Discussions surrounding artificial intelligence may see a temporary decline in intensity this week. On Wednesday, Meta Platforms, Inc. CEO Mark Zuckerberg is scheduled to testify in a Los Angeles courtroom as part of a case brought by a young woman from California against major tech firms, including Alphabet and Meta Platforms, Inc. The plaintiff alleges that her addiction to social media led to depression and suicidal thoughts. Last week, Adam Mosseri, the head of Instagram and a key deputy to Zuckerberg, provided testimony in the same proceedings.

While Zuckerberg's experience on the witness stand may prove challenging, reports indicate his company's business performance remains robust. In stark contrast, Pinterest finds itself in a different situation: its stock plummeted 17% last Friday, closing at $15.42, marking its lowest level since the pandemic-induced market crash of 2020 and falling several dollars below its 2019 IPO price of $19.

This sharp decline was a reaction to Pinterest's weak fourth-quarter advertising sales, casting a shadow over the company which had appeared to be back on track since Bill Ready became CEO in 2022. Doubts are now emerging about whether Pinterest might follow a path similar to Snap, remaining a smaller-scale social media platform permanently. This would represent a harsh outcome; Snap's fourth-quarter advertising revenue grew by only 5%, with full-year growth at just 5.8%, nearly half of its 2024 growth rate.

The fourth-quarter performances of Pinterest and Snap stand in sharp contrast to major digital advertising companies like Meta Platforms, Inc., Alphabet, and Amazon, which are leveraging their AI capabilities to accelerate growth.

For instance, Meta Platforms, Inc.'s advertising revenue last year was 38 times that of Snap, yet it still achieved a growth rate of 22%, slightly higher than in 2024. A similar trend is evident at Alphabet: its search advertising revenue growth accelerated to 16.6% in the fourth quarter, with full-year growth reaching 13.4%, compared to a search business growth rate of just 7.8% two years prior.

Both Meta Platforms, Inc. and Alphabet are making significant investments in cutting-edge artificial intelligence and are applying AI technologies to optimize the effectiveness of advertisements on their platforms, making them more attractive to advertisers.

Amazon also saw its advertising revenue growth accelerate to 23% in the fourth quarter. This figure is somewhat more complex to interpret due to the expansion of its Prime Video service in the streaming sector. However, Amazon stated in a recent earnings call that sponsored ads within its online stores remain its largest advertising business, and the company is utilizing AI to enhance ad targeting.

Naturally, Pinterest and Snap are also incorporating AI into their strategies. Pinterest is integrating AI into its products and advertising formats, including visual search capabilities, which aligns with its platform's focus on users seeking inspiration for shopping, cooking, and home decor. Snap is adding AI features to its camera and applying the technology broadly across its advertising products.

However, emerging AI technologies are amplifying the advantages of scale. The competition among smaller platforms for the remaining share of the advertising market is likely to become increasingly intense.

This week's corporate earnings calendar is relatively light. Chip manufacturers like NVIDIA and enterprise software companies will begin reporting results the week of February 23rd. Food delivery platform DoorDash is set to report earnings on Wednesday. Analysts anticipate its revenue will reach $3.986 billion, a 39% year-over-year increase, a growth rate bolstered by its acquisition of the UK-based delivery company Deliveroo last October.

In other news, Bloomberg reported on Friday that the U.S. Federal Trade Commission has intensified its scrutiny of Microsoft, investigating whether the company holds an illegal monopoly in the cloud services and software markets.

The New York Times reported that the U.S. Department of Homeland Security has increased its use of administrative subpoenas to compel major technology companies to disclose the identities behind anonymous social media accounts that criticize or track U.S. Immigration and Customs Enforcement (ICE) or publish the locations of its agents.

Axios reported that the U.S. Department of War is considering terminating its collaboration with AI startup Anthropic due to disagreements over how its Claude model is being utilized by the military.

ByteDance has released a new generation large language model, Doubao Seed 2.0, as it strives to compete comprehensively with leading U.S. rivals across various AI models, ranging from large language models to video generation.

Entertainment media outlet Variety reported that Disney, Paramount, Skydance, and a major U.S. entertainment industry union have sent cease-and-desist letters to ByteDance. This action was prompted by the widespread dissemination on social media of videos generated by the company's AI video model, Seedance 2.0.