AI: A Bottomless Pit of Investment with No Returns

Silicon Valley has made a big bet on generative artificial intelligence, but it is still unclear whether this bet will pay off. A new report from The Wall Street Journal suggests that despite the hype surrounding large language models and their supporting automation platforms, tech companies are struggling to profit from artificial intelligence.

For example, Microsoft has invested billions of dollars in its partner OpenAI, making a big bet on generative artificial intelligence. However, one of its main AI platforms has been consistently losing money. According to The Wall Street Journal, Github Copilot, launched in 2021 to automate certain parts of programmers' workflows, has been a huge "money-losing machine" despite its popularity among users. The problem lies in the fact that users pay a $10 monthly subscription fee for Copilot, but according to sources interviewed by The Wall Street Journal, Microsoft has been losing an average of $20 per user in the first few months of this year.

Other platforms are also facing similar financial difficulties. For example, OpenAI's ChatGPT has seen a decline in users while its operating costs remain incredibly high. A report from The Washington Post in June stated that chatbots like ChatGPT lose money every time a customer uses them.

There are various reasons for the struggles in the AI business, but one thing is well-known: operating costs for AI platforms are notoriously expensive. Platforms like ChatGPT and DALL-E consume a significant amount of computing power, and companies are working to find ways to reduce this resource consumption. At the same time, the infrastructure for running AI systems, such as powerful AI computer chips, is also quite costly. Additionally, the cloud capacity required for training algorithms and running AI systems is expanding at an astonishing rate. All of this energy consumption makes AI one of the least environmentally friendly things at present.

To avoid the loss of funds, many tech platforms are trying different strategies to reduce costs and computing resources while still delivering the services they promise to customers.

Nevertheless, it is difficult not to see this whole situation as a setback for the tech industry. Artificial intelligence was supposed to be the solution to finding solutions, but it has quickly become a problem that needs solving. Companies need to figure out how these tools can have economic and strategic significance, and these issues should have been addressed before their launch.