I have commented this many times on such articles, and will say it again:
Google still thinks of AI as a research project, or at best a way to produce better search results. They essentially created the entire current generation of the AI space and then... gave it away, because no one on the product side understood what they had actually built. Handing the reins to the DeepMind team – who have never launched a single product in their history – seems to be a doubling down on that same failed strategy.
Google doesn't need more smart AI researchers, academics or ethicists. They need product managers who understand the underlying technology and can commercialize it. They need pragmatic engineers who can execute, launch and maintain services. That has always been their problem as a company.
As someone who's been at Google Research ~5y, this nails is it 100%.
I was at the non-Brain part of Research and it was seen as Google Brain is the "cool", pure research one, dealing with some future abstract AI and not caring for the products, feasibility, or even if the research "could" be made practical any day.
Deepmind was an "extreme" version of it, with some animosities and politics between the two, which I didn't follow too closely.
There were attempts at making Deepmind useful, called "Deepmind for Google", but the people there were... clueless. Though one really cool thing came out of it (XManager).
(I was at a closer to the product part, "Perception", which I loved. And still got to publish, explore, pursue my own research goals, etc.)
Ilya _was_ at Google Brain, so something doesn’t add up there. I believe people wanted to launch things, but higher management stopped it.
I was next to the team that created Allo’s chat bot, but they said that they had to take out most cool stuff because legal didn’t allow it to launch, so they had to dumb it down totally.
I believe the main problem was all the ethics/safety teams that just hired a lot of non-programmers, while OpenAI management treated safety as an engineering problem that has to be solved with a technical solution.
OpenAI isn’t a multibillion profitable public company with many prior lost (some won) lawsuits. To some extent they didn’t have anything to loose by cutting corners.
This is one of startups greatest advantages over established players.
Microsoft is a multibillion profitable public company and they managed to extend the search in no time. Google is not as effective as it could be. They have great engineering and they proved that many times, but something is not working on the product design side.
This is such a lousy excuse on Google part. We see multi-billion public companies bringing bold innovative products to extremely regulated sectors, like pharmaceutical and medical devices. Google can't deploy a chatbot because of lawsuits? Oh, c'mon...
Hindsight is 20/20. Before ChatGPT, chatbots had a lousy track record. Pretty much any such project run by bigtech had been cancelled due to PR issues ("Tay" etc).
That's what great about competition. It kicks you in the pants and reminds you you need to try.
iPhone scared the shit out of the phone market and today we have great phones from Samsung and Google which dominate the market. If everyone was trying to predict the smartphone market in 2007 they'd be talking about how Nokia missed the boat but excited to see their response (or Motorola/Sony/Blackberry etc). The market today won't necessarily be the market in 10yrs from now. It might be Google, they have a solid head start to be #2 and future #1, but who knows what will happen and whether that talent/advantage stays in Google.
It could just as easily be other companies we don't even consider serious players today.
I bought an s7 or s10 which was waterproof and took photos under the water. Iirc apple was rumored to also be waterproof at the time but it was advertised.
I don’t know how true these things were. Did anyone else get this perception?
This is a great analogy, and it touches upon why I try to avoid google services. The company that once championed "don't be evil" now cannot think outside of the system of perverse incentives it has created (by that I mean add based revenue).
IE was already dominant by 2002. Microsoft didn't ignore the Internet. They went hell bent on it during Gates era and won decisevely. It's only when they had no competition IE got stuck and then surpassed.
If talking about bundling a web browser inside their OS, sure. It was more that Microsoft missed the entire potential of the internet as a whole and how fundamentally transformational it could be. They had no presence in online services, e-commerce, search and more until they saw competitors eating their lunch, and have been lagging behind ever since.
> AOL was already dominant by the time MSN launched.
And never got off the pre-web walled garden end-to-end business model, despite connecting to the web, and died because of it. Not exactly the best example to use to argue Microsoft missed the boat on Web-era online services.
Number one browser aside, they had the number one web mail app, the number one chat app, the number one voice chat app, the most web native news service.
