Snap is increasing its spending on artificial intelligence and machine learning, according to Bloomberg’s May 19 interview with CEO Evan Spiegel.

“There was a recognition that we’d fallen behind the curve on the machine learning side, which, to some degree, was reflected in the business performance,” Spiegel told Bloomberg. “We needed to improve there and bring together some of our most senior machine learning folks to just talk about what it would look like for us to get to state of the art and really invest.”

The report indicates that Snapchat has faced challenges adapting to shifts in social media usage and advertising preferences. While Snapchat initially focused on messaging and brand storytelling, the company now aims to leverage machine learning, AI, and augmented reality (AR) to enhance its advertising business and user feeds, Bloomberg states.

Rather than building AI tools internally, Snap is partnering with cloud providers Amazon and Google. This approach allows Snapchat to concentrate on innovative product experiences while relying on external infrastructure. However, Bloomberg estimates Snap still plans to spend around $1.5 billion annually on cloud computing costs alone.

During Snap’s latest earnings call, Spiegel emphasized the company’s dedication to AR, stating, “We have never worked on anything as profound and meaningful as augmented reality.” Over 70% of new users utilize Snapchat’s AR features on their first day and engage with over 300 million people daily across the app’s advertising, creator, and general user experiences.