AI: Gold rush for technology has an uncertain winner – 05/11/2023 – Market

California’s latest gold rush is a mad chase for leadership in generative artificial intelligence. America’s big tech companies like Google, Microsoft, Meta and Palantir, and a swarm of venture capital firms are all frantically mining for new veins of digital treasures. But the big questions, for now unanswered, are: who will end up swallowing dust and who will get the most gold?

The obvious guess is that the big companies that are developing these text, image, video, and audio generation models will dominate the field. As Lina Khan, chair of the US Federal Trade Commission, wrote, a handful of powerful companies seem to control all the necessary raw materials: vast amounts of stored data, computing power, and cloud services. She might have added: They also have many of the top artificial intelligence researchers on the planet and lots of cash.

“The increasing adoption of artificial intelligence carries the risk of further consolidating market dominance by established large technology companies,” Khan recently wrote in The New York Times. This worldview adds momentum to Khan’s anti-trust initiative.

But that’s not the view of the world among those inside some big tech companies, judging by a leaked memo from a Google executive titled “We Have No Moat.” [não temos fosso].

The executive noted in April of this year that Google and OpenAI, which is heavily backed by Microsoft, may have developed the most capable closed models of generative artificial intelligence, such as Bard and GPT-4.

But they were already in danger of being overtaken by nimbler competitors working on creating smaller, cheaper and more customizable open source artificial intelligence models, and they attracted some of Google’s best researchers.

“The uncomfortable truth is that we are not positioned to win this arms race, and neither is OpenAI,” he wrote. “Who would pay for a Google product with usage restrictions when there is a free, high-quality alternative without them?”

This week, Google tried to up its game by announcing it would incorporate generative artificial intelligence into an ever-growing range of services in an effort to catch up with Microsoft.

But according to Google’s memo, the main beneficiary of the trend towards open source models could be Meta, which is also turning to artificial intelligence. After releasing its own open source LLaMA model in February, Meta now aims to create the platform that others can play on.

Just as Google has built a new app ecosystem around its open source Android mobile phone software, Meta could emerge as the platform on which innovation happens. “The only clear winner in all of this is Meta,” the Google executive wrote.

Meanwhile, venture capitalists are betting that a new wave of generative AI startups, including Anthropic, Cohere, Stability AI, Inflection and AI21 Labs, might also be able to pan for gold. Their rationale is that at least some of these startups will be able to move faster than larger companies, dominate select niche markets, and largely bypass costly security controls (something that should alarm regulatory authorities).

The future will belong to smaller, specialized generative AI models that are cheaper to train, faster to run and that serve a specific use case, says Yoav Shoham, one of the founders of Israeli startup AI21 Labs. “The gap isn’t the technology. It’s the customer relationship,” says Shoham. “I think it will be a ‘few take most’ market rather than a ‘winner takes all’ market.” Dozens of other start-ups, ones that only offer generic services and don’t get traction with customers, will fail.

Established and dominant companies in most industries, which can use their unique data to feed generative artificial intelligence models and fine-tune the results, should also thrive. The challenge for them is to overhaul their organizational structures in order to exploit the new technology. The other sure winners will be the “shovels and hammers” companies that provide the tools for this technological transformation.

The big cloud computing companies, AWS, Google and Microsoft, will profit from artificial intelligence models’ voracious demand for computing power. But Nvidia, the dominant designer of the graphics processing units that power most AI models, also stands out. “We are in the iPhone moment of artificial intelligence,” says Jensen Huang, chief executive of Nvidia.

However, the speed with which the industry is evolving is so great that today’s best guesses can turn into ripped bets tomorrow. The history of other general-purpose technologies such as electricity, automobiles and the Internet suggests that generative artificial intelligence will create new markets and business models that no one can imagine today. It is quite possible that a yet-to-be-founded company will extract the greatest amount of gold.

Translated by Paulo Migliacci