- Meta is making a major push to expand its business beyond online advertising, including through subscriptions for AI features and services.
- History shows that success is not guaranteed, as Meta has struggled to find traction in any business that doesn’t involve digital advertising.
- “It is hard enough to succeed in one business, let alone two,” said Max Willens, an analyst at Emarketer.
Meta is once again trying to prove it can make money by doing something other than selling ads. It’s not a strategy that’s worked in the past, but CEO Mark Zuckerberg is betting artificial intelligence will bring better results.
The company said this week that it will begin testing two subscription services for its ChatGPT-like Meta AI app and website. Those paid offerings, available first in Singapore, Guatemala and Bolivia, coincide with the official release of premium subscription plans for Instagram, Facebook and WhatsApp, and higher-tier versions of its verification subscription service, which is designed to help businesses protect their brand.
Also this week, Zuckerberg said at Meta’s annual shareholder meeting that a potential cloud computing business is “definitely on the table,” a move that could eventually pit the company against Amazon, Microsoft and Google in cloud infrastructure.
Since Zuckerberg’s company, previously known as Facebook, began selling digital ads almost two decades ago, advertising has been its only real business. In its earnings report last month, Meta said that nearly 98% of its $56.3 billion in first-quarter revenue came from advertising. It’s a remarkably lucrative market, with some of the highest profit margins in the tech industry, and one Meta has long dominated in the U.S., alongside Google.
Meta just recorded its fastest growth rate for any quarter since 2021, showing that the online ad market is currently as robust as ever. But the rapid emergence of AI has raised questions about what happens if and when users turn to new interfaces for information and are no longer spending so much time on screens where they’re exposed to a constant barrage of links.
And when Meta has asked consumers and companies to open their wallets for anything other than ads, the answer has generally been no.
The 2018 debut of the Portal video-calling device was ultimately a bust and was taken off the market four years later. Meta’s $2 billion acquisition of virtual reality hardware startup Oculus in 2014 has yet to produce a breakout VR headset, resulting in the company’s Reality Labs unit racking up over $80 billion in operating losses since late 2020.
Reality Labs has shifted resources from VR to the more promising AI-powered smart glasses. The company is trying to capitalize on the surprise success of the Ray-Ban Meta glasses, in partnership with EssilorLuxottica, a notable exception for Meta in hardware.
Then there’s crypto. Zuckerberg jumped into the space in 2019 with a proposed cryptocurrency initiative called Libra. The effort faced intense regulatory scrutiny, resulting in the last remnant of the crypto project shuttering in 2022.
Trying to sell social media services to businesses has also been a struggle. In 2016, Facebook debuted its business-focused Workplace chat product, only to announce in 2024 that it would eventually close the service.
‘New sources of revenue’
Despite an uphill battle, some analysts are optimistic that Meta can find a new route to revenue in AI. The Meta AI subscriptions announced this week will cost $7.99 and $19.99 a month, depending on certain features and capabilities. The stock rose nearly 4% on Wednesday after the news landed.
Analysts at Wolfe Research wrote in a note that day that subscriptions could contribute up-to $3 billion in Meta’s total revenue for 2027, growing to $16 billion by 2030. That’s still a small number for a company generating over $200 billion in revenue a year, but it marks a substantial opportunity for Meta in a burgeoning market.
The Wolfe analysts said they recommend buying the stock “based on our long-term view that the company’s scale, AI investments, category leadership position, and product catalysts should enable META to outgrow the digital advertising market, gain scale, and generate new sources of revenue.”
Meta declined to comment.
Max Willens, an analyst at Emarketer, said Meta is a victim of its own success in online ads. Because the company’s core business dwarfs any other efforts, “it can be very hard for a corporate parent to sustain enthusiasm for something that is naturally going to be much smaller, likely forever,” he said.
“The circumstances around each of Meta’s past endeavors are different,” Willens said. “But I would say that it is hard enough to succeed in one business, let alone two.”
Willens said the subscription push could be successful if viewed as an aid to online advertising rather than an entirely new line of business. Because some of the new services are tailored to creators and power users, the goal could ultimately be to get more content for Meta’s apps and services and to keep people engaged on Facebook and Instagram for longer, he said.
Selling technology to enterprises could be a much bigger challenge.
Shashi Bellamkonda, research director at Info-Tech Research Group, said Meta has a lot of work to do to build an enterprise business “from the ground up, because the company is so focused only on direct to consumers.”
Bellamkonda characterized Meta’s Workplace offering as seemingly “half-hearted, because they were so focused on only the social aspect of Facebook,” which makes money from ads.
To successfully compete in the enterprise, particularly in cloud, Meta will have to “ramp up processes, platforms, technology, and most importantly, the manpower” required to operate, maintain, and sell products and services, Bellamkonda said. When it comes to customer support, Meta has been going in the opposite direction, cutting staff through layoffs.
Zuckerberg made no guarantees that Meta would enter the cloud computing market, which is led in the U.S. by Amazon Web Services, followed by Microsoft Azure and then Google. The reason to do so, he said, would be if it turns out that the company has excess capacity after its hefty investments in AI infrastructure.
In April, Meta raised its 2026 guidance for AI-related capital expenditures to between $125 billion and $145 billion, up from a prior range of $115 billion to $135 billion.
Forrester analyst Naveen Chhabra said current cloud computing leaders “are winning because they have developed a huge stack” over the years, while “Meta does not have that, at least not yet.”
Chhabra noted that past efforts by companies like Verizon and CenturyLink to create cloud businesses out of their vast data center resources didn’t pan out.
“Historical evidences like telcos jumping in the cloud business hoping their capacity and network can bring business was proven wrong across geos and times,” Chhabra said.
