We recently made a video about Google's near Monopoly in the search market and the harmful effects this has on Innovation and the technology and advertising markets. With Google being the default search engine on Apple Android and Google Chrome, it seems almost impossible for any competitor to Dethrone them. This near Monopoly status has allowed Google to become one of the most valuable companies in the world with a market cap well in excess of one trillion dollars. With Google holding 80 market share outside of China, it seemed almost impossible that anyone could ever challenge their Market position at least until now.

Over the past two years, Microsoft has invested over one billion dollars into Open AI for all practical purposes. The formerly non-profit has become a subsidiary of Microsoft and after the successful launch of Chat GPT Microsoft has wasted no time in turning this into a lucrative Venture. Just a few weeks ago, Bing which is owned by Microsoft announced that it's integrating Open Ai's technology to create a new feature called being Co-pilot Being Copilot will add a chat bot so you can talk to just like how you would talk to a normal human. very similar to chat.

GPT Within two months of operation, Chad GPT garnered over 100 million users, making it the fastest growing online app ever. If anything, the new Bing chatbot will be even better than Chat GPT because it incorporates the same technology but without a knowledge cut off day. This is a massive competitive threat to Google and they know it. If people can get a better experience from being co-pilot they'll finally abandon Google Search As soon as they saw a success of chat.

GPT Google knew that they needed to make a response so they scrambled to announce their new AI powered chat bot called Bard on February 6th. While it is still in beta mode. Based on their presentation, we can see that it's basically a competitor to Chat GPT. However, analysts and investors were not impressed.

Google published an example to Showcase Bart's capabilities. They asked what new discoveries from the James Webb Space Telescope can I tell my nine-year-old about according to Bard James Webb took the very first pictures of a planet outside of our own solar system. This was published on the official Google Twitter page. Maybe this is a good thing to tell a nine-year-old because only a child would believe something so obviously false.

The James Webb Telescope has in fact taken pictures of planets outside of Earth's solar system. Bard Probably sifted through the internet and found this article posted on NASA's website titled NASA's Web takes its first ever direct image of distant World published in 2022. It goes on to say for the first time, astronomers have used NASA's James Webb Space Telescope to take a direct image of a planet outside of our solar system. And in fact, the James Webb Telescope did take a picture of a planet outside of our solar system.

However, later on, in this exact same article, it says this is not the first direct image of an exoplanet taken from space. The Hubble Space Telescope best captured direct exoplanet images previously. So Bards claimed that the James Webb Telescope took the very first pictures of a planet outside of our own solar system is factually incorrect and this can be easily verified through a Google search. While no AI system will be 100 accurate, the James Webb debacle demonstrates a fundamental lack of understanding of human speech.

The NASA article talks about the first exoplanet picture the James Webb Telescope has ever taken, Not the first exoplanet picture that has ever been taken. This would be like if someone just got their driver's license and told you they just drove a car for the first time and you misunderstood this as meaning they were the first person in history to drive a car. After the disastrous barred presentation, Google's share price declined by about 10 percent, wiping 100 billion dollars off their market cap Investors Now View Chat GPT in being co-pilot as an existential threat to Google's Monopoly position. but how is this possible? Google has over 150 000 employees who make well over six figures.

On average, how can they be so incompetent as to not even be able to make a working AI chatbot? Of course, Microsoft and Google aren't the only companies involved in artificial intelligence. If you want to find other stocks in the AI space, the best place to begin your research is with Moomoo's Chat. GPT Concept Function Just input Chat GPT In the search box and you can see a list of stocks either involved in or potentially benefiting from the growth of generative AI technology. They have a whole host of other Concepts if you want to find stocks related to things like robotics, Unconventional Oil, The Metaverse, and dozens of others.

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In 2022, Google spent almost 40 billion dollars on research and development. This allows them to hire tens of thousands of highly paid engineers and scientists with access to vast supercomputing networks. Openai has less than 400 employees. Even after receiving a one billion dollar investment from Microsoft in 2019, their spending is low more than a rounding error compared to Google's budget.

How is it the case that Open AI was able to create chat GPT which has humiliated Google's barred chat bot in terms of accuracy and popularity. It's important to note that there are surprisingly little correlation between a company's research and development budget and how much Innovation they can achieve. Take the example of IBM which dominated the Computing market during the 1960s through the 80s. During the 1990s, Microsoft's resources were tiny compared to IBM.

