Meta AI with Llama 3 405B and Custom Characters Sharpens the Strategy

The deprecation of Celebrity AIs should prompt skepticism

Meta is all-in on AI. There are two key drivers behind this strategy.

1. Meta’s core business revolves around gaining and maintaining user attention. That attention is then monetized through ads or commerce. If AI assistants begin to consume more of a user’s attention, Meta wants to maintain the dominance it accumulated in that metric during the recent mobile era.

2. Meta’s tech giant rivals are all investing heavily in AI. The company believes it is critical to make it hard for rivals to gain a foothold and expand into the consumer “attention economy” by using generative AI as a wedge. Thus, it offers its AI assistant features to consumers free of charge, and it also offers frontier-quality foundation models to developers at no cost. Both moves make it harder for rivals to generate revenue they can invest back into AI innovation.

AI Assistants for Consumers

Meta AI is the company’s answer to ChatGPT. When it arrived in September 2023, it was driven by the Llama 2 70B model and generally trailed OpenAI’s ChatGPT and Microsoft’s consumer-oriented Copilot in performance. The Gemini assistants from Google that arrived in early 2024 also had some performance advantages. None of this was a surprise. Meta’s 70B parameter large language model (LLM) was competing against foundation models with far higher parameter counts and training data.

With the introduction of Meta’s Llama 3 405B parameter LLM earlier this month, Meta AI is now facing more of a level playing field. The default solution remains the Llama 3 70B model, and it appears to be sufficient for many users around the world. However, there is also a new limited-use option that employs the 405B model. This is a significant step in bringing Meta AI closer to parity with rivals.

Most-Used AI in 2024?

Mark Zuckerberg commented on the progress and direction for Meta AI during the company’s quarterly earnings call this past week. Unsurprisingly, his aims are ambitious. According to Zuckerberg:

Last quarter we started broadly rolling out our assistant Meta AI and it is on track to achieve our goal of becoming the most used AI assistant by the end of the year. We have an exciting road map ahead of things that we want to add, but the bottom line here is that Meta AI feels like it is on track to be an important service and it's improving quickly both in intelligence and features.

Some of the use cases are utilitarian like searching for information or role playing difficult conversations before you have them with another person and other uses are more creative like the new imagine yourself feature that lets you create images of yourself doing whatever you want in whatever style you want. And part of part of the beauty of AI is that it's general so we're still uncovering the wide range of use cases that it's valuable for.

Note the goal to become the most-used AI assistant by year-end. That will not be easy with ChatGPT’s lead in the segment, indicators that suggest Google is likely to become more aggressive in its growth efforts in consumer segments, and the introduction of Apple Intelligence later this year. There are also rumblings of an upgraded Alexa.

I am skeptical that Meta can reach its goal by year-end. However, Meta has the most formidable application-based distribution in the market through Facebook, Instagram, and WhatsApp. In addition, it depends on what metrics you want to apply to “most used.” Will that be the most users, most usage time, highest average session length, or some metrics concatenation? A metric that includes total users or sessions would be the most likely to achieve the goal.

Meta CFO Susan Li also added some additional details regarding Meta AI adoption during the recent earnings call. WhatsApp is leading the adoption path for the company. However, it appears Zuckerberg is betting that Instagram will drive the next surge in growth.

People have used Meta AI for billions of queries since we first introduced it. We're seeing particularly promising signs on WhatsApp in terms of retention and engagement which has coincided with India becoming our largest market for Meta AI usage. You can now use Meta AI in over 20 countries and eight languages. And in the US we're rolling out new features like Imagine edit which allows people to edit images they generate with Meta AI.

Attention!

Facebook and Instagram became the front door to digital experiences for many consumers. They are often the first apps opened on a consumer’s mobile device and often lead to other digital activities ranging from browsing and shopping to messaging. If a user needs to execute a task that requires an AI assistant, the risk for Meta is that its users may start their digital journeys somewhere else or end an app session early to access generative AI features elsewhere. The result would likely be a declining average session time and maybe fewer total sessions.

Meta AI provides an opportunity to mitigate the risk of a more favored AI assistant stealing user attention. If the company executes well, Meta AI could also lead to more and longer sessions. Raymond James, managing director of equity research, Josh Beck, commented after the earnings call that Meta AI may already be leading users to spend more time in Meta apps.

Meta AI…is a chatbot. They're using Instagram and Facebook to distribute it. …There's starting to be kind of a new conversation on Meta that you would have never really considered before. So, “Hey Meta, can you help me plan this trip with my friends?” [is] not something you really would have ever considered on your time on Instagram or Facebook but it is completely net new. It's driving more time. It's helping their users kind of find a new use case.

Zuckerberg commented along these same lines during the earnings call during the analyst questions period. However, he cautioned that monetization through increased attention may not arrive soon.

