It's Come to This

ChatGPT Pro and Ads

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AI For All
December 06, 2024

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Hello readers,

Welcome to the AI For All newsletter! OpenAI launched ChatGPT Pro for $200/month and is considering integrating advertising, Amazon and Anthropic are becoming even more codependent, and no one likes or uses Microsoft Copilot. Why? Let’s find out!

It’s Come to This

Where is all the money, Sam?

In an interview with the Financial Times, OpenAI CFO Sarah Friar (no doubt the most stressed woman who has ever lived) said that the company was considering an advertising model and planned to be “thoughtful” about integrating ads. In a statement following the interview, Friar clarified that while OpenAI is open to exploring advertising, there are no official plans yet. While Sam Altman himself has expressed distaste for the prospect of ads in ChatGPT, he might not have a choice long term.

As I’ve detailed exhaustively in this newsletter, OpenAI’s financials are not pretty. Even if advertising becomes a necessity, it’s unlikely to meaningfully increase revenue, and it certainly won’t make OpenAI profitable. Building a billion-dollar ads business on the level of Google or Meta, which is what OpenAI would need, requires significant, ongoing investment in adtech and sales. Unlike search engines and social networks, there is considerably less real estate (and less tolerance) for ads in a chat session.

Not unlike search engines and social networks, OpenAI could succumb to perverse incentives. Imagine they intentionally made their models worse to keep you on the platform longer (you spend more time trying to get the answer you want), so they can show you more ads. Sound familiar? Surely, OpenAI wouldn’t resort to that … right?

At this year’s DealBook Summit, Sam Altman again lowered expectations for AGI. It’s almost as if OpenAI is moving the goalpost to somewhere more feasible. When OpenAI declares that AGI has been achieved, and trust me, they will, do not accept it. They intend to stitch together their current models and call that AGI (it isn’t).

Hilariously, when asked if he was concerned that Elon Musk would abuse his impending political influence to hurt OpenAI, Altman responded, “It would be profoundly un-American to use political power, to the degree that Elon has it, to hurt your competitors and advantage your own businesses. […] I don't think Elon would do it.” I’m not sure what would make Altman think that Musk has a shred of integrity. The antics have already begun, and the motivation is there. Musk is trying to prevent OpenAI’s transition to a for-profit, a transition that OpenAI needs to keep their recent $6.6 billion in funding from converting into debt at a 9% interest rate.

In a fateful move for those familiar with the less-than-stellar economics of generative AI, OpenAI introduced a $200 per month Pro plan for ChatGPT as part of their 12 Days of OpenAI series. They also announced o1 and o1 pro, so-called “reasoning models” that try to deceive humans a lot and are somehow worse than their preview versions. Since these models use more compute to “think” through prompts, they are even more expensive to run. The writing is on the wall, and it’s AI-generated.

In other news, Amazon introduced a series of redundant generative AI models that will cost them billions of dollars in addition to the billions invested in Anthropic and another AI supercomputer loaded with Amazon’s inferior Trainium chips that Anthropic is now forced to use instead of NVIDIA’s much cooler chips (not literally cooler, they’re overheating). What’s also much cooler these days are valuations for GenAI companies.

Lastly, according to a report from Business Insider, employees inside Microsoft have serious doubts about the company’s massive investment in AI. One employee was quoted as saying, “I really feel like I'm living in a group delusion here at Microsoft. The company touts that AI is going to revolutionize everything, but the support isn't there for AI to do 75% of what Microsoft claims it'll do.” Apparently, only 0.1% to 1% of Microsoft’s 440 million business customers are paying for Copilot.

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📖 What We’re Reading

“To capture the full potential value of AI, organizations need to build trust. After all, if customers or employees lack trust in the outputs of AI systems, they won’t use them. Trust in AI comes via understanding the outputs of AI-powered software and how—at least at a high level—they are created. Organizations increasingly recognize this. In a McKinsey survey of the state of AI in 2024, 40 percent of respondents identified explainability as a key risk in adopting gen AI. Yet at the same time, only 17 percent said they were currently working to mitigate it.”

Source: McKinsey

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