Nevertheless, the Microsoft Windows operating system crushed IBM and today IBM is little more than a shell of its former self. IBM almost certainly had the technical capability to create something at least as good as Windows, but they were worried about personal computers cannibalizing their highly profitable Mainframe business, which was dominant at the time. Another example is General Motors In 1996, GM released the first modern battery electric vehicle called the Ev1. The Ev1 was a commercial failure.

Due to its high cost, low range, and low performance. They were only able to sell about 1 000 of them and halted production a few years later. The only reason they made the Ev1 was because of a law passed in California requiring automakers to sell a certain percentage of their overall sales as zero emission. Vehicles By the early 2000s, intense lobbying by the automobile industry and numerous legal challenges forced California to get rid of the zero emission requirements GM went back to focusing on his far more profitable internal combustion engine cars over the next 20 years.

Tesla With a tiny fraction of GM's resources, was able to become the dominant electric vehicle producer in the US and today its market value is many multiples of GMS. Obviously, it does require money to develop new innovation, but money is not the only factor and often is not even the decisive Factor. You also need the freedom to develop a completely new business model. This is a luxury that many established companies simply don't have.

Google's employees and certainly their senior Executives aren't dumb. They know that Chat Gbt is a massive threat. but the whole point of a dilemma is that no matter how smart you are, there are no good options. Brett Winton The chief futurist of Arc Invest explains the difficulties facing Google in this recent interview from CNBC We think that it's roughly a penny and a half of Revenue per Google search and it might cost you a penny to run the AI model if you're running a large language model.

Inference against that Google search? well, that actually stacked on top of the other infrastructure of of providing that that search that might eat all of the operating profit of a search if they're forced to do that. And so just from Google's perspective, going from a highly profitable business to a business that's marginally profitable is a big transformation truly. After Chat GPT was launched, it became so popular that their servers reached Max Capacity and most users were unable to access it most of the time. To solve this issue, they recently launched a premium version for 20 per month which gets Priority Access The AI models that power Chat GPT are extremely computationally intensive.

They require huge amounts of servers and other infrastructure. Even if it only costs one penny per query. With hundreds of millions or even billions of users, these expenses add up very fast. Google is free to use and monetizes through advertising.

According to Arc and best estimates, they make about one and a half cents in Revenue every time somebody searches for something on Google. Based on the current form of Google search server costs are extremely low. Despite the low Revenue per search, they're still able to emit very high profit margins. If they incorporate an AI chat bot feature like Bard the computational costs may be prohibitive.

Because of this, they've only put limited resources behind their barred chat bot, leading to its inferiority. As compare GPT Google has been put in a very difficult position. They can either invest into Bard and bring it up to the level of chat GPT but this will risk cannibalizing their existing search business. Alternatively, they could continue with business as usual, hoping that chat GPT and being co-pilot don't catch on.

Neither are great options. The high operating costs of running an Ai-powered chatbot applied just as much to being as well. So what are they planning to do? currently? being co-pilot is only in beta mode and there is a wait list to get access. It's highly unlikely that being co-pilot will be freely available to the general public, at least not in its most advanced form.

Due to the computational cost issues we discussed previously. the software Developer Platform GitHub which is owned by Microsoft recently launched GitHub Co-pilot which also uses Open Ai's technology to help computer programmers write code based on natural language problems. The Copilot feature costs ten dollars per month. For a professional software engineer, this is a palatable price to pay.

If GitHub Copilot can increase your coding productivity by even 10. 10 per month is a low price to pay. However, for members of the general public, ten dollars per month for a slightly better web browsing experience may not be worthwhile. So what will be the solution? We have some hints already from the Bing image.

Creator using Openai signal LG This tool allows you to create paintings based on text prompts you give it to prevent people from overusing the system. They give you a set number of boosts per day. Once you use up all of your boosts, the image generation will be slowed down to the point of being almost unusable. This way they can keep the service free while greatly limiting the computational requirements.

They may do something similar with being copiloted. You might be able to give it a certain number of queries per day for free, but beyond that, you have to either pay a fee or suffer from reduced speed. There's no doubt that the introduction of Copilot will increase the cost for Microsoft to operate being, but if this causes enough users to switch from Google to Bing, this may be worth it if being co-pilot becomes successful. Google will be forced to offer a similar offering with Bard on Google Search.

The critical importance of Bard is why they rush to put out their demonstration in February before the technology was ready. At this point, it's still too early to hold a funeral for Google's dominance in the search Market But with the rise of AI chat Bots, its Monopoly position looks more vulnerable than ever. Alright guys, that wraps it up for this video. What do you think about being co-pilot in Google's bar demonstration? Let us know in the comments section below.

As always, thank you so much for watching and we'll see you in the next one! Wall Street Millennial Signing out.