Meta Platforms (META) will soon target advertisements and other content recommendations to users based on their conversations with its generative-AI-powered chatbot. Meta stock slipped Wednesday.
The plan will go into effect Dec. 16. The move comes as Chief Executive Mark Zuckerberg has pledged to spend hundreds of billions to build AI-related infrastructure, such as data centers. The spending is to support the company’s Meta AI chatbot and other products Zuckerberg hopes to someday infuse with the power of “superintelligence.”
The Facebook and Instagram parent company announced the update to its algorithmic content recommendation system in a blog post Wednesday.
The Meta AI chatbot — which has a stand-alone app and is also infused within Facebook, Instagram, WhatsApp and Messenger — has more than 1 billion active monthly users, according to the company blog post.
Meta’s plan to target ads from its chatbot is unlikely to register as a surprise on Wall Street. Advertising already provides nearly all of Meta’s revenue, which analysts polled by FactSet forecast will reach $196.7 billion this year. Zuckerberg has previously told analysts he expects the company can get a return on its AI investments through improved advertising, both in how ads are sent to users and the tools the company can offer businesses.
But advertising based on chatbot conversations could prove tricky, given that some users use chatbots for personal questions. Meta said in its blog post that it won’t use conversation on topics such as religious or political views, sexual orientation, health, and racial or ethnic origin to customize ads. The company is also not including users in the United Kingdom, South Korea and the European Union for the initial launch.
Meta Stock: Competing With OpenAI, Google Gemini
Meta AI competes against chatbots such Google’s (GOOGL) Gemini and OpenAI’s ChatGPT. ChatGPT has soared to more than 700 million weekly users in the three years since it launched. But the startup behind it has so far been resistant to advertising.
OpenAI Chief Executive Sam Altman has previously been critical of the idea that ads should be mixed with AI chats but has not ruled out the possibility of OpenAI launching an advertising business in some form.
OpenAI on Monday announced a new feature allowing users to buy items directly within ChatGPT from Etsy and Shopify merchants. Some analysts see that decision as a precursor to a broader advertising rollout, which could help drive more revenue to fund the startup’s massive AI data center spending plans.
Google offers ads within its AI mode feature. But a frequently-asked-questions page for Google’s Gemini chatbot says “Gemini Apps chats are not being used to show you ads. If this changes, we will clearly communicate it to you.”
Meanwhile, Meta stock was down 2.5% at 715.77 in recent trading on the stock market today. Stocks are broadly lower as investors reacted to the U.S. government shutdown and weaker-than-expected ADP employment numbers.
Meta shares are falling below the bottom of a previous flat-base pattern, according to IBD MarketSurge. And while Meta stock is ahead 23% year to date, shares of the social media giant have pulled back by roughly 10% from a high of 796.25 reached in early August. That was after Meta’s strong Q2 results ignited a rally for the company’s stock.
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