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Google's Gemini home page displayed on a smartphone in a photo illustration.
Hard Numbers: Pay for Google?, Indonesian investment, Amazon walks out on AI, Scraping YouTube
175 billion: Google said it made $175 billion in revenue from its search engine and related advertising last year, but is it ready to risk the golden goose? The company is reportedly considering charging for premium features on its search engine, including AI-assisted search (its traditional search engine would remain free). We’ve previously tested Perplexity, one of the companies trying to uproot Google’s search dominance with artificial intelligence, and you can read our review here.
200 million: The chipmaker Nvidia is teaming up with Indonesian telecom company Indosat to build a $200 million data center for artificial intelligence in the city of Surakarta, according to Indonesia’s communications minister. This news comes weeks after AI played a central role in the country’s presidential election, and it represents a major investment from one of the world’s richest tech companies in a key emerging market as Indonesia seeks to modernize its economy.
1,000: Amazon’s Just Walk Out in-store AI system for cashier-less grocery store checkout relied heavily on more than 1,000 contractors in India manually checking that the checkout transactions were accurate. Now, Amazon has announced it’s ditching the technology, which was being used in 60 Amazon-branded grocery stores and two Whole Foods stores.
1 million: One OpenAI team reportedly transcribed more than 1 million hours of YouTube videos to train its GPT-4 large language model. The company built a speech recognition tool called Whisper to handle the massive load, a move that may have violated YouTube's terms of use. YouTube parent company Google is a major rival to OpenAI in developing generative AI. Google hasn’t filed suit yet, but legal action could eventually come.A visitor plays a video game with virtual reality glasses at the Mobile Word Congress The Mobile World Congress has closed after four days of activity with a figure of 101,000 visitors according to the Director of Fira de Barcelona Constantí Serrallonga.
Hard Numbers: Game devs have qualms, Pulitzer-winning AI, Klarna it, Super Micro growth, NVIDIA chip disappoints
79: In a survey of more than 3,000 video game developers, 79% had ethical concerns about the use of generative AI in their work. Among the ethical concerns were that the technology could lead to layoffs in the video game sector as well as that it could “supercharge copyright infringement.”
5: Out of the 45 works named as finalists for this year’s Pulitzer Prizes, five were made in part with AI. This is the first year that the awards committee asked nominators to clarify whether or not AI was used in the production of their submissions, and it comes as the journalism world is grappling with what its relationship with AI should be. It’s not yet clear how the finalists used AI and if they’ll actually be named winners later this spring.
700: The buy-now, pay-later company Klarna recently boasted that its AI system can do the jobs of 700 employees. That’s raising eyebrows because it’s around the same number of people the company laid off in October 2022, though Klarna denied the insinuation that AI directly replaced those recently given the boot.
1,000: We’ve written a lot about how the AI chipmaker NVIDIA is having a massive year of stock growth, but another firm in the supply chain is doing even better. The company, Super Micro Computer, or SMC, makes servers popular with artificial intelligence companies, and officially joined the S&P 500 yesterday after a year in which its stock jumped about 1,000%.
2.18: While Nvidia is bullish on its ability to keep growing, investors may be curbing their once-unbridled expectations. Yesterday, the chipmaker unveiled its powerful Blackwell series of processors at its "AI Woodstock" event. In response, the company's stock fell 2.18% in premarket trading today – whether this reflects tempered attitudes about NVIDIA's unilateral success in the AI-grade chip market or the AI industry as a whole is uncertain.Amrapali Gan, CEO at OnlyFans, addresses the audience during the second day of the Web Summit 2022 in Lisbon.
Hard Numbers: OnlyAI, Raw deal for media companies, AGI approaches, Less work and more money
10: OnlyFans CEO Amrapali Gan said in an interview that verified creators on the platform need to provide 10 different pieces of personal information in the US — nine everywhere else — including government ID, which she claims will help prevent the site from being overrun by AI porn bots. She admitted that sex workers may use AI tools on the platform but emphasized that their work can't be “wholly AI.”
2,500: Media outlets Raw Story, Alternet, and The Intercept sued OpenAI last week for copyright infringement, following the leads of the New York Times and others. The companies are seeking $2,500 per violation — that would add up quickly — in addition to the removal of the violating material. “Big Tech has decimated journalism,” Raw Story founder John Byrne said. “It’s time that publishers take a stand.”
5: AI-focused chip maker Nvidia’s CEO, Jensen Huang, says we’re just five years away from artificial general intelligence, where AI systems can outperform humans in most cognitive tests.
90: JPMorgan Chase claims its new AI-powered cashflow management tool was able to help clients cut back on manual labor by 90% and made it easier to “analyze and forecast cashflows.” The tool is currently free, though the company is considering charging in the future.Hard Numbers: NVIDIA rising, the magician’s assistant, indefensible budget lags, Make PDFs sexy again
3: NVIDIA is now the third-most valuable company in the U.S. after reporting rosy financial returns. The AI-focused chipmaker’s market capitalization is now $1.812 trillion, surpassing Google parent company Alphabet, and trailing only Microsoft and Apple. How things change: just one year ago, NVIDIA’s market cap was a paltry $580 billion.
