Snap to Ramp Up AI Investment Following Lag in Technology

Snap CEO Evan Spiegel acknowledged that Snapchat has fallen behind in artificial intelligence (AI) and plans to significantly increase investment in this area after years of focusing primarily on its advertising business. In an interview with Bloomberg, Spiegel admitted, “there was a recognition that we’d fallen behind the curve on the machine learning side,” which has impacted Snap’s business performance.

Spiegel outlined plans to assemble a team of senior machine learning experts to spearhead AI development, shifting focus from brand advertising to technological advancement. The company aims to invest around $1.5 billion annually to enhance its AI and machine learning capabilities, competing with rivals like Meta Platforms. Instead of building its infrastructure in-house, Snap is partnering with cloud providers such as Google and Amazon to support these efforts.

In the first quarter of 2024, Snap’s revenue grew by 21% year-on-year to $1.2 billion, showing recovery after struggling with an advertising slump in recent years. With improving ad revenues, Snap plans to enhance Snapchat’s recommendation algorithms and integrate its short-form videos and Story features more effectively.

Snapchat already offers a virtual AI chatbot, powered by a customised version of OpenAI’s ChatGPT model, introduced in early 2023. Its premium service, Snapchat+, had 7 million paying subscribers by December 2023.

This strategic pivot towards AI investment marks a significant shift for Snap as it aims to strengthen its technology and maintain competitiveness in the rapidly evolving social media landscape.