can let them see what you see and hear what you hear," the CEO said. "So their full context on what's going on around you."

The CEO said he thinks the glasses have "the ability to be a pretty meaningful and growing platform sooner than then I would have expected so."

While Meta's Quest virtual reality headset competes with Apple's Vision Pro, Zuckerberg has said before that he doesn't imagine a future of people walking around with virtual reality headsets.

"That's certainly not the future that I'm hoping we get to," Zuckerberg said to podcast host Andrew Huberman in an interview in October 2023.

It's not the first time the CEO has thrown shade at the Apple Vision Pro and tried to one-up Meta's competitor. In February, Zuckerberg posted a video of himself reviewing Apple's competing device and said the Quest didn't just have better value but that it was "the better product period"

In the video, Zuckerberg also listed a number of features on Meta's Quest that he said were better than the Vision Pro, like a brighter screen and wider field of vision.

Zuckerberg isn't the one executive at the tech giant to drag the Apple Vision Pro. Meta's CTO, Andrew Bosworth, previously said the product was "very uncomfortable."

from All Content from Business Insider https://ift.tt/TtDeIV0
via IFTTT

• The effects of California's $20 minimum wage for fast food workers are starting to show.
• Chipotle said the law raised wages at its restaurants by roughly 20%.
• This translated to a 7% menu price increase at Chipotle locations in California. 

California's $20 wage for fast food workers is just a few weeks old, and the effects on workers and customers are beginning to emerge.

At Chipotle, the law drove a 20% increase in wages for its restaurant staff in the Golden State, the company said during its earnings call on Wednesday.

To offset that cost, menu prices notched up about 6% to 7% for customers in California, CEO Brian Niccol said.

CFO Jack Hartung added that the average ticket in California before the increase wasn't all that different from other states, even though the cost of doing business there is generally higher than other areas of the US.

Chipotle is based in California and has 475 restaurants there, representing about one-eighth of the company's total count.

"After the increase, we still have burritos that are going to be reasonably priced," Hartung said. "That chicken burrito is gonna be around $10."

Still, he added that it's a bit early to see the real effect on customer behavior.

And, of course, Chipotle is not the only restaurant chain trying to figure out the math to make the new rule work.

Hartung said the company is passing on less of the cost to consumers than its competitors.

"We still think we offer a great value here," he said. "As the consumer figures out how do they want to balance their budget, we think Chipotle will stay in their budget."

from All Content from Business Insider https://ift.tt/H0zmkYF
via IFTTT

• Meta's Q1 earnings report reveals it was off by at least $5 billion in capital expenditures.
• The report said costs are expected to increase as the company invests "aggressively" in AI.
• Meta also cited higher infrastructure and legal costs as the factors behind the increase. 

Meta's first-quarter earnings report reveals the company's AI plans are costing more than anticipated.

The tech giant is upping their estimate of capital expenses and expects the increase to continueas it invests "aggressively" in "AI research and product development efforts."

The expenses are expected to be roughly $5 billion more than the original estimate, reaching between $35 and $40 billion. The original prediction was between $30 billion and $37 billion.

Meta's minimum estimate for full-year 2024 total expenses will also be $2 billion higher than expected.

"We expect full-year 2024 total expenses to be in the range of $96-99 billion, updated from our prior outlook of $94-99 billion due to higher infrastructure and legal costs," the report said.

The increase isn't just coming from AI. It's also coming from product development and legal costs.

Meta is currently facing ongoing legal issues, including an antitrust lawsuit and being sued by 33 states who claim the tech giant is negatively impacting children's mental health.

The company also expects significant increases in Reality Labs' operating losses due to "ongoing product development efforts" and investments to scale its ecosystem, according to the report.

Reality Labs is a division of Meta that focuses on human-computer products through virtual reality headsets and augmented reality glasses.

Max Willens, senior analyst at market research firm Emarketer, a sister company to Business Insider, said it's not surprising that Meta changed its guidance.

"Companies investing in this space, especially at the scope Meta is investing in it, may struggle with costs in the near term," Willens said.

from All Content from Business Insider https://ift.tt/e6Uv2pD
via IFTTT

• Michael Cohen said he would briefly stop talking about Donald Trump during Trump's Manhattan criminal trial.
• Cohen is a key witness to what prosecutors allege was a scheme to falsify business records to cover up hush money.
• But until now, Cohen has continued to talk about Trump and the case.

