Meta could spark a price war in the fast-growing AI coding market.
The tech giant on Thursday announced its latest AI model, Muse Spark 1.1, saying it performed well in industry tests of coding and AI agents. This is the first AI model that Meta charges users for.
Meta CEO Mark Zuckerberg said in a comment about the X that the model will be priced “very low,” but the company has not yet announced pricing. In comments to Bloomberg, he also accused other AI companies of pricing their chatbots at “extremely extreme” levels. He told Bloomberg that the model outperformed Google’s Gemini in several categories, including agents, coding and other features.
“We think we have a real ability to deliver frontier or very advanced intelligence at a much more affordable price point,” Zuckerberg told the magazine.
Although the model is not yet fully available to developers, it is the latest milestone in Meta’s AI efforts and signals that the company intends to compete on price.
If Meta’s new AI models can compete with widely used coding tools from competitors like Anthropic, OpenAI, and Cursor, it could become a huge new revenue stream. Meta stock rose nearly 2% on Thursday.
Businesses are increasingly concerned about the cost of using AI as employees integrate technology into their daily work. Companies have been reining in the use of AI by their employees in recent months as vibecoding becomes more popular. For example, Coinbase currently limits engineers’ weekly AI spending to between $500 and $5,000 per week.
Meta quotes one of its customers, AI coding startup Cline, saying that the new AI model price point makes it easier to perform heavy AI coding tasks at scale.
“This combination is rare, which is why we wanted to give Cline developers early access,” Cline CEO Saud Rizwan said on the Meta website.
Meta is spending a huge amount of cash on AI, raising its capital spending outlook for this year to $125 billion to $145 billion, up from the previous estimate of $115 billion to $135 billion. According to its first quarter results, Meta remains highly dependent on its advertising business, accounting for approximately 98% of its total revenue.
“We believe Meta is well-positioned to generate sufficient revenue to support its spending through monetization of its AI initiatives, increased ad share, incremental subscription revenue, optional cloud delivery, and external usage fees for AI models,” Nick Jomes, senior analyst at BNP Paribas Equity Research, said in a note to investors on Thursday.
Meta is also working on an upcoming AI model, codenamed “Watermelon,” which Alexandr Wang, the company’s head of AI, says has caught up with one of the latest versions of OpenAI’s ChatGPT.
The model uses “an order of magnitude” more computing power than Meta’s predecessor, Wang told staff last week, Business Insider previously reported.
Mehta did not respond to requests for comment.
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