Abstract:
According to the Wall Street Journal, Meta appears to have launched a highly successful AI product, but the road to ultimately dominating the next stage of consumer AI applications is far from smooth. Two weeks ago, Meta launched Muse, a new, easy-to-use personal AI agent. The app has been at the top of Apple's U.S. App Store since Friday, pushing Meta's stock price up 11% on Monday.
AI agent Muse
However, it has faced scrutiny over privacy concerns.
Amazon has recently blocked Muse from shopping on its website. Analysts expect competitors to launch their own Muse rivals in the near future.If Meta can maintain its initial momentum, it will reap huge benefits from a product that can access users' vast troves of data, from text messages to emails to calendars. Now, investors are hoping to see the company reap bigger returns from its multibillion-dollar spending spree.
Muse tops Apple App Store rankings
Investment bank Truist Securities estimates that Muse could bring Meta $28.5 billion in new revenue by 2030.
“I don’t know if this momentum can be sustained, because if we can learn anything from this space, it’s that give Google and OpenAI a few weeks and they will copy anything that is already on the market,” said Truist analyst Youssef Squali. “At least for now, I think the market’s perception of Meta is changing.”
Privacy invasion and security concerns
Muse will become more useful as users open up more of their life data to the AI agent, including email, text messages and calendars. But analysts say many people themselves are uncomfortable handing over their passwords to these accounts, and are particularly reluctant to hand over their passwords to Meta.
A survey of U.S. consumers conducted by Oppenheimer showed that only 8% of respondents were willing to hand over their passwords to Meta, compared with 30% who felt comfortable handing them over to Google.
However, Muse has been downloaded more than 2.5 million times since its launch on September 8, according to market intelligence firm SensorTower. It's unclear how many people have fully opened up their online lives to Meta.
Another related issue is security. Meta emphasized in the press release that Muse was designed with security in mind and stated that each agent runs on its own secure dedicated computer.
Before the release of Muse, Alexandr Wang, head of Meta AI, said in an interview that the company was more worried about AI agents accidentally leaking users' personal information or deleting important emails than losing control of AI.
Wang Tao
But analysts say concerns remain. "If there was some kind of major hacking attack tomorrow and some AI agent stole a user's account credentials or credit card information and then went on a rampage, I think that would have a negative impact on the entire industry," said Truist analyst Squally.
Ability to access other websites
Muse's performance also depends on which websites it can access, but Amazon's actions on Sunday night made the product less useful.
Amazon now bans Muse from accessing its website and does not allow Muse to purchase items on behalf of users. Amazon said it had not previously been informed that Muse would visit its stores and had not authorized such behavior.
An Amazon spokesperson said: "We believe that third-party apps that offer services to purchase goods from other businesses on behalf of customers should do so openly and transparently and respect the service provider's decision whether they want to participate."
As of press time, Meta declined to comment on Amazon’s actions.
Analysts said that in addition to selling goods, Amazon's shopping website also has a huge advertising business, and it will not be willing to give up any ground to Meta in this area. If agents complete more shopping for users in the future, that means fewer people will see ads, which could prompt Amazon to rethink its business model.
"Almost every internet marketplace either has a very large advertising business or plans to build one over time," said Josh Beck, a technology analyst at Raymond James & Co. "So, I think that's a major sticking point."
Baker added that these sites need to believe that working with AI agents will bring enough new users to their platforms to boost revenue, rather than becoming a "loser that outweighs the gain." Otherwise, they would not allow agents access to their websites. Meta said it has partnered with several brands including Shopify, Instacart and Dick's Sporting Goods.
Muse’s early and rapid adoption in recent days has also raised concerns that AI will disrupt certain industries, including financial services. Shares of wealth management companies, brokerage firms and even major banks fell on Tuesday, with Charles Schwab falling more than 6%. Travel website operator Booking Holdings and insurance company Allstate were also hit.
OpenAI, Google competing products
Meta must expand its market share without losing it to competitors such as OpenAI and Google. Analysts expect these companies to launch similar products soon.
Analysts say Meta does have a first-mover advantage. As the parent company of Instagram and Facebook, Meta already has data on millions of users and has almost unrivaled distribution channels for its products. The only comparable product on the market currently is an AI agent launched by a startup called Instinct. The product is also currently under rapid development, but is only available to invite-only users.
“Timing is critical here,” Wells Fargo analyst Ken Gawrelski said. “As we, the consumers, learn how best to interact with these assistants and direct our agents, they will get better and better.”
He also added that Google has a lot of computing power that can be redeployed to create a similar product in terms of privacy and security. Since each agent runs on its own virtual computer, Muse consumes a lot of computing power.
Analysts also expect OpenAI to release a consumer-grade AI agent within the next week or two, and Apple is expected to join the race at some point.
"It's too early to tell how this field will develop," Baker said, "but everyone is already starting to move in that direction."
Comments