Michael Cohen, Donald Trump's ex-personal attorney, has now pledged to stop talking about the former president until after his testimony in the former president's ongoing hush-money trial over.

"Despite not being the gagged defendant, out of respect for Judge Merchan and the prosecutors, I will cease posting anything about Donald on my X (formerly Twitter) account or on the Mea Culpa Podcast until after my trial testimony," Cohen wrote on X.

Cohen's loquaciousness about his time as a fixer for Trump should be legendary. He has a book and a podcast and is a frequent guest on cable TV — all will the goal of furthering his quest for redemption after his time working for Trump.

As Trump's personal attorney, Cohen is at the core of what New York prosecutors allege was an effort to falsify business records to cover for hush money paid to adult film star Stormy Daniels ahead of the 2016 presidential election. Cohen was also a major witness in Trump's fraud trial.

Unlike Trump, Cohen is not under a gag order. But legal experts have been dismayed at how Cohen continued to talk about the case, potentially providing Trump's lawyers with additional ammunition for their cross-examination during Cohen's expected testimony.

The former president has also attacked Cohen, one of a series of actions that prosecutors argued violated Judge Juan Merchan's gag order on Trump. Merchan upbraided Trump's attorney on Tuesday when considering the former president's statements but has yet to release a ruling on where the gag order stands.

Cohen is already likely to have a rough time on the stand during the trial.

He was sentenced to prison for lying to Congress and other offenses.

Trump has repeatedly attacked Cohen's credibility — including noting that Cohen is now a convicted liar.

The former president doesn't mention, though, that Cohen was convicted of lying to Congress about something that was supposed to help Trump.

from All Content from Business Insider https://ift.tt/XDcNv9H
via IFTTT

• House Speaker Mike Johnson wants Columbia University's President out.
• Johnson and other House Republicans have criticized her handling of campus protests and antisemitism.
• Pro-Palestinian student protests have been roiling Columbia's campus since last week.

House Speaker Mike Johnson wants Columbia University's president to resign, calling her "inept" and "weak."

Johnson, who is visiting Columbia on Wednesday, has railed against Nemat "Minouche" Shafik's handling of pro-Palestinian student protests and antisemitism on campus following Hamas' October 7 attack on Israel and Israel's subsequent war in Gaza.

Upon his arrival to campus Wednesday evening, Johnson was greeted by a crowd that booed and heckled him, while a few cheered, according to an Axios reporter who posted a video to X.

Though Johnson does not have the power to directly oust a college president, similar calls from political figures have fueled recent resignations.

After lawmakers and powerful figures urged the presidents of Harvard, MIT, and UPenn to resign following their congressional testimony about on-campus antisemitism in December, both Harvard's Claudine Gay and UPenn's Elizabeth Magill did resign, though MIT's president Sally Kornbluth has maintained her role.

"What we're seeing on these college campuses across the country is disgusting and unacceptable," Johnson said on "The Hugh Hewitt Show" on Wednesday. "Every leader in this country, every political official, every citizen of good conscience has to speak out and say that this is not who we are in America, and we have got to have accountability."

"It's unconscionable," Johnson added. "This president, Shafik, is shown to be a very weak, inept leader. They cannot even guarantee the safety of Jewish students? They're expected to run for their lives and stay home from class? It's just, it's, it's maddening."

Columbia students began camping out on campus last week to protest Israel's war in Gaza, arguing that the country is committing genocide against the Palestinian people. They're also demanding that the university divest from companies that support Israel.

As the protests were ramping up, Shafik testified to Congress, where she took a much stronger stance against antisemitism than her college president peers had done at their hearing months before. When Congress asked Harvard's Claudine Gay, for example, whether students calling for a Jewish genocide would violate university policies, she answered with, "It can be, depending on the context."

On the second day of protests, Shafik called in the NYPD, which arrested more than a hundred pro-Palestinian student protesters on suspicion of trespassing. The protests have continued in the days since, with some student groups saying Jewish students have been targeted with offensive, antisemitic rhetoric on campus.

In response to the ongoing campus unrest, House Republicans have been threatening to withdraw federal funding from Columbia and other schools experiencing similar protests, arguing that they've failed to protect Jewish students' safety.