1: A New Orleans magician says he was paid $150 by a Democratic operative supporting presidential longshot Dean Philipps to create the fake Joe Biden robocall sent to New Hampshire voters in January. Creating the fake audio took him 20 minutes and cost $1, the magician said. The incident sparked national outrage, including an investigation by the New Hampshire attorney general and the Federal Communications Commission banning unsolicited AI-generated robocalls.
1.8 billion: The U.S. Department of Defense is seeking $1.8 billion in the federal budget solely for AI. But with congressional budget talks still ongoing, Craig Martell, the Pentagon’s chief digital and AI officer, said his office needs to make tough decisions about what projects to prioritize. AI-related defense projects range from the simple—such as making administrative tasks more efficient—to the complex, like building new advanced weapons systems.
400 billion: Adobe has lots of cutting-edge products: Photoshop, Premiere, After Effects; but there’s nothing sexy about PDFs. On paid versions of Acrobat and Reader, which people use to view 400 billion PDFs each year, an AI chatbot will soon summarize and search your document. Adobe wants users to have a “conversation” with their PDFs—summaries sound nice, but does anyone want a full dialogue?People visit the stand of NVIDIA during the 11th China Digital Entertainment Expo and Conference, known as ChinaJoy 2013, in Shanghai, China, 25 July 2013.
Nvidia rally lifts markets – and struggling political leaders
Where is GZERO’s signature political angle on this story? The first stock market to surge on this news was the Japanese Nikkei index, which climbed 2.2% higher to break its all-time highs set in late 1989 (!).
OK, “Japan is back” enthusiasm is limited by news this week that its economy fell into fourth place behind Germany with a disappointing Q4 from last year. There’s also the reality that topping this previous high reminds Japan and the world just how tough the past third of a century has been for its economy.
Still, good news is good news, and Fumio Kishida’s deeply unpopular government can use all the good news it can get.
This is also a welcome development for the US economy at a time when President Joe Biden badly needs it. On Thursday, US stocks posted their best day of the year so far, with the NASDAQ closing up nearly 3%.
Sam Altman’s wish on a $7 trillion star
Sam Altman, CEO of OpenAI, needs more chips. He needs a lot more chips. The only thing stopping his $100 billion startup — if you can still call it a startup — may be the current supply of powerful chips.
The semiconductor fabrication process is notoriously slow and expensive, and the global supply chain runs through a few big, highly specialized firms. There are only a small number of companies that actually design chips made for generative AI — AMD, Intel, and Nvidia. And they’re pricy: Nvidia, which is set to take 85% of the market next year by one estimate, sells its H100 chips for about $40,000 a pop.
Naturally, Altman wants to make his own chips, but to make that dream a reality, he’s asking for an obscene amount of money.
How much does Altman want to raise?: According to the Wall Street Journal, Altman is deep in talks with investors with the goal of raising $5-7 trillion for a new chip venture.
“The dollar amount he’s reportedly trying to raise — $7 trillion — eclipses not just the semiconductor investments made by governments, including the United States’ $39 billion investment in chip manufacturing, but also the size of the entire semiconductor industry,” says Hanna Dohmen, a research analyst at Georgetown University's Center for Security and Emerging Technology. “It cannot be overstated how massive this sum of money is.”
Eurasia Group’s Director of Geotechnology Alexis Serfaty calls the sum “preposterously high and also seemingly arbitrary,” and says while it helps that OpenAI would be a built-in customer for this new chipmaker, the semiconductor industry is a difficult one with a propensity for demand gluts and supply chokepoints at every turn. Also, it would require strong leadership. “There are only so many people in the world with the expertise and experience to run an advanced fab, let alone the 300 [facilities] that $7 trillion would buy,” he adds.
Money can buy a lot — but it might not be able to solve the problems that every chipmaker already faces.
Who’s going to give him all that money? Altman has reportedly met with Masayoshi Son, CEO of the influential Japanese investment company SoftBank, and officials from Taiwan Semiconductor Manufacturing Company, one of the world’s largest chip fabrication companies, about investing in his new venture. Altman reportedly wants to “raise the money from Middle East investors and have TSMC build and run” new chip fabrication plants.
But the real eyebrow-raising potential investor isn’t in East Asia; it’s in the Middle East. In recent weeks, Altman has reportedly met with Sheikh Tahnoun bin Zayed al Nahyan, the United Arab Emirates’ security chief, to discuss the venture. OpenAI already struck a deal in October with the Emirati technology company, G42, to bring AI solutions to the Middle Eastern market, laying the foundation for additional business support from the wealthy nation.
This is going to cause geopolitical headaches, right? Almost definitely. Washington is extremely touchy about foreign investment in US companies and even more hesitant when it comes to scarce critical infrastructure such as semiconductors.
