Silicon Valley has bet big on generative AI but it’s not totally clear whether that bet will pay off. A new report from the Wall Street Journal claims that, despite the endless hype around large language models and the automated platforms they power, tech companies are struggling to turn a profit when it comes to AI.
Microsoft, which has bet big on the generative AI boom with billions invested in its partner OpenAI, has been losing money on one of its major AI platforms. Github Copilot, which launched in 2021, was designed to automate some parts of a coder’s workflow and, while immensely popular with its user base, has been a huge “money loser,” the Journal reports. The problem is that users pay $10 a month subscription fee for Copilot but, according to a source interviewed by the Journal, Microsoft lost an average of $20 per user during the first few months of this year. Some users cost the company an average loss of over $80 per month, the source told the paper.
OpenAI’s ChatGPT, for instance, has seen an ever declining user base while its operating costs remain incredibly high. A report from the Washington Post in June claimed that chatbots like ChatGPT lose money pretty much every time a customer uses them.
AI platforms are notoriously expensive to operate. Platforms like ChatGPT and DALL-E burn through an enormous amount of computing power and companies are struggling to figure out how to reduce that footprint. At the same time, the infrastructure to run AI systems—like powerful, high-priced AI computer chips—can be quite expensive. The cloud capacity necessary to train algorithms and run AI systems, meanwhile, is also expanding at a frightening rate. All of this energy consumption also means that AI is about as environmentally unfriendly as you can get.
As someone who has always been skeptical of "AI," I definitely hope corporations dial back their enthusiasm on it; but I think its value has never been commercial, but industrial.
"AI" was not designed so consumers could see what it would look like to have Abraham Lincoln fighting a T-Rex without having to pay artists for their time. "AI" was designed so that could happen on a much larger enterprise scale (though it would probably be stock images of technology or happy people using technology instead).
With this in mind, I think "AI" being a money pit won't dissuade corporations since they want the technology to be effective for themselves, they just want consumers to offset costs.
Exactly. It will lead to improved automation for industrial processes but it won't ever be a consumer tech other than improving your siri results.
It won't replace jobs, anymore than industrial robots in factories replace them.