Big Tech is making big AI promises in earnings calls as ChatGPT disrupts the industry

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It’s been a rough year for the tech world, and Silicon Valley giants are scaling back and regrouping. But one area companies are loath to cut back on in the year ahead, if this earnings season is any indication, is artificial intelligence.

Up until very recently, tech giants seemed to be playing it safe with A.I. Facebook, for instance, has been experimenting with A.I. and chatbots for years, but the massive size and bureaucracy of the sector’s biggest companies have also been criticized for stifling rapid innovation leaps in deep science fields, such as artificial intelligence.

That all changed in November, when San Francisco-based startup OpenAI, which has around 500 employees launched ChatGPT, the advanced chatbot and large language model that put every tech giant on red alert.

In a few short months, OpenAI’s ChatGPT has quickly become one of the world’s most widely-used apps. The chatbot surged past 100 million monthly active users in January and is now the fastest-growing consumer app in history, according to a Wednesday research note by Swiss investment bank UBS. Although not without its informational shortcomings, ChatGPT’s popularity looks unlikely to wane anytime soon, given how it continues to wow audiences worldwide.

Tech giants were sure to take notice, especially after rival Microsoft announced a $10 billion investment that effectively puts it in charge of the artificial intelligence startup for the next few years. And they confirmed as much during their investor calls this week. Although some are still reeling from sagging sales and thousands of layoffs, many tech leaders are signaling that A.I. is set to play a much bigger role moving forward.

Unlocking “the incredible opportunities A.I. enables for consumers, our partners and for our business” is one of Google parent Alphabet’s biggest priorities in 2023, CEO Sundar Pichai said in his opening remarks during Alphabet’s earnings call with investors Thursday.

“A.I. is the most profound technology we are working on today,” he added.

Big Tech piles into A.I.

Google has a vested interest in staying competitive with OpenAI and Microsoft, as ChatGPT poses a direct threat and reportedly sparked a “code red” for the former company’s long-standing search engine hegemony. 

Pichai said during the call that Alphabet will imminently incorporate its own A.I., known as LaMDA, into its search engine.

“Very soon, people will be able to interact directly with our newest, most powerful language model as a companion to Search, in experimental and innovative ways. Stay tuned,” he said.

“We’ve been preparing for this moment since early last year, and you’re going to see a lot from us in the coming few months,” he added of the company’s planned rollout of different A.I. products, which include PaLM, another large language model.

But Google isn’t the only Big Tech company targeting a bigger A.I. presence to counter OpenAI’s rise. During Apple’s earnings call on Thursday, CEO Tim Cook said A.I. is a “major focus” at the company, adding that its applications have the potential to “affect every product and every service that we have.”

Facebook parent Meta has also been spending more on its A.I. programs in recent months to sustain its metaverse ambitions and has reworked its data center design plans to ensure A.I. workloads can be supported. 

Company leaders emphasized these points during Meta’s earnings call Wednesday: “The two major technological waves driving our roadmap are AI today and over the longer term the metaverse,” CEO and founder Mark Zuckerberg said. CFO Susan Li added the company is “investing heavily in AI” over the long term to enhance its privacy features.

Meta has also signaled a greater focus on A.I. in the months ahead as the company seeks to optimize the performance of Reels, its short-form video feature on Facebook and Instagram, which has so far failed to emulate the success of similar offerings from competitor apps like TikTok.

The startup threat

But the big tech companies coming up against OpenAI and the many other startups working on artificial intelligence and its growing list of applications may come up against an inherent disadvantage: Big Tech might be just too big.

Disruptive technological developments such as big advances in A.I. tend to come a lot easier to more nimble startups than large companies weighted down by bureaucracy, according to Clayton Christensen, the late Harvard economist and business consultant who quite literally wrote the book on disruptive innovation more than once. Christensen argued in his work that big companies tend to be less successful at innovating given the pressures of preserving their established business.

“One of the bittersweet results of success, in fact, is that as companies become large, they lose the ability to enter small, emerging markets,” Christensen wrote in a 2000 article for Harvard Business Review. “The reason, therefore, that large companies often surrender emerging growth markets is that smaller, disruptive companies are actually more capable of pursuing them.”

For companies like Alphabet and Meta, the disruptive force of A.I. might present the same challenge. From a technological standpoint, Google’s language models and ChatGPT have “a lot more that’s similar than different,” UBS researchers wrote in this week’s report. But that doesn’t mean Google can rid itself of bureaucratic obstacles as easily.

Last month, Google released an update on its A.I. work that reiterated its commitment to advancing the technology, but while the UBS report praised the company’s work, it warned Google against getting in its own way.

“Reading this post, it feels like a company that is fighting a lot of institutional roadblocks, and at a time when there might be tectonic shifts underway in technology,” researchers wrote.

Companies like Alphabet and Meta may have more resources than OpenAI, but there’s a good reason the startup was able to successfully launch its product to the public before any of the industry heavyweights, who now risk being left behind.

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