What Did OpenAI Do This Week? - 07/05/2023 [+30 LINKS]

OPENAI BURNING THROUGH CASH; NO MOAT?

OpenAI is burning through a ton of cash working on things like text to 3D objects, a ton which doubled to $540m in 2022. Previously unreported, the figure reflects the steep costs of training machine-learning models and one reason why OpenAI sold access to ChatGPT earlier than others might have. OpenAI predicted $1 billion in revenue by 2024 but has likely blown passed that already due to popularity and media coverage. All this means costs increase and keep increasing (servers, employees, legal). Sam Altman, OpenAI’s CEO, is reported to have discussed the possibility of a $100B capital raise, with several analysts saying that was both achievable and low. The question this week was if OpenAI (along with Google) has a moat; a competitive advantage that allows a company to maintain its market position and earn outsized profits". People are split. TechCrunch had a unique way of putting it; “Google and OpenAI are Walmarts besieged by fruit stands”. Here’s what the ex-Googler believes that kicked off the whole argument:

Moat or not, OpenAI - and Google - are important parts of the ecosystem. Both Google and OpenAI wouldn’t have been asked to the White House (factsheet) this week if this was the case when other multi-billion user network players (cough: Meta) were not. The US clearly wants to lead, the Biden-Harris administration announced a $140m AI hub investment that will launch seven new National AI Research Institutes, bringing the total to 25 across the country. Altman told reporters after the meeting "we're surprisingly on the same page on what needs to happen." The question remains; where on the spectrum will the hammer come down? Is generative AI moving too fast in open-source circles that the companies who offer some element of control for governments can’t survive or will a larger clampdown come thick and fast across the board? The possibilities on how this ends are murky at best while the technology expands.

SO WHAT?

Right now, any moat is likely to be temporary or attacked regularly thanks to costs, open-source competition and the way AI progresses. What might cause greater concern regarding future revenue guarantees could be regulation, antitrust, brain drain and simply, the ability to innovate against open source models that are faster, more customisable, private, and ‘pound-for-pound more capable’.

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