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Microsoft's £8bn bet on the artificial intelligence arms race 

Brave new world: Microsoft has pumped up to £8bn into a new partnership with artificial intelligence leader OpenAI and its much-hyped ChatGPT model

It has been described as the greatest technological breakthrough since printing, electricity and even fire.

It’s perhaps no surprise, then, that Microsoft has pumped up to £8 billion into a new partnership with artificial intelligence leader Open AI and its much-hyped Chat GPT model.

It’s all part of a long, costly push into a brave new world where content and productivity are king.

Brave new world: Microsoft has pumped up to £8bn into a new partnership with artificial intelligence leader OpenAI and its much-hyped ChatGPT model

Brave new world: Microsoft has pumped up to £8bn into a new partnership with artificial intelligence leader OpenAI and its much-hyped ChatGPT model

In its simplest terms, artificial intelligence (AI) is computer programming that allows machines to behave like humans.

Examples include everything from the spam filter in your inbox, which is trained to recognize “spam,” to Amazon Alexas dotted around your home that responds to your voice.

First developed in the 1950s, AI means computers can be trained to mimic conversation, make predictions or recommendations, and ultimately process data much faster and more efficiently than humans.

So why, if AI has been around for so long, are we seeing such an acceleration in 2023?

According to Dr. Mhairi Aitken, a researcher at The Alan Turing Institute science center, the main reason is due to advances in “generative AI”, which not only speeds up processes, but can be used to create completely original and new content, including audio, images, text and videos.

Chat GPT, which belongs to Open AI backed by Elon Musk, is the most famous of these computing models, which exploded in popularity after being made free for the public in November, with more than a million users in five days. .

That former US Treasury Secretary Larry Summers was right to describe the model as “on par with printing presses, electricity, and even the wheel and fire”, the result is certainly impressive.

Last weekend, Chat GPT was able to produce an essay that passed the final MBA business leadership exam at a major US university, and was used to draft legal contracts, create artwork, and produce original song lyrics in the style of any artist in the world.

Tech analyst Matt Navarra said Microsoft’s investment in Open AI was a “wise move,” reflecting the company’s desperate attempt to modernize and flex its muscles at Google, which has been working on its own generative AI. “The fact that Microsoft pulled this off is a huge achievement for them,” he said.

Wedbush analyst Dan Ives called it an “AI arms race” where every tech company seeks to lead this highly lucrative sector.

“All the big companies are going to make big bets on AI with payout starting in 2023 and beyond. This is the fourth industrial revolution. Despite the gloomy macro backdrop, tech stalwarts remain in growth mode,” he explained.

Estimates from Air Street Capital’s 2022 State of AI Report suggest global investment in AI scaling and start-ups was nearly £40bn l last year, almost all of Silicon Valley wading into the mix.

The stakes are high. PwC estimates that AI could contribute up to £13 trillion to the global economy in 2030, more than the current output of China and India combined.

Shortly after Microsoft announced the Open AI deal, Google released an internal “code red,” pushing plans to demo an AI version of its search engine over fears that Microsoft could integrate Chat GPT into its own. Bing search engine, less used.

The other side of the coin to all these advances is the question mark surrounding jobs. This turned out to be particularly relevant given that companies that invest also lay off staff.

Data tracker estimates that up to 57,000 people in the tech sector were laid off in 2023 alone.

Still, the consensus is that this is bad timing rather than a loaded strategy on the part of big tech.

Michael Gartenberg, technology analyst at Flash Advisory & Research, dismissed the correlation between AI investment and layoffs. He said that while it’s “bad optics” for a company like Microsoft, tech giants have been slowly but surely moving towards AI.

After all, Microsoft invested over £800m in Open AI in 2019, long before AI novices were using it to write marketing articles on Linkedin.

Aitken also played down broader fears surrounding workplace safety. “AI will automate many tasks in the workplace, but it won’t completely eliminate jobs,” she said, saying the solution creates new jobs focused on creating and managing technology. of AI, because it affects everyone. sector, from fashion to the development of medicine.

An HSBC report, “Will AI take your job?”, written by economist James Pomeroy makes a similar point.

“AI is more likely to take some (the boring part) of your work, rather than all of it,” he explains. This could trigger substantial productivity gains for many roles if used correctly, and while the outlook for AI and its impact is uncertain, this is just the beginning.

So while an AI war erupts between Google and Microsoft, the reality is that AI is here to stay – reimagining what our jobs look like, what Silicon Valley looks like, and maybe even what resembles the world of business, art and music.

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