The GenAI Pursuit Comes With A New Set Of Challenges For Big Tech

This week, U.S. tech titans, Microsoft Corporation MSFT, Google-parent Alphabet Inc GOOGGOOGL, Facebook-parent Meta Platforms META and Amazon.com Inc AMZN are expected to post an improved quarterly revenue growth as their legacy businesses stabilized after what was a challenging year. As their enterprise software and digital ads businesses bounced back, the market is expecting to see how Microsoft, Google, Meta and Amazon built upon this recovery as professional and consumer spending showed a surprising resilience amid these tough economic times. But, with these upcoming reports, all eyes are on AI-fueled developments that are shaping the world of tomorrow, but also bringing these companies a new set of challenges.

Big Tech’s Big Bet On Generative AI

Microsoft has positioned itself at the forefront of genAI era with its OpenAI investment and by integrating genAI within its browser, search engine, and productivity package. With the recent Copilot launch, Microsoft clearly showed its goal of integrating this new technology into everyday tasks. 

Although initially lagging, Google is quickly catching up. Google integrated genAI with virtual assistant, powered itsprimary search engine with the genAI chatbot Bard while also enhancing it with image creation capabilities.

Meta tailored its genAI features for advertisers, empowering them them to craft content such as image backgrounds. Meta also seamlessly integrated genAI into business interactions by adding genAI features that craft suitable responses to its Messenger and WhatsApp platforms.

Amazon is also going all in into this developing field as it committed $4 billion in genAI startup, Anthropic, launched a comprehensive genAI development platform Amazon Bedrock, while also enhancing its e-commerce platform with an AI-powered customer review feature.

Google’s Nightmare From AI That Creates New Content From Past Data

After Microsoft thrived with the rise of OpenAI’s ChatGPT, Google responded to concerns regarding its future by launching a new genAI-powered form of search. With this developing technology, Search Generative Experience responds to queries by creating summaries by synthesizing multiple web pages and offering ‘dig deeper’ links for those who want to learn more. This experiment continues to evolve as Google incorporates feedback from news publishers to further improve the product. 

To publishers, the still-evolving product is the latest red flag

On the other hand, publishers continue to struggle as they depend from Google when it comes to online advertising. Their concerns relate to web traffic, whether they will be credited as the source of information that appears in thesummaries as well as the accuracy of the provided summaries. More importantly, publishers want to be compensated for the content which Google and other tech companies use to train their AI tools. At the end of September, Google made a good faith gesture by announcing a new tool that empowers publishers to block their content from being used by Google for these purposes, if they wish. But, Google-Extended does not allow them to prevent Google from ‘dragging’ their content into SGE summaries unless they disappeared from its traditional search engine.

Showing up in Google search is essential to the advertising business but the SGE design has pushed the links that appear via the traditional search down which has the potential to reduce their traffic by as much as 40%, as reported by Reuters. Moreover, Forrester Research Senior Analyst Nikhil Lai noted that if the SGE recap answers the user’s query, this novelty will significantly harm publishers’ organic traffic and also make them change their performance metrics as the click through rate will no longer be a valid indicator. Therefore, the new AI features are a black box for publishers who don’t know to make sure they are part of the algorhythm behind it.

Big Tech Is Still Figuring Out How To Turn Costly AI Technology Into Profit 

With a system of credits, Adobe ADBE is protecting itself on the cost side of its AI image generator, Firefly. Once its customers exceed their monthly credits, Adobe slows down the speed of the service in order to discourage overuse. Adobe CEO Shantanu Narayen explained that while Adobe aims to provide great value, the company is also making sure it stays out of the red zone.

The AI boom is widely seen as the next technology revolution that will fuel Big Tech’s decade long-dominance of the internet economy but as GlobalData observed, this pursuit is also bringing a new set of ethical, legal and economic challenges that these tech titans will have to face. With their latest results, they are expected to provide more information on how they intend to work around them. 

DISCLAIMER: This content is for informational purposes only. It is not intended as investing advice.