ChatGPT- “Important as the Invention of the PC and the Internet”

February 14, 2023

That’s high praise from Bill Gates, co-founder of Microsoft (“MSFT”). Eric Schmidt, who ran Google (“GOOGL”), calls Chat GPT the “first broadly visible example of” what a human being’s Artificial Intelligence (“AI”) friend might look like. The Economist calls ChatGPT the “first real threat to Google’s search dominance.” Instead of merely searching and providing a list of links, like Google does, ChatGPT can, when prompted by users’ instructions, produce a full written, seemingly human answer, complete with the references. It’s a very big deal. The question is: When will this new “answer engine” replace the “search engine”?

ChatGPT creator OpenAI was founded in 2015 as a non-profit organization with the objective to advance AI in a way that would “benefit humanity as a whole, unconstrained by a need to generate a financial return.” Reality set in a few years later when mounting computing and staff costs caused the organization to become a for-profit company and accept outside funding. However, they “capped” the profit that investors could make at 100 times the initial investment. Open AI then quickly received $1 billion from MSFT that included cash and computing support. MSFT contributed $2B more over the last three years, and another $10B a few weeks ago. MSFT gets a 75% share of OpenAI’s profits until it recovers its money invested and then becomes a 49% partner in OpenAI.

MSFT has already integrated OpenAI’s technology into its products, software and offering. ChatGPT is part of its Azure cloud offering, it is now part of a premium version of MSFT Teams, which automatically creates meeting notes, and MSFT plans to add ChatGPT as part of its Bing search engine. Bing currently has 5% of the search market, while GOOGL has 90%. 

A big financial battle looms ahead for MSFT, GOOGL, META and AMZN as the world moves from search engines to answer engines. A real key is the trust in the information received from the answer engine. That’s a lot different than a search engine. These new chatbots are extremely powerful but there is lots of information they can access that is incorrect and/or biased. How these tech giants handle this will be extremely important.

In November, META released an AI chat-based science search engine called Galactica. But the scientists immediately found so much incorrect information and offered such vocal criticism that META shut it down after three days. MSFT and OpenAI are fighting a $9B class action lawsuit for carelessness with copyrighted code. Other AI chat-based engines have been sued for use of artists’ work without consent.

The WSJ indicated that “proving your AI more trustworthy could be a competitive advantage more powerful than being the biggest, best or fastest repository of answers.” GOOGL seems to have adopted that strategy as they reported last week that they will strive for “Responsible AI” in its chatbot named Bard. GOOGL has been working on Bard for years. GOOGL generates $224B each year in search revenue and they obviously would also prefer that Chatbot acceptance goes slowly. With their dominance in “search” and concerns about reputational damage liability, they’ve been cautious to bring their product to market until now.

MSFT, on the other hand, is rolling out its ChatGPT quickly in many ways and asking its users to provide feedback. ChatGPT has already been proven to be vulnerable to “jailbreak” from parties wishing to escape ChatGPT’s moderation rules and screening. MSFT and OpenAI believe that they have the computing resources and the human resources to deal with all the misleading, incomplete or biased information that their Chatbot will encounter.

The Battle is On. MSFT, GOOGL, META and AMZN and others want to capture this new “answer search market.” Creating trust in AI will be critical for success. The WSJ says that “creating trust by moderating the content generated by AIs might not prove to be so different than creating trust by moderating the content generated by humans.” It’s obviously another battle for money and for truth. Looks like those who provide Responsible AI will be the winners. Stay tuned.

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