Facebook – Bottom of the class

Yet another AI red flag.

• Another small slip-up by Facebook reveals just how challenging its AI problem is and why it must continue to hire humans to do the jobs of the machines resulting in the announced 1000bp decline in operating margins over the medium term.
• This slip-up involves only one user but serves as a great example of how weak Facebook’s AI is as it appears completely incapable of making even the simplest cognitive leaps without explicit programming.
• A British woman suffered the agony of losing her baby and when she used Facebook to break the news to her family and friends, it responded by continuing to populate her news feed with parenting adds greatly adding to her distress (see here).
• To be completely fair to Facebook, I suspect that Amazon and Google would have fared little better but their databases would not have had the cue from the user that the tragic event had occurred.
• Furthermore, as Facebook holds itself out to the market as a place for community and coming together, the onus is on Facebook to live up to that ideal much more than it is for Amazon and Google.
• For the last two years, RFM has ranked Facebook dead last when it comes to the AI arms race that is currently being run among the digital ecosystems and this event serves as yet another red flag warning of how much work Facebook still has to do.
• There are plenty of examples of this eventuality that already exist within Facebook’s data set meaning that if Facebook had the ability to categorise and understand its data properly, this issue would never have arisen.
• The understanding of one’s data is only stage one of three when it comes to creating and deploying AI to improve one’s digital life services (see here).
• It is because Facebook cannot get past stage one, that it is having to hire armies of humans to analyse its data because its machines are too stupid.
• To make matters worse, humans are ill-suited to this task as to prevent objectionable content from trending, it needs to be seen and identified very quickly after it has been posted.
• Much of the human fact-checking that Facebook does takes days to flag content as fake or objectionable and often it has trended and is in decline before it is removed.
• This is the worst of both worlds as the humans are really expensive (as declining EBIT margins show) and they can never be as good at this particular job as the machines can be.
• This is why AI remains by far the biggest problem that Facebook has today, and while progress is happening, it is painfully slow.
• I think that the net result will be financial underperformance for the next couple of years meaning that the time to get back into Facebook is not even close.
• I am sitting on the sidelines until I can see maturity and engagement with its new Digital Life services as well as a meaningful improvement in its AI.
• There is worse to come.