Meta has just agreed to pay up to $18 billion in a settlement over lawsuits involving youth addiction. On the same day, Reuters reported that its internal “AI-native” restructuring was halted by Zuckerberg.
Those two headlines hit at once, and the market’s narrative about Meta is shifting: from “AI dramatically boosts efficiency” to “AI burns money but its output is questionable.” Reuters obtained internal data showing that the volume of code changes year over year was up by 220%, but only 36% more functionality could be delivered to users. Meta’s internal projections even included using AI to cut 60% of jobs; however, the second wave was called off on May 19, and the next day they still cut about 10%.
To make matters worse, youth protection measures are currently only in the United States. The EU and South Korea are both calling for global application. The settlement is not yet finished—regulators’ concerns are still rolling forward.
The question is: if AI can’t prove it’s worth the $10 billion per year in investment, what story does Meta’s valuation need to tell again?
Those two headlines hit at once, and the market’s narrative about Meta is shifting: from “AI dramatically boosts efficiency” to “AI burns money but its output is questionable.” Reuters obtained internal data showing that the volume of code changes year over year was up by 220%, but only 36% more functionality could be delivered to users. Meta’s internal projections even included using AI to cut 60% of jobs; however, the second wave was called off on May 19, and the next day they still cut about 10%.
To make matters worse, youth protection measures are currently only in the United States. The EU and South Korea are both calling for global application. The settlement is not yet finished—regulators’ concerns are still rolling forward.
The question is: if AI can’t prove it’s worth the $10 billion per year in investment, what story does Meta’s valuation need to tell again?