ChatGPT’s $8 trillion gift to Big Tech
Elon Musk’s quest to beat OpenAI
Inside Elon Musk’s messy breakup with OpenAI
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ChatGPT’s $8 trillion gift to Big Tech
Two years ago, OpenAI introduced ChatGPT, a seemingly modest widget, to the web. Staffers speculated on its potential user base, with the highest guess being 100,000. They couldn't have been more off the mark.
ChatGPT rapidly ascended to become the fastest-growing app in history, now boasting around 200 million active users. Upon its release, social media buzzed with examples of its capabilities, far surpassing Amazon's Alexa and Apple's Siri. It could craft poems and high school essays, sparking discussions about its potential to revolutionize Hollywood and education. Some of these predictions have materialized, with schools rethinking homework assignments, though its broader impact remains uncertain.
What is undeniable is that in just two years, the primary beneficiaries of this AI, which Sam Altman claims will "benefit all humanity," are a select few tech giants. The six largest firms have collectively seen their market capitalizations soar by over $8 trillion since ChatGPT's debut.
Consulting firms, ever the opportunists, have thrived in this AI gold rush. McKinsey, for instance, expects about 40% of its business this year to be tied to generative AI, according to The New York Times. IBM's generative AI business has surged to $3 billion, while Accenture's bookings for generative AI skyrocketed from $300 million in late 2023 to $1 billion in just the last quarter of 2024.
Entrepreneurs developing generative AI products are also attracting a larger share of venture capital, despite a general decline in startup funding due to higher interest rates. Two years after captivating the public, ChatGPT's most significant legacy appears to be enriching tech's biggest players. The next phase of AI might democratize the field, as smaller, specialized models lower entry barriers....
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Elon Musk’s quest to beat OpenAI
Elon Musk has spent the past year rapidly developing his artificial intelligence startup, xAI. Now, he faces the challenge of turning it into a profitable business.
Musk founded xAI last summer to catch up with OpenAI, the ChatGPT developer he co-founded but left in 2018 after a power struggle. He recruited top talent from across the industry and pushed contractors to build a massive new data center in Memphis, Tennessee, within months—a nearly unprecedented timeline for such a project. Musk promises this facility will enable xAI to deliver the world’s most powerful AI "by every metric" by December.
Investors have shown confidence in Musk's vision and track record. The startup has raised at least $11 billion, boosting its valuation to $50 billion in a recent funding round, making it the second most valuable private AI developer after OpenAI.
However, as a revenue-generating venture, xAI is still in its infancy. The startup projects its annual revenue to surpass $100 million, while OpenAI expects nearly $4 billion this year.
xAI is now striving for independence. Earlier this month, it launched a paid tool for developers to build products using Grok, offering discounts as incentives. Next month, it plans to release a stand-alone consumer app similar to ChatGPT, according to sources. Despite its late entry into a highly competitive market dominated by OpenAI, Google, Meta Platforms, and Anthropic, xAI aims to carve out its niche.…
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Inside Elon Musk’s messy breakup with OpenAI
In 2016, OpenAI was negotiating a crucial deal with Microsoft to secure the compute power needed to develop what would eventually become ChatGPT. Sam Altman, OpenAI's CEO, sought approval from the company's largest investor, Elon Musk.
According to newly revealed emails, Altman proposed a deal: "$60MM of compute for $10MM, and input from us on what they deploy in the cloud." Microsoft wanted OpenAI to provide feedback on and promote its AI tools like Azure Batch. Musk was vehemently opposed, saying the idea made him "feel nauseous."
Altman then presented a revised offer: "Microsoft is now willing to do the agreement for a full $50M with 'good faith effort at OpenAI’s sole discretion' and full mutual termination rights at any time. No evangelizing. No strings attached. No looking like lame Microsoft marketing pawns. Ok to move ahead?"
Musk agreed, provided the deal did not involve active promotion: "Fine by me if they don’t use this in active messaging. Would be worth way more than $50M not to seem like Microsoft’s marketing bitch."
These emails were released last week as part of Musk's lawsuit against OpenAI and Microsoft. The lawsuit aims to highlight what Musk claims is an anticompetitive partnership between the two companies. However, the emails also reveal early collaborations and power struggles between Altman and Musk, who invested between $50 million and $100 million in OpenAI's early days. They document OpenAI's transformation from an open-source nonprofit to what the lawsuit describes as a "closed-source de facto subsidiary" of Microsoft, allegedly straying from its mission to develop AI for the public good. The emails also underscore the complete breakdown of Musk and Altman's once-promising partnership....
Enjoy! SBalley Team