The emergence of generative Artificial Intelligence (AI) has taken the world by surprise, yet one question remains unanswered: Who can finance it? OpenAI, the company behind the development of ChatGPT, spent around $540 million last year and estimates it needs another $100 billion to reach its potential. Sam Altman, the founder of OpenAI, made it clear that the company is going to become “the most capital-intensive startup in Silicon Valley history.” However, when Microsoft, one of the major investors in OpenAI, is questioned about the cost, they only give assurances that the company is following economic performance.
Constructing a model similar to OpenAI’s, Microsoft’s, and Google’s, expertise is of utmost importance. It also requires an immense amount of invested capital. Jack Gold, an independent analyst, commented that “people don’t realize how much AI stuff, like ChatGPT requires significant amounts of processing power and training these models can cost tens of millions of dollars.” Given that hardware with such resources are priced tens of thousands per device, not many companies have the capacity to finance or purchase such technology. This further induces them to outsource their computing needs to companies such as Microsoft, Google, and Amazon’s AWS, who offer these services for free.
Stefan Sigg, the Chief Product Officer of Software AG, expressed his concern over the increasing costs of cloud computing, claiming that many businesses fail to understand the consequences. According to him, cloud costs are similar to electricity bills, and those who are unoffered about these costs can be subjected to huge shock when they witness their bills rising over time.
Microsoft, which is the frontrunner in this artificial intelligence race, has Azure as their signature offer in the cloud world. It has demonstrated to be a successful message and has resulted in billions of profits. Additionally, the AI bet of the company has significantly increased its shares and stock value. According to Dan Ives of Wedbush Securities, Azure has the potential to reach $20-40 billion in profits if their bet on AI pays off. It seems that Microsoft is determined to not let go of that opportunity and they plan to charge for AI capabilities in order to make a profit.
Several steps have been taken by analysts and companies to reduce the cloud costs such as having AI replicated on all devices. However, this may not be enough since extremely expensive technologies will be needed to carry out such model. OpenAI’s president, Sam Altman, expressed his concerns over the situation. He believes that few companies have the capacity to afford such capabilities.
Law enforcement authorities have taken notice and they remain concerned. Chairwoman of the Federal Trade Commission (FTC), Lina Khan, mentioned that monopol players and incumbents might take advantage of small companies and cause difficulties for competition. This idea was shared by many people.
In conclusion, although AI has taken the world by storm, its high price tag is a considerable factor that companies don’t ignore. Few companies have the resources to invest in it and those that do are likely to share profits among them. Although whistleblowers have raised awareness about the issue, further measures are needed to help create a fair competition when it comes to AI projects.
