The Lex Newsletter: OpenAI and the Case for Techno-Optimism

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Dear Reader,

When I arrived in San Francisco at the top of 2018, the techlash was already in full swing. Public trust in US technology corporations has been shaken by data breaches and faux news. Corporate mottos like Google's “Don't be evil” and Facebook's “Move fast and break things” had begun to sound like punchlines.

Six years later, as I prepare to depart town and log off from the Lex column, San Francisco is experiencing a brand new boom. SF startups like OpenAI and Anthropic are leading a world race in generative artificial intelligence. Technology company valuations have multiplied. Look at Microsoft, the most important US company by valuation. Since 2018, its market capitalization has tripled to greater than $3 trillion. Confidence in technology can have declined, but demand for its services and stocks is at an all-time high.

If you're a tech enthusiast, you might consider that AI is about to usher in a world shift akin to the Industrial Revolution. Those of a more nervous disposition will wonder how long it can take for the whole lot to return crashing down. In any case, OpenAI is the corporate to regulate.

This week OpenAI decided to release the newest version of its AI chatbot to the general public. The multimodal model can handle images and audio and has a somewhat annoying, giggly voice assistant. But the demonstration also served two other purposes: It nullified competitor Google's recent AI announcement and diverted attention from the departure of OpenAI co-founder and chief scientist Ilya Sutskever.

Sutskever's exit marks the ultimate phase of OpenAI's transformation from a nonprofit research organization pursuing human-like artificial general intelligence (AGI) while protecting humanity to a multibillion-dollar industrial enterprise. It also consolidates the facility of CEO Sam Altman.

Go back six months and neither of them were sure. Sutskever had just taken part in a bizarre board coup that briefly removed Altman from OpenAI. Little explanation was given to investors apart from the incontrovertible fact that Altman had not been “consistently candid.” The episode led to farce with Altman's reinstatement, aided by backer Microsoft and employees waiting for his or her shares in the corporate to be paid out. Sutskever recanted his actions.

Sutskever is an AI pioneer who was instrumental in the event of neural networks that led to the creation of enormous language models that drive generative AI. But what turned OpenAI into an $80 billion company — probably the most helpful startups on this planet — was not only its research but additionally its decision to repackage its breakthroughs in a free, easy-to-use platform called ChatGPT. The reason it reached $2 billion in annual revenue inside a yr was the corporate's decision to quickly sell chatbot subscriptions and access to the underlying model.

OpenAI's popularity and talent to draw attention far exceeds that of its larger competitors. According to OpenAI, ChatGPT has 100 million weekly users. Google has not chosen to offer an identical metric. This week's nearly two-hour presentation showed how the corporate is constructing AI into all of its services and needs to create personalized “agents” that will help complete individual tasks. But as analyst Richard Windsor noted, Google is a technology-led company. It's not superb at marketing its own skills. OpenAI is.

We still don't understand how much OpenAI is spending. We also don't know if the pursuit of AGI is possible. But OpenAI has shown that there’s a demand for AI services that individuals are willing to pay for. That gives some substance to AI valuations.

The next phase we’ll enter is a fight between big tech corporations. OpenAI is reportedly in talks with Apple so as to add generative AI services to iPhones and other Apple products. Microsoft — which invested $13 billion in OpenAI, is entitled to profits from its for-profit subsidiary, and had access to its tools — is reportedly working by itself in-house AI services. OpenAI may launch a search tool to rival Google's.

Companies and individuals still wish to understand how and what they will use generative AI tools for. Is it a creativity assistant or an assistant? Will it make online life sharper and more personalized or are all of us about to be inundated with AI-generated sludge? And is it really a threat to humanity? Answering these questions obviously requires technical skills, but additionally showmanship. OpenAI has shown that it may well excel at this.

• London's efforts to revive its stock market received a lift this week with news that Raspberry Pi, a British microcomputer maker, plans to list on the London Stock Exchange this summer.

• Booming debt markets offer private equity groups respiratory room and a probability to avoid selling assets at lower valuations.

• After years of in depth and somewhat haphazard tech betting, Masayoshi Son has taken a more conservative approach to investing. As a result, SoftBank's money holdings have grown. What are the probabilities that Son can resist spending his money on expensive AI bets?

Things I liked this week

Cruise was the primary company to launch a self-driving taxi service in San Francisco in 2022. I took a fairly dangerous ride in one in all its self-driving cars last yr and vowed to steer clear of robotaxis. Since then, Cruise has removed his cars from SF. Fortune magazine offers an in-depth look all of the things that went unsuitable in the corporate.

Beauty pageants could also be going out of fashion, but there are still a whole bunch of 1000’s of pageants held every year. However, Miss USA's future is unsure following the resignation of its most up-to-date winner and the disturbing revelation that got here together with her exit post “I AM SILENT”.

Verge explains why teenagers are lonely Make friends with AI chatbots. The information they share seems like a privacy nightmare.

Enjoy your weekend and thanks for all of the emails and reader comments on Lex Tech stories through the years.

Elaine Moore