For those people who follow the wacky world of AI business, the perennial conundrum is – how are these hucksters ever going to turn a profit?
Much has been written, by far wiser heads than mine, concerning the dire prospects of any AI industry ever making a positive return on the gargantuan amounts of capital currently being sunk into it. It’s simply not a viable industry, under prevailing circumstances.
So is it a vast bubble?
Until recently I used to think so. I’m not so sure, now.
My initial thinking was as follows. Everything the industry is doing at the moment really amounts to classic loss-leader activity. This is a traditional way that internet startups (and others) have sought to bootstrap themselves: give the product away freely to start with, and eventually you’ll have insinuated yourself into enough punters’ lives that some of them can’t live without it – and those are the ones who will become paying customers. Voilà… Your business succeeds and you’ll become the world’s first trillionaire!
That’s not necessarily going to happen with AI.
Studies show that despite the tsunami of hype, most people rarely use AI. Of those who do, the vast majority don’t pay for it (i.e. it comes bundled into your Outlook or your web browser for free).
Looking at ChatGPT, it has over 700 million users worldwide… yet only 10 million are actually paying customers.
That’s a pretty awful figure when you consider that they’re trying to raise $40 billion alone this year. In fact, the math doesn’t compute. They are never going to make money from captured consumers.
“Godfather of AI” Geoffrey Hinton suggests that this isn’t, and has never been, the real business plan. He believes, and he could be right, that the real payback will come from “labour replacement”… in other words, by wholesale enforced redundancies across wide swathes of the employment spectrum, focusing on those areas that pay the most. Most professional sectors will simply disappear.
If that’s the game plan – and the AI industry is suspiciously silent on this all-important question – then we need to have the biggest and widest possible public discussion. Because we’re looking at nothing short of societal revolution.
Reality check. Is present-day AI capable of massive employment sector replacement? I really don’t think so – yet. Anyone who’s messed around with current-level AI will know that it massively over-promises yet underwhelms on delivery.
Now, I suspect that’s why the industry is so desperate to raise such astronomical sums of capital investment at the moment – they know the tech isn’t at “job replacement” level yet, but are betting that it will be given given the scale of investment they’re currently seeking.
It’s a punt. One that, if they win, means the rest of us will lose catastrophically.
Yet, our politicians seem almost ridiculously naive to this outcome, e.g.:
The scale of current investments, believes Geoffrey Hinton, suggests the transition is already underway, and without deliberate policy intervention, the trajectory points to widespread [jobs] displacement alongside concentrated profit.
Sounds like dystopia to me...
Much has been written, by far wiser heads than mine, concerning the dire prospects of any AI industry ever making a positive return on the gargantuan amounts of capital currently being sunk into it. It’s simply not a viable industry, under prevailing circumstances.
So is it a vast bubble?
Until recently I used to think so. I’m not so sure, now.
My initial thinking was as follows. Everything the industry is doing at the moment really amounts to classic loss-leader activity. This is a traditional way that internet startups (and others) have sought to bootstrap themselves: give the product away freely to start with, and eventually you’ll have insinuated yourself into enough punters’ lives that some of them can’t live without it – and those are the ones who will become paying customers. Voilà… Your business succeeds and you’ll become the world’s first trillionaire!
That’s not necessarily going to happen with AI.
Studies show that despite the tsunami of hype, most people rarely use AI. Of those who do, the vast majority don’t pay for it (i.e. it comes bundled into your Outlook or your web browser for free).
Looking at ChatGPT, it has over 700 million users worldwide… yet only 10 million are actually paying customers.
That’s a pretty awful figure when you consider that they’re trying to raise $40 billion alone this year. In fact, the math doesn’t compute. They are never going to make money from captured consumers.
“Godfather of AI” Geoffrey Hinton suggests that this isn’t, and has never been, the real business plan. He believes, and he could be right, that the real payback will come from “labour replacement”… in other words, by wholesale enforced redundancies across wide swathes of the employment spectrum, focusing on those areas that pay the most. Most professional sectors will simply disappear.
If that’s the game plan – and the AI industry is suspiciously silent on this all-important question – then we need to have the biggest and widest possible public discussion. Because we’re looking at nothing short of societal revolution.
Reality check. Is present-day AI capable of massive employment sector replacement? I really don’t think so – yet. Anyone who’s messed around with current-level AI will know that it massively over-promises yet underwhelms on delivery.
Now, I suspect that’s why the industry is so desperate to raise such astronomical sums of capital investment at the moment – they know the tech isn’t at “job replacement” level yet, but are betting that it will be given given the scale of investment they’re currently seeking.
It’s a punt. One that, if they win, means the rest of us will lose catastrophically.
Yet, our politicians seem almost ridiculously naive to this outcome, e.g.:
- PM plans to 'unleash AI' across UK to boost growth - BBC News
The scale of current investments, believes Geoffrey Hinton, suggests the transition is already underway, and without deliberate policy intervention, the trajectory points to widespread [jobs] displacement alongside concentrated profit.
Sounds like dystopia to me...