For things like Meta AI or AI Studio, I mean these are things that I think will increase engagement in our products and have other benefits that will improve the business and engagement in the near term. But before we're really talking about monetization of any of those things by themselves, I mean I don't think that anyone should be surprised that I would expect that that will be years…

I mean we obviously want to kind of grow that and grow the engagement on that to be a lot deeper, and then we'll focus on monetizing it over time.

Zuckerberg commented to analysts in October 2023:

Whenever there's more engagement in the apps, that creates the opportunity for more monetization.

Meta’s economic model is based on user attention. Just about every strategic and app feature decision the company has made over the last decade has focused on driving more and longer sessions. One area where the company has struggled to drive longer session times and advertising revenue is WhatsApp. Meta AI could provide an ideal tool for transforming that app experience into a more easily monetizable vehicle for the company and extend beyond simple communications. With that said, it may be some time before investors see a direct impact on revenue.

Customizing Consumer AI Experiences

Zuckerberg also highlighted the company’s most recent feature launch, Meta AI Studio. It appears that he expects creators on Instagram to be the first power users of the solution by enabling them to craft a customized character to interact with their followers. However, it is also a new feature that everyday users may adopt to enhance their experience on the company’s social networks. Zuckerberg commented:

An important part of our vision is that we're not just creating a single AI but enabling lots of people to create their own AIs. This week we launched AI Studio which lets anyone create AIs to interact with across our apps.

I think that creators are especially going to find this quite valuable. There are millions of creators across our apps and these are people who want to engage more with their communities and their communities want to engage more with them, but there are only so many hours in the day. So, now they're going to be able to use AI Studio to create AI agents that can channel them to chat with their community, answer people's questions, create content, and more. I'm quite excited about this.

But this goes beyond creators to anyone is going to be able to build their own AIs based on their interests or different topics that they are going to be able to engage with or share with their friends.

In some ways, this seems similar to GPT's functionality in ChatGPT and characters from Character AI. However, Zuckerberg seems to be thinking bigger. He mentioned business messaging as a key feature. That suggests creators and small businesses might begin to leverage the capability to answer fan and customer queries, which would be a meaningful change in feature value.

AI Celebrities Personas Fail

This all sounds good, but Meta’s ability to read the market has already faced headwinds. During the announcement of Meta AI last fall, Zuckerberg spent just 21% of the nine-plus minutes talking about that product and 79% promoting AI characters that mimicked celebrities such as Kendall Jenner, Snoop Dogg, and Tom Brady. Users did not share that enthusiasm. The Information reported in July:

Meta Platforms has scrapped its first high-profile foray into consumer artificial intelligence—chatbots played by celebrities and social media influencers such as Charli D’Amelio, MrBeast and Paris Hilton…

None of the AI chatbots amassed particularly big followings, especially compared with the personal accounts of the celebrities. In some cases Meta paid millions of dollars to license these celebrities’ likenesses.

…

But the celebrity chatbots didn’t gain much of a fanbase—and some users found them weird.

Snoop Dogg’s AI character had only about 15,000 followers on Instagram, compared with 87.5 million on the rapper’s personal account, as of late June.

Jenner’s Billie was the most successful of the bunch based on followers, amassing about 179,000. But that still paled in comparison to the real-life Jenner’s Instagram account, which currently has 294 million followers.

The Consumer AI Assistant Showdown

Thus far, the rise of Generative AI-enabled assistants has primarily been a competition among new and old tech giants, such as OpenAI, Microsoft, and Google. In addition, the proving ground has revolved around production and productivity—creating text and images or making it more efficient to work with text. Meta is taking a different approach. It is focused on consumption and connectivity.

It seems unlikely that Meta AI will become the productivity-focused AI assistant of choice. However, it could become a leading leisure and entertainment-focused AI assistant. The big sign that Meta is succeeding will be if it starts to become the reason users open its apps as opposed to accessing them occasionally when already in the apps. I suspect the latter scenario is more likely.

I’d also be surprised if characters take off on Instagram. There may be a flurry of activity over the next 4-6 weeks. However, the key metric to watch is user retention. Most of these types of features, such as Meta’s AI characters and OpenAI’s GPTs, showed strong initial demand that soon tapered off. Consumers seem to want digital assistants for productivity tasks. It is unproven whether they will adopt them for entertainment use cases. The sustainability of character customization has only shown staying power for digital boyfriends and girlfriends on Character AI. So, much of Meta AI’s strategy is headed into unknown territory.

We’ve seen previous clashes around AI assistants — Siri and Google Now, Alexa and Google Assistant. Generative AI represents a continuation of that trend. However, now, the technology is much more useful, the investment if larger, there are more competitors, and there is a growing use case segmentation. Meta AI is taking the consumer route. OpenAI, Microsoft, and Anthropic are largely taking the business and personal productivity route. Google is likely to do both. Let the games begin (again)!

Many thanks to our title sponsor.

• Dabble Lab: AI-powered bespoke software development services