Global AI rises

Today:

AI has been busy while we were sleeping, and we're here to catch you up on all the juicy details!

• Universal Basic Intelligence? OpenAI working towards global AI

• Did Bing just win the AI wars?

• What is Google's "win" condition?

OpenAI working towards global AI

OpenAI's prices dropped clos to 97% over the last year.

It's opening up access to it's AI platform with API as well as it's enterprise side "Foundry"

The massive money flowing into AI means that the most "savvy" way of doing business would be to jack up prices and watch the money roll in.

However OpenAI is opting to lower costs, while also opening up to as many people as posible.

This has several big implications:

• It's going to to be VERY difficult for competing AI companies to scale because of the huge costs associated with compute (paying for cloud computing etc.).

• OpenAI is moving towards it's mission of democratizing AI and trying to get it out to as many people as possible.

By the way, can we talk about Bill the Gates and his company...

Microsoft and AI

Did you know Microsoft owns 49% of OpenAI?

There is a stipulation where Microsoft gets 75% of all profits from OpenAI until they recoup the $10 billion they invested.

THEN they get a 49% stake of OpenAI.

Also as OpenAI ramps up how many companies use their platform, their cloud computing bill will be going up MASSIVELY...

Guess who they pay for their cloud compute services?

That's right, Azure (aka Microsoft).

Also if ChatGPT and the like disrupt search, Google's loss will likely be Microsoft's gain as all that search ad revenue flows away from Google.

(nothing here is financial advice, btw)

On that note, quick survey:

(this is just for my own edification, I'm genuinely curious what you think)

Click your response above. [grants +12 to luck]

By the way, many people don't share the view that Microsoft will harm google with Chatbots and AI.

Here's a great thread of why Google will win this race:

Here are the reason why he thinks Google will win:

• Google has a monopoly on search and a massive user base.

• Google's search bot "Bard" will be better than Bing's.

• Google has been the leader in AI for decades.

I think he's correct in all his arguments, but off on (1) thing.

WHAT HAPPENS TO "SEARCH" AS BOTH GOOGLE AND BING ENGAGE IN TRYING TO WIN THE AI CHATBOT WAR?

Google is one of the most profitable companies in existence because they organized the worlds information, so when you type in a keyword a list of articles about the topic is shown.

*plus an ever growing number of related text ads around the subject*

This is MOST of Google's business.

Google revenue breakdown (2022)

In 2022, Google generated over $282 billion in revenues, of which over $162 billion from Google Search.

Almost 60% of every dollar Google makes comes from *search ads*.

In actuality I think that number is much bigger, because search also drives clicks to YouTube as well as websites that have Google Adsense on them, so while that revenue is not "from search" it's "because of search"

So when you search for a "weight loss meal plan" for example, first you have to navigate the Google results page, the ads placed on there, click on the best organic result.

Then get hit with the email pop up, get hit with the cookies consent popup, plus autoplay videos, tons of ads, tons of tracking cookies that take forever to load.

Most SEO optimized pages will have TONS of text on them to keep you from getting the information you want, so that you stay on the page longer.

Now, I even see certain news sites "inject" other pages into your history so that when you click the back button, it goes to another one of their pages (instead of back to search).

I watched Google search go from "Excellent" in 2012 to "Really Crappy" in 2023.

Searching for a meal plan on Google can be a huge pain with bad, regurgitated information.

The alternative is asking ChatGPT (or similar):

What is the calorie and macro breakdown for a 32 year female to lose 1 lbs per week?

It instantly spits out the answer, letting you know that it could give you a better results if you included your height.

You can follow up by asking for a weekly meal plan that fits those macros as well as a shopping list for your help grocery store visit.

This takes about 10 seconds. No ads, no cookies, no tracking, no popups.

So when this Chat technology improves and becomes more accurate and better, what percent of search queries do think will go from "search" to "chat"?

Is it 5%?

Maybe 10%?

Or is it more like 50%?

For every 10% drop, Google loses something like $16 to $20 BILLION PER YEAR.

Also that drop will signal to investors to rethink how they valuate the company.

Google was perceived as having the "best moat" ever because no one could build a competing search engine.

But could search be on it's way out? At least the hyper-profitable, poor user experience search that Google became over the years?