Your AI Chats Are Now the Product

The Unspoken Bargain of AI

The basic bargain of the internet, for two decades, has been a simple one: you get free services, and in exchange, tech companies get to mine your data to sell ads. This week, Meta announced it is officially extending that bargain into the far more personal and intimate realm of AI. The price of a free, powerful AI assistant, it turns out, will be a direct window into your thoughts.

Meta will soon begin using your private conversations with its AI chatbot to target you with ads across Facebook and Instagram. Here is TechCrunch on the change:

[Meta] said on Wednesday that users’ chats and interactions with Meta AI will soon be used to target them with even more personalized ads. Users will start seeing notices of the change next week, but it won’t kick in until December 16.

Meta already targets users with ads based on what they post and click on, as well as who they’re connected to, on its social media platforms. That data enables Meta to infer what users might buy. But in conversations with Meta’s chatbot, users could directly tell the company about what they’re shopping for or the trip they’ll soon be packing for or what problems they have that a product could solve.

This is a new and powerful data gold rush. A "like" on a photo is a weak signal of intent; a detailed, multi-turn conversation with an AI about planning a home renovation is a direct declaration of a high-value purchasing need. With over a billion monthly users, Meta AI has created a rich new stream of first-party data that is far more potent than anything the company has had before.

The move also draws a clear line in the sand in the great AI monetization debate. While rivals like OpenAI are experimenting with transaction fees and subscriptions, Meta is doubling down on the ad-supported model that built its empire. The strategy is to offer a powerful, free AI to billions of people and make money by using their interactions to fuel a hyper-targeted advertising machine.

There is, of course, a catch. According to Meta, there is no way for users to opt out of this new data collection, unless you happen to live in the UK or the European Union, where privacy laws prevent it. For everyone else, the unspoken bargain is now spoken. Your thoughts, your plans, your private conversations with a seemingly personal AI assistant—this is the new price of admission.

The Expensive Truce

There are, in principle, two ways to handle a supplier who is suing you and threatening to put you out of business. The first is to find a new supplier. The second, apparently, is to buy their newest, most expensive product.

This, in essence, is the story of what just happened between Qualcomm and Arm. After a year of ugly legal battles where Arm threatened to revoke the very license Qualcomm's business is built on, Qualcomm has quietly adopted Arm's latest and priciest v9 architecture for its new flagship chips.

The move is a pragmatic admission of a harsh reality: in the high-stakes race to power the next generation of AI-enabled phones and PCs, Qualcomm had nowhere else to go. Rivals such as Apple and MediaTek are already using the AI-optimized features of Arm's v9 technology. To stick with an older version would be to unilaterally disarm in the middle of a war.

Trapped by market forces, Qualcomm decided to make peace with its legal adversary. The move is a massive victory for Arm, demonstrating the immense power it holds over the industry. Here is Reuters:

Qualcomm's new chips will use the ninth version of Arm's computing architecture, called "v9" in the industry, which includes several improvements aimed at helping chips handle tasks from chatbots and image generators better.

...While Arm faces competition from newer rivals such as RISC-V, an open chip standard that is free to use, that technology is decades less mature than Arm's and has a smaller software developer base. Qualcomm also could have elected to stick with a previous generation of Arm technology, as it did with chips announced last year.

For Qualcomm, it is the price of staying in the game. The legal battle may not be fully resolved, but the business reality has been decided. Arm won, not in the courtroom, but in the marketplace. It is a truce born of necessity, and for Qualcomm, an expensive one.

The Scoreboard

• AI: OpenAI hits $500 billion valuation after share sale to SoftBank, others, source says (Reuters)
• EV: Tesla has its best sales quarter ever as EV tax credit expires (TechCrunch)
• Semiconductor: Taiwan rejects U.S. proposal for ’50-50′ chip production, says trade talks focused on tariffs (CNBC)