Yes Ballmer threw everything away and IE, Hotmail, MSN Messenger, Skype and MSNBC are jokes now, but that doesn’t mean they weren’t dominant force in Bill Gates era.
> Yes Ballmer threw everything away and IE, Hotmail, MSN Messenger, Skype and MSNBC are jokes now, but that doesn’t mean they weren’t dominant force in Bill Gates era.
At least we got Xbox and Xbox live… which seems to have barely lived by a life line. Confusing mess with Xbox vs windows vs media center PC.
I still think they could have been much more successful with the kinetic. Wii was loved for its ability to bowl and play tennis and etc. Nobody I know really wants to strap a sensory deprivation device onto their face. I don’t see VR working out but a highly evolved sensor bar that allows you to interact with humans physically present and online seems an easier pill to swallow. Never owned one but seems like Kinect is still fondly remembered in some applications.
All that said I wouldn't buy one today because I don’t need x amount of cameras and lidars and y microphones recording inside my house 24/7 and going to MSFT and whoever else.
> They had a presence in online services, MSN is older than even IE.
No, it isn’t. IE, Microsoft Internet Start (Microsoft’s original web portal), and MSN (originally a separate subscription-based dialup online service that later merged with the main portal) all launched simultaneously in August 1995.
IE was not a terrible browser, and Microsoft did really go hell bent on it in terms of dedicating resources to the IE development. I am not sure why you call IE a terrible browser here. (IE has to be compared to Netscape for any such assessment to make sense). IE development stopped once Microsoft had won, not before.
It’s hard to overstate how far ahead of everyone else DeepMind was as far back as 7-8 years ago. When AlphaGo burst on scene it blew everyone’s mind and even redefined what’s possible by an AI agent. I had thought back then surely Google will figure out a way to convert those research breakthroughs into consumer products.
And yet here we are. If anything it’s a great example of how a “money printer” business, Google’s ad business, makes an org into a lazy, risk averse and accumulates an army of empire builders who collectively breed promo culture.
Combine that with a decade of 0% interest rates which also boosted its stock price and it’s no wonder that Google is struggling on so many fronts.
Is there anyone who has successfully productized AI? ChatGPT isn’t a profitable product, at least not yet. Google Photos and Spotify recommendations are the best AI products I can think of with clear revenue, and in these examples AI is just a cherry on top of a product people would use anyway.
I’d be astonished if they’re even close to breaking even on copilot. In its current incarnation it wouldn’t even lace the boots of what’s coming out of OpenAI.
CopilotX with its OpenAI collab will be the real winner - if it ever gets released to those on the waitlist. I’m not aware of anyone who got in yet, which leads me to believe it doesn’t yet exist.
I got access to the Copilot CLI, which is supposed to be part of the Copilot X package eventually. Dunno anyone who has gotten access to Copilot Chat yet, which I expect is what everyone really wants.
The question there is how many of the estimated 100,000 software engineers at Microsoft are using Copilot, and what has been their (I'm sure measured) productivity boost. Microsoft does derive some benefit from Copilot being accessible to the paying subscribers of the world from having them give feedback and in free (and paid) press. But the internal use numbers probably easily justify its initial cost to train.
Say Copilot makes an engineer 2x as productive, their all-in salary is $500k to make the math easy, 1,000 MS sw engineers are using it, and Copilot took $5mm to train (GPT-3 took $4.6mm). Those 1k MS employees now being twice as productive are doing the work of an extra 1k people at $500k, or $500 million's worth in a year. That means $5 million in Copilot training costs are paid for in... 4 days. I have no inside information, so those number are all made up, but I'm pretty sure the initial training costs have already been paid off internally.
We also don't know how many multiples of $5mm it took to produce the initial version of Copilot, nor how many subsequent training runs there have been.
Point is, any significant productivity gains made, across an organization the size of Microsoft engineering, easily pays for big expensive training runs.
SOME parts of an engineer's work are 2x faster, but not all. Generating code - yes, writing tests and docs - yes, designing the system - no, debugging - no, attending meetings - no, getting your data faster, or moving the other team to finish integration sooner - no help. So it's going to be 10% boost overall, not 100%.
