Microsofts Real AI Advantage over Google

Its not what you think and is prophetic for the future of corporate innovation

When ChatGPT3 (an OpenAI product thats backed by Microsoft to the tune of $10b+) became publicly accessible, some were quick to label it the Google Killer!. But for that to be true, theyd have to connect ChatGPT to the internet. And, as it turns out, thats where it's a bit harder for an AI to impress.

We saw it when Google launched its AI assistant, Bard, which immediately incorrectly stated that the James Webb Space Telescope took the first pictures of an exoplanet. (Rubbish, that honour goes to astrophysicist Grant Tremblay back in 2004.)

But what happened next was very telling for AI and corporate innovation in general

Google shareholders panicked, which sent Alphabet (Googles parent company) stock plummeting, resulting in an 8% drop and wiping $100 billion of its market cap. Ouch.

But was it a fair assessment? Perhaps not.

With machine learning models, garbage in-garbage out is particularly applicable. (And we all know how much garbage there is on the internet.) And, while Google is training AI to distinguish between fact and fiction in an online environment with ever-changing versions of the truth, in building ChatGPT3, OpenAI pulled data from the same garbage bin, but protected us from it with an army of underpaid African workers and others to train the language model.

Effectively creating a little box that can be controlled (and is very much controlled by zeitgeist).

Microsofts true advantage

ChatGPT also makes mistakes and theyre well documented but none of them has tanked Microsofts share price. In fact, we overlook ChatGPTs mistakes. Why?

Because OpenAI is a startup and Google is not.

Startups are allowed to fail. Most people expect them to. So any kind of success they obtain is newsworthy. Listed companies have to manage the sentiment of loads of stakeholders and loss aversion could send many not-so-savvy shareholders running for the hills at the first sign of bad news.

What does this mean for corporate innovation?

In case it's not clear, the lesson in this is that corporates could and maybe should be investing in savvy startups to drive their innovation. Because it protects your share price.

Ok, so how does a corporate go about this?

While every circumstance is unique, its clear that corporate investing in startups and corporate venture building is a viable option for corporates to stay relevant in the innovation game. But startups are risky, so how do you know who to back?

Get yourself a tech partner that knows the corporate space

Agencies like Specno offer venture building as a service to corporates. Within venture building, the corporate has all the potential upside that Microsoft had backing OpenAI, but very limited downside in terms of reputational damage (like what happened to Google).

For now the verdict is still out on whether conversational AI can even provide accurate information when connected to the internet, but one this is for sure, Microsoft is winning this round. We are watching this space
 

This is an extract from this weeks The Open Letter Weekly Newsletter.