"We're going to call on educational institutions like Columbia, if you cannot control what is happening at your university, if the president at this university is failing to keep students safe, then she shouldn't be eligible for any federal aid coming into this university," NY Republican Rep. Anthony D'Esposito said on Monday after visiting campus, according to The Washington Post.

Johnson echoed those calls on "The Hugh Hewitt Show" on Wednesday, adding that the visas of protesting students can be revoked.

Johnson is scheduled to meet with Columbia Jewish students and the university's Rabbi Yuda Drizin on Wednesday before holding a press conference where he and other House Republicans are expected to formally call for Shafik's resignation, The Washington Post reported.

"The decibel of our disagreements has only increased in recent days," Shafik wrote in a statement on Monday following her decision to call NYPD to campus. "These tensions have been exploited and amplified by individuals who are not affiliated with Columbia who have come to campus to pursue their own agendas. We need a reset."

Representatives for Shafik did not immediately respond to BI's request for comment.

from All Content from Business Insider https://ift.tt/KBR4A5V
via IFTTT

• TikTok's CEO is calling its users to action to support the app against US lawmakers seeking a ban.
• President Biden signed a bill that forces TikTok to be sold to an American company or face a ban.
• Users are freaking out over potentially losing access to their favorite app.

TikTok CEO Shou Chew has issued a rallying cry to users that the company plans to fight a possible US ban.

A foreign-aid bill passed Tuesday by the US Senate and signed by President Joe Biden Wednesday has millions of Americans who use TikTok freaking out over a potential ban.

Chew responded to the latest moves in a video posted by the official TikTok account. "Make no mistake, this is a ban," Chew said in the video. "A ban on TikTok and a ban on you and your voice."

The clip has over four million views as of Wednesday afternoon, and the comments show that users aren't ready to say goodbye to TikTok anytime soon.

Many expressed support for Chew, whose call to action hints at the pressure building against TikTok and its Chinese owners, Bytedance.

"I trust you with my life," one comment read.

Others credited the platform for helping users find "their voice and livelihood" and providing "a sense of community here that we don't have anywhere else."

Meanwhile, some reminisced about what they learned on the app, from restaurant recommendations to beauty product reviews.

"bro i learned how to change my air filters for my car and how to do an oil change," a commenter said.

Despite Chew's defiant video and the growing outrage from the app's users, a TikTok ban won't happen in the immediate future.

Bytedance has nine months to a year to find a buyer for TikTok — and that's only if the bill holds up in court.

from All Content from Business Insider https://ift.tt/IRBksUX
via IFTTT

• Selena Gomez has shut down rumors that she's looking to sell her makeup brand, Rare Beauty.
• The line has been valued at $2 billion and has earned more than $70 million from blush sales alone.
• During the Time100 Summit, Gomez said she's "enjoying this a little too much."

The rumors aren't true, according to Selena Gomez. She's not eager to sell her makeup brand.

In March, Bloomberg reported that Gomez's company, Rare Beauty, had hired financial advisors to join meetings with potential investors and buyers.

The report came after The Business of Fashion named Rare Beauty one of the top merger and acquisition targets in January and valued the brand at $2 billion, citing $300 million in sales last year.

But during an appearance at the Time100 Summit in New York City on Wednesday, Gomez hinted at a strong future for her company — one that intrinsically involves her.

"I don't think I'm going anywhere. I am enjoying this a little too much," she told Time senior editor Lucy Feldman. "I just want to continue building what we're doing."

Gomez went on to describe Rare Beauty as her "pride and joy" and said there are "so many fun things coming up."

"I'm just looking forward to being a part of this," she said.

Rare Beauty has seen major success since launching in 2020 with TikTok-viral products and Sephora bestsellers. As Bloomberg reported last year, it "moved 3.1 million units" of its Soft Pinch Liquid Blush alone in 2022, earning the company around $70 million in revenue.

The fan-favorite product is so popular that Rare Beauty launched a new version — the $26 Soft Pinch Luminous Powder Blush — in April.

Rare Beauty is also known for its Rare Impact Fund, an initiative Gomez founded that's dedicated to raising $100 million over the next 10 years to expand mental health services across the world.

Other celebrity beauty brand founders have famously sold their own cosmetic lines and often earned serious cash in the process.

Bobbi Brown sold her namesake beauty company to Estée Lauder in 1995 for a reported $74.5 million, and Kat Von D sold her shares of her former brand to Kendo in 2020.

