Big Techs Race To Capitalize On AI, Says Munster: How Apple, Microsoft, Google Would Monetize The Technology

The past week saw some milestone events on the artificial intelligence front, with OpenAI unveiling the latest iteration of its GPT large language model and Baidu Inc. BIDU announcing its Ernie chatbot.

What Happened: Reviewing the development, Deepwater Asset Management’s Gene Munster commented that big techs are racing to capitalize. He shared some insights into the potential ramifications for some of the biggest techs.

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Ad Market: Training data will likely differentiate one LLM from another, and therefore having unique sources of data like Tweets or customer reviews will likely fetch unique responses from the AI model, Munster said. He sees the potential of these LLMs built into the backend of many tech services.

In the long term, this could hurt ad models, as fewer eyeballs at Alpahbet Inc.’s GOOGL GOOG Google Search could mean less ad revenue, Munster said.

While details of how AI-powered ads will eventually look aren’t clear yet, the venture capitalist is of the view advertisers will find a way into the AI ad funnel.

“Now we’re entering the age of AI-powered search and discovery and a new ad model paradigm will emerge over the next decade,” he said.

Microsoft: For Microsoft Corp. MSFT, which has invested about $13 billion into OpenAI since 2019, the path is clear, given the expectation that more than 80% of the business will eventually have some form of AI assistant, Munster said.

The company will likely monetize the usage of AI in Microsoft 365 and Azure by raising prices, and with Bing, it could go with advertising for monetization, he added.

Google: Munster noted that Google has been an AI-first company since 2017 and it has a 90% share of the global search market, excluding China and Russia, which will likely feed its AI models and make them smarter.

Alphabet could monetize the usage of AI in search and YouTube, which together account for 80% of the overall revenue, through advertising, the fund manager said.

With Google Cloud, the company might raise prices or charge for models, he said, adding that it will likely take a similar approach as Azure and Amazon Inc.’s AMZN AWS, charging for AI models that developers can plug into applications hosted in the cloud.

Apple: While conceding that Apple Inc. AAPL is missing in AI conversations, Munster said it is the only company owning both mobile and desktop operating systems. “AI in its most useful form will be the fabric of an operating system that enables new features within apps,” he added.

Apple could raise hardware prices for AI-integrated iOS and MacOS, he said. He sees the use of autonomous systems in Apple’s self-driving cars in the works as the “mother of all AI projects.”

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