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In November 2022, a Google senior research director, Douglas Eck, told an audience in New York that it was important for Google to move slowly with artificial intelligence because of “the real risks that this technology can pose if we don’t take great care.”
Just a few weeks later, OpenAI released ChatGPT, and suddenly everything changed as the generative-AI chatbot quickly spread in use.
In the months since, the language coming out of Google has shifted to “bold and responsible” as the search giant — caught off guard how generative AI resonated with the general public — moves at warp speed to launch chatbots and other AI tools. Google is not the only company doing this: Amazon and Meta have also steered their ships further toward AI.
Within Microsoft, OpenAI’s partner and largest investor, there was a surge to capitalize on its sudden surprise advantage.
“Speed is even more important than ever,” Sam Schillace, Microsoft’s deputy chief technology officer, told employees, according to The New York Times. He added that it would be an “absolutely fatal error in this moment to worry about things that can be fixed later.”
The AI boom has lit a fire under Silicon Valley and, it seems, most of the world. Artificial intelligence has the potential to transform industries from healthcare to education. Meanwhile, funding of AI startups has soared, suggesting there are ample opportunities for smaller players to reap the spoils of the AI gold rush.
And there are — except the tech giants hold many key resources that enable them to benefit the most from the boom.
In April, researchers at the AI Now Institute published a report that said AI development had been “foundationally reliant” on the resources held and controlled the giants. The report said Big Tech’s advantages were threefold: data (the more you have access to, the more you have to train models), computing (training and running AI requires vast amounts of compute power), and geopolitical standing (tech giants are held up as prized assets on the world stage).
The hyperscalers have the data and financial resources — and they have the reach of their ecosystems. Google may be on the back foot in some ways, as it jumped into generative AI later than Microsoft and OpenAI. At the same time, it has a library of hugely popular apps, including Gmail, Docs, and Photos, which are being used millions — and in some cases, billions — of people.
Without Microsoft’s backing, it’s far less likely that OpenAI would have anywhere near the power it has now, in terms of both its financial security and the reach of Microsoft products it can tap into.
Now even minor updates to ChatGPT have the potential to wreak havoc on smaller startups, such as Jasper AI, that are trying to compete “wrapping” themselves around ChatGPT and other AI tools. Others may simply become “roadkill” for OpenAI, which benefits from the resources and talent Microsoft can offer.
“OpenAI may need Microsoft more than Microsoft needs OpenAI,” Business Insider wrote in May.
Seven months on, that seems to still be true. If there was any doubt, just look at the latest drama: OpenAI CEO Sam Altman was temporarily ousted from his own company. Microsoft CEO Satya Nadella personally intervened, and just days later, Altman was back on the throne and Microsoft had a (limited) board seat. The debacle raises concerns about just how accountable Altman ever was, while showing the benefit of having the support of a giant like Microsoft ready to step in and flex its powers.
That’s not to say the giants don’t need the smaller players. Amazon didn’t have a head start in this new era, which is why its investment in the AI startup Anthropic is so significant. Amazon announced in September it would invest up to $4 billion in the startup, which was formed former OpenAI employees, and that Anthropic would use Amazon Web Services’ in-house Trainium and Inferentia chips to build and train its AI models.
These types of deals can help the incumbents find key differentiators in their cloud services and move faster. As the billions of dollars from tech giants pour into these startups, much of that money comes straight back in the form of cloud spending.
Some investors are worried that this phenomenon, known as “round tripping,” allows powerhouses such as Amazon, Google, and Microsoft to artificially inflate their cloud numbers. Also, it lays bare the symbiotic relationship that allows Big Tech to further entrench itself in the AI gold rush.
2023 may have upended narratives in the Big Tech race with OpenAI’s head start. Yet no matter who’s ahead, at the end of the day, the giants still stand to reap most of the rewards.
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