The nice effect is that the AI makes people more confident to try things and go out of their comfort zone. Maybe the quality of the end product will be higher.
It's a good question, but also helpful to point out that one of the beauties of these models is that you can train them once and deploy to many use cases. The same model can be used by Github, Bing, Office 365, Azure and so on.
And as for the big multi-billion investment in OpenAI, they may have more than made that back up on their valuation already. Plus the deal was structured that OpenAI would pay it's revenues into Microsoft till the investment was paid back and MS would sill end up with a 49% stake.
All in all, sounds like a smart investment from MS and, cerry on top, managed to majorly embarrass a main rival.
How do you want to define AI? Google's been using ML models to power various Google products for years. Translate was a big switch over, back in 2016, and it powers the Google Search answer box. I have no idea how profitable that answer box is, but I'm fairly certain that Google Search is profitable. The Google Home speaker voice recognition is also powered by ML models.
It is currently April 2023. “~0 in 2022” is the only part of that that seems credible. I not convinced of OpenAI’s rosy predictions of future explosive growth.
The fact that Microsoft is baking GPT into all of their products guarantees explosive growth.
ChatGPT is also one of the fastest growing consumer products in history by number of users. At $20 a month for plus, it could be a significant revenue stream.
Then add all the companies like Duolingo and Snapchat that are using GPT as well.
If you don’t see this as explosive growth, then I don’t know what to tell you.
Because Microsoft is the largest software company in the world. Their products are in wide use by virtually all businesses and schools in the country. Judging by the popularity of ChatGPT, these features will be very popular and heavily used.
"Hopes to grow" revenues. Current estimates put hardware costs alone at $700k/day, so even if they hit $300M in 2023 that won't make them profitable. This isn't even counting the people costs and other operation costs required to run a company.
edit: order of magnitude was wrong on costs per day.
And yet, $300M is only 1.25M subscribers at the current $20/mo rate. If we say that they need a $1B / year to be comfortably profitable, that's ~4.2M subscribers. A good rule of thumb is that you can hope to convert about 10% of your free user base to paid; one random source says they have 100M monthly active users - which at 10% conversion, is $2.4B / year. I think they'll be fine.
You are talking about a revolutionary product that literally dominates mindshare from consumers to students to CEOs to governments. Its a pure monopoly that has insanely wide utility and instantly obvious value proposition.
Do you know anything about B2C freemium products? 10% conversion over 10s-100s of millions of users is literally insane.
It doesn't matter how revolutionary GPT-4 is, people's willingness to pay for anything is generally very low. ChatGPT premium is also a very expensive subscription for a consumer product!
People are willing to pay $10k a year for college, very high conversion rate.
People are willing to pay for tutoring, at rate that's probably about 10% of student base, despite its very high costs ($50/h, not $20/m)
At the very minimum, I can already see every university and high school student paying for GPT-4. Its a way way way more powerful essay writer and personal tutor than GPT3.5, that alone is incentive to upgrade. For only $20 a month.
Know what GPT-4 currently is insanely capacity limited. So far, the limitation is not on the demand side, but the supply side.
Getting 100 million users in 3 months with 0 marketing or network effects already annihilates existing records, getting 10% conversion is nothing special.
You could have saved yourself and everyone else the time by instead writing “I have no idea what I’m talking about and I don’t understand constraints”.
The cheating sites I see on the first page of Google seem to charge around $10-$30/page. GPT is cheaper, but lower quality. I don't think the market for tens of dollars cheaper but shittier quality than buyessayfriend.com is anywhere near every highschool and college student.
GPT API is a successful product. All those start ups that are just a thin layer over GPT that are funded by YCombinator are paying for API use and that's profitable for OpenAI.
No, I would like facts, not assumptions. It's definitely not safe to assume they are making a profit, as a whole, or per transaction. It's more complicated than that.
Profit has a strict definition of $revenue - $cost, for a business operation as a whole, which leaves money in the bank at the end of the month.
