The evolution of AI is shaping up to be a dynamic and rapidly evolving landscape, with a few large companies currently leading the way and yet the potential for new players to enter the market and shake things up.
Big Tech’s research facilities are expanding the capabilities of artificial intelligence in a variety of fields, and in a race to develop these capabilities, several of the big tech companies are allocating ever more capital. At the same time, these companies are acquiring AI-related start-ups at a rapid pace to remain at the forefront of the industry.
However, as more and more businesses become aware of the potential for AI to improve efficiency and profitability, we may well see new companies entering the market with innovative approaches that could disrupt the existing power balance.
Key Players
Industry leaders in technology have long emphasized artificial intelligence, and global leaders are emerging on the scene due to the fierce competition worldwide to reap the benefits of AI.
Among many of the big tech companies, Apple takes the lead in terms of the number of acquisitions, with a record of 29 AI startup acquisitions since 2010, followed by Google with 15 acquisitions. Microsoft and Facebook follow closely with 13 and 12 acquisitions, respectively. Major technology companies like Intel, Salesforce, Twitter, and IBM are also among the top acquirers.
Obviously, these companies have the resources and expertise to both acquire startups and also to invest heavily in AI research and development. But another advantage is the access to large amounts of data, which is crucial for training AI models, and additionally, the ability to scale and commercialize their AI products and services. Which begs the question: Will big tech rule the artificial intelligence sector?
“The AI industry is currently dominated by a few companies, but I believe that this will change in the near future. The most obvious reason for this is that advancements in AI are happening at such a rapid pace that it becomes nearly impossible for any one company to keep up with all of the changes.”
- Annie Morris, Editor in Chief at Made in CA
The Emergence of AI
One cannot help but wonder why AI is becoming such a hot field given the rise in acquirer interest, which has shown
Among many possible explanations for the mania regarding this emerging industry is the fact that AI is becoming a necessity as it has the potential to significantly improve
With significant advancements in machine learning, natural language processing, and computer vision, Artificial intelligence has finally emerged as a key technology. These advancements have led to the development of AI systems that can perform tasks that were previously thought to be the exclusive domain of humans, such as image and speech recognition, language translation, and decision-making.
Between
The idea that AI systems would eventually evolve into standalone systems, like robots or expert systems, was prevalent thirty years ago. But the majority of AI applications today combine different technologies making it more possible to be applied across several sectors.
Surge in Interest and Investment
From
As AI adoption continuously skyrocket,
According to
The reason for this big jump is that AI capabilities have matured significantly, and thus enterprises are more willing to implement the technology.
Yearly,
This substantial market growth speaks to the strong demand for artificial intelligence services and solutions and the contest to stay on top of the game. In the coming years, artificial intelligence will remain an invaluable tool for companies seeking to maximize returns, reduce costs, and unlock new opportunities. Little wonder big tech is actively attempting to dominate the sector, and to an extent, have an advantage.
“Building large language models is too expensive for startups, with estimates putting the cost of training a model similar to GPT-3 at $5 million dollars. And that's only computing power, without taking into account R&D and data gathering costs. As the number of parameters increases, big tech will most likely have a monopoly over the large and more general models. But it won't stop startups from building smaller models for more specific use cases. For example, at Salarship, we have built a small NLP model to analyze job postings. Given a job description, we can infer the skills/experience required for the job and give an estimation of the salary.”
- Nathan Brunner, CEO of Salarship
Potential Impact of AI Consolidation
Generally, AI will likely have both direct and indirect positive impacts on employment, productivity, and GDP, according to a 2016 study by
Direct impacts will be produced by higher profits and employment in businesses and industries that produce or develop AI technologies, which may also result in the emergence of completely new economic activities. Indirect impacts will result from a broader increase in productivity in industries that use AI to optimize business processes and decision-making, as well as to increase their knowledge and access to information. Over the next ten years, they predict much more marginal improvement (US$1.49-2.95 trillion).
But what are the potential implications of a small number of companies dominating this industry?
“The implications are similar to any industry that buys out the competition. The big companies can set prices without having the market dictate prices which happens when there is a competitive market. Also, there could be a slowdown in innovation since there is no real competition to push new features.”
- Sandy Fliderman, CTO at Industry FinTech
According to
The result would be a barbell-shaped economy where mid-sized businesses would suffer. This could lead to the emergence of very small and very large firms. Consolidation in the AI industry is, therefore likely to occur, although it may take on different forms. Advances in AI and technology may allow front-runners to make a clear break from the competition and become elite players with the highest levels of productivity.
McKinsey further stated that other likely outcomes include heightened competition and a widening gap between technology leaders and laggards across all industries. Companies that fully adopt AI tools over the course of the next five to seven years are considered to be "early adopters," and they will likely profit inordinately from this development. Slow adopters or non-adopters would be at the other end of the spectrum and are likely to see some economic decline.
The leaders will likely overtake the laggards in terms of market share because they will be able to gradually draw in a larger and larger portion of the industry's profit margin. An outcome like what is currently seen in tech markets would be a "winner takes all" scenario.
Who will win?
Big tech is really
“Generative AI could change every industry that requires humans to create original work, from gaming to advertising to law effectively the next trillion dollar industry. Not only the big tech will thrive, but smaller & innovative well-funded startups could rise and dominate several sectors.”
- Alvin Foo, co-founder of Securo
Different technology subcategories, not all of which are led by the same companies, fall under the umbrella of AI. But it appears that
What we are currently seeing, due to the ‘sudden’ appearance of ChatGPT and existing platforms such as Midjourney and Dall-E, is that the big tech is desperately trying to grasp their control of the industry and keep their tech dominance. By incorporating the technology of companies like Open AI / ChatGPT, normally the big tech can bring the technology to a wider audience and make it more accessible to the mainstream. And this last thing, the ability to claim topics and make it mainstream, even though the quality isn’t as good as that of tech startups, is what the power from big tech traditionally brings. For example, Microsoft has really taken a strong position in the field of voice cloning and creating text-to-speech for individual users. Benchmarks only show that the quality of a startup like Voxygen can be 3x times better than that of Microsoft. So bigger and louder doesn’t always mean better.
- Bart Veenman, CCO at Humans.ai
In response to the question, “Will big tech dominate the AI industry?” Eldad Postan-Koren, the founder of WINNAI, said:
“The AI industry is highly competitive and rapidly evolving, making it difficult to predict which companies will come to dominate in the long term. However, some experts believe that large technology companies such as Google, Amazon, and Microsoft are well-positioned to maintain their leadership positions due to their significant resources and research capabilities. These companies have invested heavily in AI and have access to vast amounts of data and computing power, which can be leveraged to develop and improve their AI systems.”
He continued, underscoring once more the likelihood that new players will join the game and succeed,
“On the other hand, smaller startups with disruptive ideas and innovative technologies may also have an opportunity to gain a foothold in the market. These companies can often be more nimble and adaptive than larger companies and may be able to quickly respond to changes in the market. Additionally, smaller startups may be able to secure funding from venture capital firms and other investors, which can help them to grow and expand their operations.”
Some of the predictions made by
“As Facebook has illustrated with its dalliance in the metaverse, it is unlikely that the major players will jump in and dominate the AI space. While Big Tech has big money, they don’t have the same agility as smaller, laser-focused startups. Big Tech is beholden to shareholders, whereas smaller firms have more latitude to take big risks. Undoubtedly, that means that many of those startups will fail. The majority of them, even. However, it also means that the most disruptive tech will likely come from startups --- which will then be bought up by the major players in Big Tech.”
- Richard Gardner, CEO at Modulus
