From Investors to Competitors, the Fight For the AI Throne is Heating Up
Microsoft CEO Satya Nadella fired a new salvo intensifying the AI arms race last spring when he said, “A race starts today… We’re going to move, and move fast.” So far, the race has been close, and at times it’s gotten down and dirty.
At the end of May, news broke that Google was hiring AWS and Microsoft Executives to beef up their AI arsenal and cloud unit. And just this week it was reported that the DOJ and FTC had reached a deal to investigate Microsoft, Nvidia and OpenAI’s dominance of the emerging AI industry as part of a federal antitrust investigation.
Open AI’s inclusion among the tech behemoths should also stand out. The race for AI dominance now includes smaller more nimble startups in addition to the typical tech giants like Microsoft, Apple, Google, and Amazon. In the past, these larger tech companies have invested heavily in the smaller AI labs, but recent developments indicate a shift towards direct competition, signaling a new phase in the battle. The outcome could determine who will pioneer this new landscape of artificial intelligence - will Google be dethroned by Microsoft or Amazon, or will an unforeseen newcomer take the lead? The competition appears to be fierce right now, and it seems certain that artificial intelligence could make or break established companies. Ultimately it could determine who reigns as the next AI driven tech giant in the new era.
‘I got very, very worried’
Microsoft initially dismissed the capabilities of AI. A revealing email addressed to Microsoft's CEO, Satya Nadella, and Bill Gates in 2019 establishes the point in time when the company began to realize AI’s potential. Microsoft’s former Chief Technology Officer, Kevin Scott, candidly expressed his mounting concerns. “When [Google] took all of the infrastructure that they had built to build NLP models that we couldn't easily replicate, I started to take things more seriously,” he wrote. “And as I dug in to try to understand where all of the capability gaps were between Google and us for model training, I got very, very worried."
This led to Microsoft’s first billion dollar investment in OpenAI in 2019. Today Microsoft’s total investments in OpenAI have ballooned to about $13 billion. In return, OpenAI has granted them exclusive access to cutting-edge AI systems which Microsoft has integrated into their products and services in an attempt to dethrone Google. One notable example is the integration of AI into Microsoft Edge and Bing, their web browser and search engine. By leveraging AI, Microsoft aims to enhance the user experience and challenge the dominance of Google's search engine. Additionally, Microsoft has infused AI into its Office suite, enabling intelligent features that streamline productivity and collaboration. People using Word are assisted by Microsoft’s AI Copilot.
Not to be outdone, Amazon has made a strategic move by investing $4 billion in Anthropic, a startup renowned for its advanced AI models. This investment underscores Amazon's recognition of the commercial and technical viability of developing in-house AI capabilities. Driven by this realization, Amazon has intensified its efforts, pushing its AGI (Artificial General Intelligence) team to develop a model that surpasses Anthropic's Claude 3 by mid-year.
Amazon's pivot towards AI dominance highlights the growing importance of AI in the tech industry. By leveraging Anthropic's expertise and investing in its own AGI team, Amazon aims to gain a competitive edge and position itself as a leader in the AI landscape.
A Threat to Google Search
Despite an ostensible lead in the AI domain, inside Google headquarters they are highly cautious about the threat this burgeoning field could pose to their search dominance. Following the initial success of ChatGPT, Google issued a "code red" corporate emergency and quickly introduced its own search-oriented chatbot, Bard. On the other hand, Google has long been a frontrunner in AI development, leveraging its vast data resources and AI-optimized chips to maintain a competitive edge. Google's integration of AI across its services, from the Google Search Index to YouTube, provides it with unparalleled data sets to train its AI models.
This vertical integration, as highlighted by Microsoft in response to EU antitrust regulators, gives Google a significant advantage, allowing it to innovate independently without relying on external partnerships. "Today, only one company - Google - is vertically integrated in a manner that provides it with strength and independence at every AI layer from chips to a thriving mobile app store. Everyone else must rely on partnerships to innovate and compete," Microsoft said in its report to the Commission. Google punched back, “We hope the Commission's study will shine a light on companies that don't offer the openness of Google Cloud or have a long history of locking-in customers - and who are bringing that same approach to AI services.”
The Battle to Buy the Best
The tense rivalry between big tech firms over AI is far from being limited to regulatory legal battles.. Google recently recruited two cloud executives from Amazon Web Services and Microsoft to enhance its artificial intelligence capabilities and boost its cloud business. Saurabh Tiwary, previously a corporate VP at Microsoft, will become Google Cloud's general manager of cloud AI. Raj Pai, formerly a VP at AWS, will handle product management for the cloud AI team and report to Tiwary, replacing AI cloud expert June Yang, who left earlier this year. Such examples demonstrate the contentious recruting drive underway between tech powerhouses determined to win with AI.
Noticeably quiet so far has been Apple, which is usually at the forefront of technological revolutions. Do not be deceived. Despite a noticeable reticence on mentioning AI in public announcements and disclosures, Apple is paying close attention to the rise of artificial intelligence. In fact, Apple is actually the largest buyer of artificial intelligence companies.
Apple has acquired 21 different AI and machine learning companies since 2017, ranging from voice design technology to image recognition tools. This is almost double the amount of AI companies acquired by both Microsoft and Meta, and almost as many acquisitions made by Google, Intel and IBM combined. Many of the technological advancements Apple acquired by purchasing smaller companies are predicted to be featured in the next line of iPhones and Macbooks. They could soon become the most ubiquitous and utilized sources of artificial intelligence given Apple’s immense popularity and size.
Rise of the Startups
Microsoft and Amazon are making strides developing their own AI models, which should be cheaper than licensing the models from their smaller partners. However, they face significant competition from the very startups they have invested in which have a head start in the field and should not to be discounted.
In contrast to the big tech companies, the startups are flexing their AI muscle. They benefit from a concentration of talent and proprietary algorithms that allow them to innovate efficiently, perhaps more than their much larger and wealthier rivals.
Anthropic, for instance, is betting on its ability to stay on the cutting edge of AI development with fewer computational resources, a strategy that co-founder Jack Clark believes will keep the company competitive. Rumors flew last month that OpenAI was set to unveil an AI-driven search product of its own the day before Google’s annual I/O conference, intensifying its rivalry with the search giant. While CEO Sam Altman denied the rumors, he did disclose that they were building something new that “feels like magic,” and sources recently told The Verge that OpenAI was working hard to “poach Google employees for a team” to build a rival product.
In the short term, AI companies are backing off on some of the larger than life predictions surrounding AI. Despite the initial excitement and amazement, for now companies like Microsoft, Amazon, and Google are urging caution, acknowledging the high costs and technical limitations of current AI technologies. AWS, for instance, has advised its sales staff to manage customer expectations, highlighting the challenges of implementing AI solutions at scale. Similarly, Google aims to generate significant revenue from its AI services but recognizes the need for a realistic approach to market adoption.
The race for AI supremacy creates stiff competition between well-known tech giants and novel, yet now household-name, startups. Those startups include OpenAI and the LLM powered news outlet hosting this article. The true potential and future of AI technology is far from completion. Among the most exciting developments, however, is that this competition is forcing the tech titans to stop resting on their laurels. Microsoft CEO Satya Nadella summed it up like this: “It’s a new paradigm. It’s a new day, and search innovation is back into the forefront. The fact that the largest software category with the best economics is back in [the] contest is just fantastic.”
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