They could be making more money for a single query than the cost of compute time for that single query, but that may not cover the engineering and idle servers. They could be running at a loss with the assumption that they can improve efficiency per transaction soon. They could be running at a "loss" because they're giving some of the compute away for free right now, to improve the training with the user responses. Or maybe they are making fistfuls of money. "Profitable" has a strict meaning, shouldn't be assumed, and definitely isn't required, at this point in their operation.
I'm very interested to know if they are profitable, at the moment, but I don't think that's been publicly disclosed yet, and I can't find anything. A reference is required.
I don't have a reference. I'm taking the very reasonable assumption that openai is making money on API calls based on how much they charge compared to others in this space, the favorable pricing they receive from Microsoft, their ability to constantly bring down the costs and push the savings to their consumers, their unwillingness to lower the cost of Dall-E even though it's more expensive than it's competitors.
Very reasonable assumptions. You will never get certainty, even if they say they're profitable maybe they're just lying for investors. If you see their bank account total go up every month maybe it's a ponzi scheme.
For my heuristics, if not profitable, at least close, and definitely a major success in acquiring market share and customer mind share.
It was not a petty insult. The options you gave are "fraud" or "unfounded speculation." Literally lacks any kind of nuance. What sort of nuance would you say you contributed?
I think it would be better to make it clear that something is an assumption rather than stating it as fact, to not add to the noise. In the world of tech (and any R&D heavy group), initially running at a loss is the norm, not the exception.
TikTok uses a bunch of AI. From their algorithm for the FYP. To vision for classification of videos. And sound processing to bucket sounds/music. This feeds into their rec engine as well as their safety engine.
if you consider Spotify recommendations as AI then you should consider also Youtube and every social network based on a non-time based timeline and ads, no?
I completely agree. I was involved as a tech executive at a large medical center trying to get collaborative work with both Google per se, and DeepMind, to a usable or product stage, and it was essentially impossible. DeepMind in particular was more interested in pushing the research envelope, and getting more papers in Nature, than in building products.
I wouldn't underestimate the degree to which this is by design, from the very top of Google. Different Google and other Alphabet companies' executives more than once told me they just weren't interested in products that didn't have an obvious path to more than 1 billion users. The companies don't have a clue how to make money retail. If they can't print money with an idea, they don't have the tools and skills to bring it to market.
I would go farther still and say Google doesn’t need PMs — it needs a singularly bold visionary — a Satya Nadella or John Legere or maybe someone else — not a good ceo or a bad ceo; nor a polite ceo or a trash-talking tough ceo — they just need someone to yank the empire builders out and go all in on product building. Not product managing.
The deeper problem is the money people who lead Google have no imagination whatsoever and literally can’t figure out how to make money in anything that isn’t mining user data for ads. Cloud is a money pit, and will NEVER be #1 in the space.
They literally put more effort and resources into rigging ads auctions than trying to solve real user problems.
They're just making a correct calculation. Do we increase our $70 billion / quarter with 2% or do we put resources towards doubling the income of a $1 million / year product.
Yes, the answer isn't what you'd like, but let's not pretend it's not rational.
The cat's out of the bag now, it doesn't take a genius PM to work it out. Maybe a genius PM could've worked out how revolutionary generative AI is going to be pre- chat GPT release but I really doubt that a random MBA who knows nothing about AI can do that. Every single day there's a cool new AI application. The problem space is fairly fleshed out. It's a matter of executing.
How do you make enterprise tools better? (Photoshop + AI, Code + AI etc.)
How do you make consumer tools better? (YT tools + AI)
How do you make search better?
> They need pragmatic engineers who can execute, launch and maintain services
Not the job description Google has for engineers. Their hiring process effectively eliminates anyone who matches that description and bothers to put themselves through it.
To me, you've described a situation that's infinitely more a feature than a bug.
They don't pay me, so I don't care about their profits, but the stuff they've more-or-less given away and people don't think much about is their best stuff. Colab, Docs, Scholar, etc...
> Google doesn't need more smart AI researchers, academics or ethicists. They need product managers who understand the underlying technology and can commercialize it.
