This Week in AI: Tech Giants’ Spending Soars; Meta Rethinks Metaverse

This week in artificial intelligence, Big Tech invests in AI, Meta rethinks its metaverse pivot and DeepSeek poses a potential security threat.

The AI arms race is getting pricey. Meta, Google, Microsoft and Amazon announced they are planning to collectively spend at least $315 billion on capital expenditures in 2025, much of it for AI.

Meta’s capital expenditures budget is between $60 billion and $65 billion, while Google parent Alphabet has set aside $75 billion, mainly toward data centers, servers and networking infrastructure. Amazon forecasted capital expenditures of $100 billion for the year, while Microsoft is booking $80 billion to build data centers, train AI models, and deploy AI and cloud-based applications.

Microsoft President Brad Smith said in a Jan. 3 blog post that “artificial intelligence is the electricity of our age.”

“This starts with advances and investments in world-leading American AI technology and infrastructure,” he said.

Every industrial revolution has been marked by a general-purpose technology applied broadly across industries to boost innovation and productivity. AI is igniting the next industrial revolution, he said in the post.

However, AI requires hefty investments. Training large language models uses thousands of GPUs (each Nvidia GPU costs about $10,000 or more) or specialized AI chips for a total of tens or hundreds of millions of dollars. Running these AI models at scale also requires high-performance data centers, which need more servers and require more cooling and maintenance.

Plus, there’s the cost of acquiring and preparing big datasets, six-figure salaries for AI researchers and engineers, constant R&D, regulatory compliance, and other expenditures.

Meta, which changed its corporate name from Facebook in 2021 to pivot to the metaverse, might be having a change of heart.

Meta Chief Technology Officer Andrew Bosworth told employees in Reality Labs — the home of its metaverse and wearables products — that “this year likely determines whether this entire effort will go down as the work of visionaries or a legendary misadventure.”

“We need to drive sales, retention and engagement across the board but especially in [mixed reality],” he added in the memo.

He also talked about Horizon Worlds, an immersive, virtual reality world where avatars interact with each other.

“…Horizon Worlds on mobile absolutely has to break out for our long-term plans to have a chance,” he said.

However, bulky headsets that are needed to access the metaverse are hampering greater consumer acceptance. Last year, Reality Labs lost $17.7 billion from operations on revenue of $2.15 billion.

During Meta’s latest earnings call Jan. 29, CEO Mark Zuckerberg told analysts that 2025 will be a “pivotal year for the metaverse,” adding that “we’re going to know a lot more about Horizon’s trajectory by the end of this year.”

DeepSeek has gone from an AI darling to pariah in less than two weeks.

U.S. lawmakers Rep. Darin LaHood of Illinois and Rep. Josh Gottheimer of New Jersey introduced legislation outlawing DeepSeek’s AI chatbot on government devices, citing national security concerns.

DeepSeek, based in China, rocked the AI world in late January with the release of a foundation AI model that performs on par with the best from the United States but at a fraction of the price. For days, it was the most downloaded app in the Apple App Store.

However, the app has intentionally hidden code that could transmit user login information to China Mobile, a state-owned telecom provider banned in the U.S., Feroot Security CEO Ivan Tsarynny told The Wall Street Journal Thursday (Feb. 6).

“This is a five-alarm national security fire,” Gottheimer said in a statement. “We must get to the bottom of DeepSeek’s malign activities. We simply can’t risk the [Chinese Communist Party (CCP)] infiltrating the devices of our government officials and jeopardizing our national security.”

Australia, Italy, Taiwan and the state of Texas have already banned DeepSeek on government devices. The startup is also under investigation in Belgium, France, Ireland and South Korea.

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