Yahoo is purchasing Artifact, the AI news app created by Instagram's co-founders

Instagram's co-founders developed a powerful tool for recommending news to readers, but struggled to scale it. Yahoo, with its large reader base, aims to differentiate itself from other news aggregators by acquiring Artifact. While the financial terms were not disclosed, Yahoo is acquiring Artifact's technology, not its team. Artifact's co-founders, Mike Krieger and Kevin Systrom, will act as "special advisors" but will not join Yahoo. The remaining five employees of Artifact have either found new jobs or plan to take a break.

The acquisition follows Artifact's launch by a little over a year and its closure announcement three months ago. The co-founders stated that while a core group of users loved Artifact, they concluded that the market opportunity was not significant enough to justify further investment. They decided to focus on new endeavors with broader reach. The underlying belief in Artifact was that AI could be a transformative technology for the internet, but perhaps there were more compelling projects than a news app with limited audience.

After announcing the shutdown, Systrom and Krieger did not actively seek buyers or funding, as they were Artifact's sole investors and had run a lean operation. However, they received interest from several companies. Systrom mentioned having around 10 conversations with potential suitors after the shutdown, indicating a growing interest in AI-driven news and personalized content.

Yahoo was among the interested parties. The decision to pursue an acquisition of Artifact was sparked by a letter announcing the shutdown, according to Kat Downs Mulder, Yahoo News' general manager. She praised Artifact for its meticulous approach to content taxonomy and recommendation systems, highlighting the challenges involved in categorizing content, determining relevant signals, and designing user experiences that effectively connect users with content. While Yahoo has been focusing on personalization and recommendations for some time, Artifact's approach stood out as particularly exceptional.

Artifact brings its sophisticated personalization and recommendation technology to Yahoo, while Yahoo offers Artifact access to a massive audience. Yahoo News attracts over 185 million monthly visitors, providing Artifact's technology with a significantly larger user base than it would have achieved independently. For Systrom, this presents an opportunity to witness the technology's full potential. He explains that Artifact had been gradually growing its user base each month, reaching a point where the promised benefits of machine learning and AI could start to materialize. However, achieving this scale was challenging. Integration with Yahoo will occur gradually but is expected to significantly accelerate Artifact's growth.

Once the acquisition is finalized, the Artifact app will be discontinued. However, Artifact's technology for content categorization, curation, and personalization will be integrated into Yahoo News and eventually other Yahoo platforms. According to Downs Mulder, users can expect to see these features in Yahoo's products in the coming months. There is also a possibility that Yahoo's apps will gradually adopt some of Artifact's speed and polish.

Both Systrom and Downs Mulder emphasize that the integration will be a gradual process and cannot be accomplished by simply inserting Artifact's algorithms into Yahoo News. However, they believe that this integration will accelerate the advancement of their platforms. Yahoo aims to develop a personalized content ecosystem, similar to the "TikTok for text" concept that attracted Artifact users, while Artifact can enhance the news service of the future.

Systrom is uncertain about his next steps. He is currently focused on ensuring a smooth transition to Yahoo and is constantly exploring new ideas. Despite this, he remains optimistic about AI and is contemplating the future needs of a world powered by large language models. However, he acknowledges that entrepreneurship is not a seasonal endeavor and recognizes the unique appeal of the Artifact opportunity. Now, he is on the lookout for the next big idea.