Google's revenue is equal to the GDP of New Zealand. Google's cash reserves are sufficient to sustain the company through half a century of bad quarters. Not that they have had any bad quarters, ever.
They don't need anything.
Their ad business is a donkey that shits gold, with Chrome and Android keeping the competition locked out, and everything else doesn't matter for Google as a company. They've done little more than play around for the last decade, with an endless procession of hyped-then-canceled "products", and it hasn't affected their market dominance in the slightest.
They can keep fucking up for the foreseeable future, and it won't really matter. If a startup emerges that appears to have the right approach to AI, Google can simply buy it. Power is power, and everything else is nothing.
Google controls 90% of the browser market, and 70% of the mobile OS market. They can force anything they want down the throats of billions of people, the vast majority of which aren't even aware that there are alternatives. And even those that are aware are in many cases unable to switch, as for example most phones will only run their manufacturer's version of Android, from which Google features usually cannot be completely removed.
This isn't even remotely comparable to the AltaVista situation. Google has a planet-scale stranglehold on how half the world's population accesses information. This arguably makes Google more powerful than most nation states. I can guarantee they won't be dislodged by some search startup with a cool idea.
> Google has a planet-scale stranglehold on how half the world's population accesses information
…currently.
I think OP’s point is that once some better product comes out and e.g. normal people hear about it on tiktok and start switching, it doesn’t seem like Google is institutionally capable of competing. Honestly, considering how much good research they put out, I really hope they don’t.
> it doesn’t seem like Google is institutionally capable of competing
They don't have to compete. They can just buy any startup that's a potential threat to them, or lobby for laws that would effectively make them illegal. That's what power is, and it's all that matters.
You could have said the same about Compuserve or AOL or IBM or Xerox or HP at some point in their history. Where are all of them now?
Every untouchable business inevitably gets disrupted once the company can no longer stay competitive and get ahead of new trends. Same is happening with Google today.
IBM bought RedHat. And the Watson demo is very similar to the Waymo situation. It works, but no one can use it actually, but sure IBM pushed it for years ruthlessly.
Netscape was a company during a time when using the Internet was a niche activity.
Google is one of the most powerful entities in the history of mankind, with read/write access to the private information of the majority of humans alive.
The two aren't comparable. Indeed, there are few entities that are comparable to Google. Google won't use their technological edge to keep potential competitors out, they'll use their financial, social, and political power.
I don’t think they will. And I think like lotus notes running groupware, like windows running the desktop, like novell running the lan, Google will always rule search, and never make the transition into the next thing.
The company hasn’t released the significant product in 15 years, despite the huge amount of money they have this will be not be enough to change the culture.
> they need product managers who understand the underlying technology and can commercialize it.
I would say they more need engineers who care about and can make good products. In my limited experience, it takes time to turn a research-focused group into a product-oriented team. Research vs production requires different skill sets.
So Google did a Xerox PARC or an IBM PC (to a lesser extent)?
It’s curious how predictable it is that a major player is going to fall into this trap at any point in time. There’s probably some way you could measure its likelihood if you were tracking internal comms, org charts and maybe some finely designed survey data.
Well, I'm ok with Google having this "problem". Hopefully, they will produce a couple more of useful things, until it somehow kills Google or whatever.
For a business to survive it needs competition. You could argue it was necessary to create competition in the AI space before business needs arise that Google could provide. Without competition, there's no way for the market to rise to demand. Google didn't give away stuff, they created demand.
Isn't the exact opposite reading of this just as likely to be true from what we know so far? That rather than handing over the reins to DeepMind, they're actually reining them in and forcing them to work on productization?
Google still thinks of AI as a research project, or at best a way to produce better search results. They essentially created the entire current generation of the AI space and then... gave it away, because no one on the product side understood what they had actually built. Handing the reins to the DeepMind team – who have never launched a single product in their history – seems to be a doubling down on that same failed strategy.
Google doesn't need more smart AI researchers, academics or ethicists. They need product managers who understand the underlying technology and can commercialize it. They need pragmatic engineers who can execute, launch and maintain services. That has always been their problem as a company.