“While the US government is eager to bring chip manufacturing to the United States, it would likely be reluctant to do so with the involvement of the UAE government given existing concerns about Emirati companies’ relations with Chinese counterparts,” says Dohmen, who notes that, under US law, companies need licenses to even export certain semiconductors to the UAE.
America’s number one concern is China. Not only has the Biden administration invested heavily in the US chip industry, but it has launched a no-holds-barred campaign to prevent China from getting its hands on chips or even cloud-based AI. Over the past few years, the Biden administration has exacted stringent export controls that seek to prevent any global semiconductor technology, if it’s made with US parts, to do business with China, who it fears will use AI to supercharge its military. Dohmen adds that lawmakers are worried that G42 is already “dealing with blacklisted Chinese firms.”
Simply put, Serfaty says, “Altman’s partnerships with foreign governments could conflict with this US national security strategy.”
Could the US take action against this new venture? Yes. The US government has taken the extraordinary step to block foreign investment in chip companies. In 2018, the Trump administration blocked the sale of the US-based Qualcomm to the then-Singapore-based Broadcom, citing national security concerns. (Broadcom has since moved its headquarters to the US). That administration also blocked the sale of Lattice Semiconductor to a US private equity firm funded by Chinese capital.
Altman could be inviting antitrust scrutiny, as well. If he controls both the country’s most important generative AI company and the chip supply chain it relies upon, he’ll raise eyebrows with any antitrust regime — even if it’s not the current tech-hungry one overseen by the FTC’s Lina Khan and the DOJ’s Jonathan Kanter. The government is already starting to look into Microsoft’s $13 billion investment in OpenAI.
In short, all eyes are on OpenAI. The ChatGPT maker and its once-embattled, now-emboldened chief have their sights set on global AI domination. Whether it’s $7 trillion or far less, they’re due to make a real attempt to solve the chip problem that appears to stand in the way of true unbridled success.
Semiconductor chips are seen on a circuit board of a computer in this illustration picture taken February 25, 2022.
The great chip divide
The chip industry is surging on the back of insatiable demand for artificial intelligence. While AMD and NVIDIA have doubled and tripled their stock prices respectively in a single year, there’s reason to believe that AI’s rising tide isn’t lifting all ships.
Semiconductor industry analysts told the Financial Times that the chip boom is mostly focused on AMD and NVIDIA, which make high-powered graphics chips needed to run generative AI systems. That includes the companies’ suppliers, such as the chip fabrication company Taiwan Semiconductor, aka TSMC, and the server company Supermicro.
Meanwhile, Intel and Texas Instruments reported disappointing quarterly financial earnings last week, causing most of the sector’s stocks to droop. The culprit: weakened demand outside of AI. Not only was 2023 a down year for computers and smartphones, but there are new concerns about a pullback from automakers and industrial manufacturers.
It’s a far cry from just a few short years ago at the height of the pandemic when chip supply couldn’t catch up to ravenous demand, which made new cars and Nintendo Switches hard to come by.
But it may not be all smooth sailing for AMD and NVIDIA either: New reports indicate Amazon, Google, and Meta — who rely on AMD and NVIDIA chips to power their own AI chips — are investing billions to build their own. It’s not that there’s a chip shortage, really, but there’s a shortage of the right chips.The logo of OpenAI is seen displayed on a mobile phone screen with the Nvidia logo in the background.
The rise of AI giants (and their challengers)
Two winners have emerged from the AI boom’s first year, but others are in hot pursuit.
Within a few days of ChatGPT’s launch on Nov. 30, 2022, the chatbot attracted millions of users, proving that the world was ready for consumer-grade AI. This made OpenAI, the parent company, a clear victor on the software front. On the hardware front, NVIDIA grabbed the spotlight. The company’s graphics-processing chips have become the industry standard for fueling powerful AI models, making NVIDIA a trillion-dollar company this year.
Wannabe contenders, however, are trying to catch up.
Last week, Google launched Gemini, its much-anticipated new AI model, which it integrated into its Bard chatbot, boasting about “multimodal reasoning capabilities.” Google, already the industry leader in so many internet sectors — search, advertising, online video, and more — wants Gemini to challenge OpenAI’s large language model, GPT-4, on which ChatGPT is built.
Gemini, an umbrella for three models functioning at different levels, will also be added to Android mobile devices, the Google search engine, and Chrome. Google CEO Sundar Pichai told The New York Times that there’s room for more than one top AI company: “It’s so far from a zero-sum game.”
Meanwhile, US chipmaker AMD has NVIDIA in its crosshairs. Last week, AMD announced a new series of chips specifically for AI. The new chips, called MI300, are meant to rival NVIDIA’s H100 series. Microsoft plans to use the new AMD chips to power some of its Azure-branded cloud computing services, and Meta wants to use them for its data centers.
In these parallel races for AI domination, there’s only one sure winner: the United States. There are plenty of top tech companies competing for dominance of the buzziest industry of the moment, but so many of them — OpenAI, Google, NVIDIA, and AMD — are based in the US. As we chronicled last week, Washington stands to benefit in countless ways.