This is AI's 'iPhone moment'

Companies are scrambling to show they are in the AI game as a result of ChatGPT's launch.

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The emergence of artificial intelligence may be causing Elon Musk to lose his sleep, but he's hardly alone: Big tech is ready to move fast and do anything to make your life more convenient.

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Despite the "existential angst" that Elon Musk has complained about, there seems to be a very real and very substantial risk now facing tech companies that fail to take advantage of the AI iron while it is hot.

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Artificial intelligence applications, such as machine learning and natural language processing, seem to have gone from being futuristic moonshots that are fun to talk about to dire necessities that tech companies must have in order to be considered investible today, almost overnight.

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The pile-on of half-baked AI announcements across social media on Monday was the latest example of this trend. According to a Facebook post by Mark Zuckerberg, chief executive of Meta Platforms, the company is striving to centralize staff working on artificial intelligence technology so that it can achieve faster breakthroughs across more products, including AI tools and “personas.” The same day, Snap Inc., the parent of Snapchat, unapologetically launched an imperfect AI chatbot as a feature for its Snapchat+ subscribers as an experimental feature. During this time, the Information reported Monday that Mr. Musk has been in talks with researchers to develop a ChatGPT competitor that would have fewer restrictions around divisive subjects in order to compete with ChatGPT. 

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Investors are entitled to be skeptical at times, and you can understand that. The tech sector has had no shortage of hyped "next big things" to entertain those who have been following the sector over the last few years. Cryptocurrency was a hot topic in 2019 and was referred to as "Project Libra." By 2020, it has evolved to encompass anything related to blockchain or what is referred to as Web 3. There was a lot of buzzes last year about the metaverse and Facebook's risky pivot and rebranding effort made it especially salient. 

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It is important for investors to pay more attention to the market this time around for two key reasons. One of the most important aspects of AI is the velocity at which it is growing and improving. At the core, artificial intelligence can be said to be a technology that mimics human intelligence through the use of data it has accumulated. Back in 2010, former Google Chief Executive Eric Schmidt said that we produce as much information every two days as was created between the dawn of time and 2003, which was a huge achievement. There has been a rapid increase in the creation of information since then. Thus, even with nascent AI technology in its infancy, today's nascent AI technology is already able to draw from an established and growing reservoir of knowledge, giving it a head start compared with other types of new technologies in its field. 

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Meta's virtual-reality headsets have been available for years now, for example, but users still complain about sweaty faces, burning eyes, and headaches after using them. That's not to mention the fact that their avatars do not even have legs yet. Despite this, Mr. Musk was on the verge of describing OpenAI's ChatGPT as "scary good" just days after it was launched as a prototype late last year.

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Second, and perhaps more significantly, is the fact that Artificial Intelligence has received a very warm and rapid reception from consumers in recent years. The Facebook company, through a unit called Meta AI, in the early months of 2020 published a chart indicating that nearly half of the people rated chatbot interactions as being better than human interactions, an increase from less than a quarter just over 18 months earlier. A recent BofA Securities note that discussed AI's potential also referenced a poll conducted by IE University in 2021 that found that over half of Europeans were in favor of giving government seats to AI algorithms with access to their personal data.

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Only a fifth of American adults uses some kind of virtual reality, despite the fact that the technology has been around for years. According to an Axios survey published last year, more than three times as many Americans say the idea of the metaverse scares them more than it excites them, according to the survey. Pew Research found that only 16% of U.S. adults had invested in, traded, or used any cryptocurrency as of last year, a sign that the cryptocurrency industry has been more cautiously received. Bitcoin has been available for well over a decade, but only 16% had invested in, traded, or used any cryptocurrency as of last year. 

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In comparison, Similarweb data shows that ChatGPT has racked up 100 million users in its first two months of operation, according to Similarweb data. It has been found that the chatbot is now attracting nearly 35 million daily visits, roughly the same amount of worldwide web traffic as that received by Microsoft's Bing search engine. It is not surprising that AI-enabled chatbots are loved by so many people -they are fun, free, impartial, always available, and, despite their relative omniscience, they are humble (just ask them!).

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However, timing is everything when it comes to business. Match Group, the giant in the dating industry that runs Tinder, has credited its success with Tinder-the top-grossing dating app for roughly the past decade-partly to the iPhone's timely rise to prominence. A tech industry starved for growth in recent years may finally have found what analysts at BofA have referred to as the new "iPhone moment" after years of somewhat empty promises. 

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Taking that context into account, it is not surprising that tech companies are racing toward AI with a sense of reckless abandon.

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“We're sorry in advance! ” On Monday, Snap said that it would be willing to take responsibility for any harm caused by its new chatbot. According to Snap, “as with all AI-powered chatbots”, the My AI chatbot is susceptible to hallucinations, or making statements with false conviction, and is able to be tricked into saying anything at all.” Snap clearly apologized, but not to a great extent.

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