The latest earnings reports from America’s top tech companies reveal that Silicon Valley is going all-in on artificial intelligence, sometimes in spite of users’ concerns.
Financials from Meta, Microsoft, and Google released Wednesday show that all three companies beat experts’ earnings and revenue expectations. On earnings calls, all three companies pointed to increased AI investment, and increased spending in general. Google parent company Alphabet raised spending by about 7% for the year, Microsoft discussed spending above their original goal of 42% this year, and Meta discussed aggressive and substantial investment, but did not provide a specific number.
“Across Facebook, Instagram, and Threads, our AI recommendation systems are delivering higher quality and more relevant content, which led to 5% more time spent on Facebook in Q3 and 10% on Threads,” Meta CEO Mark Zuckerberg said. “Video is a particular bright spot, with video time spent on Instagram up more than 30% since last year.”
This week also brought good news for the AI sector across the board. Federal Reserve Chairman Jerome Powell on Wednesday told investors that he doesn’t see a bubble in the AI space, noting that artificial intelligence companies “have real earnings and business models,” rather than just “ideas.” As if to underscore that point, Nvidia, a major player in the AI space, became the world’s largest company in terms of market capitalization, reaching $5 trillion in value.
This is good news for Big Tech. But is it good for America?
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Beneath the AI hype and rosy growth numbers, Meta’s latest financial filing reveals something darker: the company is facing tens of thousands of lawsuits alleging its apps are addictive and harmful.
“Beginning in January 2022, we became subject to litigation and other proceedings alleging that Facebook and Instagram cause ‘social media addiction’ in users.”
The company noted the lawsuits are ongoing and that a “favorable outcome” for the company cannot be assured.
“Substantially all of our revenue comes from advertising,” Meta reported to investors, noting that prominent revenue streams depend on users staying on Instagram and Facebook.
“Advertising revenue could be adversely affected by decreases in user engagement, including time spent on our products.”
With AI investment accelerating across big tech, the coming quarters will show whether the technology continues to drive growth, as well as how companies like Meta, Microsoft, and Google balance innovation, profitability, and potential public scrutiny.
Meta did not immediately respond to a request for comment.