Though Gomez might not be planning to join them anytime soon, the possibilities — and dollars — in the future are seemingly endless.

from All Content from Business Insider https://ift.tt/HJeOlnB
via IFTTT

• Buy now, pay later company Affirm is starting to offer loans for elective cosmetic procedures.
• BNPL works differently from a credit card — critics say it can encourage people to pile on debt. 
• It's not just available for Botox, though. Dental and vet bills can be paid this way, too.

"Buy now, pay later" company Affirm has identified a new category for growth, according to a new report from Reuters: elective medical procedures like Botox, nose jobs, and even dental treatments.

Buy now, pay later options like Klarna and Affirm have become ubiquitous at checkouts on e-commerce retail sites for some time. Klarna even had a Super Bowl ad. But until recently, these companies have largely focused on retail purchases.

Now, BNPL is moving into the medical arena — a first for a major buy now, pay later company, according to the Reuters report:

Over the past year, Affirm has more than doubled the number of elective medical merchants on its network, reaching around 130 at of the end of 2023. The San Francisco-based company is hoping to tap growing consumer demand for financing for cosmetic treatments, dental services, medical devices and veterinary procedures.

"A lot of these price points are about $2,000 and above, so that suits our installment product … really well," Pat Suh, Affirm's senior vice president of revenue, said in an interview.

On one hand, financing cosmetic procedures is nothing new. A plastic surgeon or dentist may offer their own financing plans, and certainly, people use personal credit cards or other personal loan products for these things.

BNPL can appeal to people who don't have a credit card, perhaps because they're young and don't have a credit history or have bad credit. This can be a good thing, giving purchasing power to those who wouldn't otherwise have it. But BNPL apps typically don't help people build credit. They don't send positive payment information to the credit bureaus, but if your account goes into collections, it can negatively affect your credit score.

They can also trip those same people up. In 2022, a LendingTree report found that 42% of people who had used BNPL had at least one late payment. And those late payment fees can start to add up.

The services can also lead young people down a bad road, encouraging overspending with the allure of a seemingly low monthly payment. Business Insider reported recently how BNPL loans grew by 10 times between 2019 and 2023, creating a significant amount of "phantom debt" in the US economy since it's not typically reported to credit bureaus.

I know: It can be hard to sympathize with someone who's using lip filler they can't afford by putting it on Affirm. But go back to what it's actually being used for: "cosmetic treatments, dental services, medical devices, and veterinary procedures."

That means it's not just lip filler and Botox.

People who might need a root canal or a crown for a chipped tooth — the kind of necessary care that can be very expensive even with dental insurance — might be using Affirm. Or veterinary bills: any pet owner knows the horrible choice they face if their dog or cat needs an expensive surgery.

from All Content from Business Insider https://ift.tt/q74j2sa
via IFTTT

• The US economy is facing a rare and difficult bifurcation, says Piper Sandler's head economist.
• Big companies have withstood or even benefited from high rates, while consumers are feeling the squeeze. 
• The economist forecasts 53% odds of recession but adds that one is needed to bring down inflation. 

The US is navigating a "bifurcated" economy that's only been seen twice before, with both times ending in a recession, according to a top economist.

Nancy Lazar, Piper Sandler's chief global economist, told Fox Business Network on Wednesday that the current economic backdrop is "very difficult" and "very unusual," and occurred only during the energy crisis in 1978-1979 and the latest Great Recession in 2008. 

"You have those that are benefiting from higher interest rates. You have those that are suffering from higher interest rates, those that can pay for these higher prices, and those that are really getting squeezed," Lazar said.

She said large businesses have been riding high on interest income, favorable financial conditions from locking in low-cost debt, surging stock rallies, and hefty government support.

Meanwhile, consumers are feeling the squeeze, facing mounting debts at elevated interest rates while inflation eats into wage gains. 

"At the end of the day, the interest rate structure had to go higher for longer, and in turn, eventually, you did have a recession, and that's how you eventually crushed the excesses and inflation," she said. 

Lazar forecasts a 53% odds of a recession, but she emphasized that we "need a recession" to tackle the inflation problem. 

"[Otherwise,] you're going to have a big group of people, a big group of companies continue to spend, continue to bid up these prices. And so I think it's a fine line, and I worry more about sticky inflation than I worry about recession."

from All Content from Business Insider https://ift.tt/RMlI9q8
via IFTTT