AI Has Its 'iPhone Moment'

"Elon Musk may be losing sleep over artificial intelligence and he is hardly alone: The technology industry is ready to move fast and break anything to artificially serve you.

Setting aside the "existential angst" that Mr. Musk has complained about, there is suddenly a real investment risk to big tech companies that fail to strike while the AI iron is hot. Nearly overnight, applications in artificial-intelligence technology seem to have gone from futuristic moonshots to dire necessities a tech company must have to be considered investible.

Monday's pile-on of half-baked AI announcements across social media was the latest example. Meta Platforms Chief Executive Mark Zuckerberg said in a Facebook post that his company is hustling to centralize staff working on AI technology to achieve faster breakthroughs across more products. The same day, Snapchat parent Snap Inc. launched an imperfect AI chatbot as an experimental feature for its Snapchat+ subscribers. The Information reported Monday that Mr. Musk is in talks with researchers to develop a ChatGPT rival that would have fewer restrictions around divisive topics.

You can forgive investors for being skeptical. Anyone following the tech sector has had no shortage of hyped "next big things" to entertain. In 2019, it was cryptocurrency and "Project Libra." In 2020, that expanded to mean anything blockchain or so-called Web3. Last year, it was the metaverse, made especially salient through Facebook's rebranding effort.

There are two key reasons investors should pay more attention this time. The first is the velocity at which AI is growing and improving. AI is, at its core, technology that mimics human intelligence through data it has collected.

Recall back in 2010, former Google Chief Executive Eric Schmidt said every two days we were creating as much information as was created between the dawn of time and 2003.

Since then, the pace of information creation has accelerated. That means that today's nascent AI technology already has an established and growing reservoir of knowledge, giving it a head start relative to other new technology.

Meta's virtual-reality headsets have been available for years, for example, but users still complain of sweaty faces, burning eyes and headaches -- and their avatars don't even have legs yet.

But days after OpenAI's ChatGPT was launched as a prototype late last year, Mr. Musk was describing it as "scary good."

The second factor is the rapid and warm reception AI received from consumers. In early 2020, Facebook, through a business unit now called Meta AI, published a chart that showed nearly half of people evaluated preferred chatbot interactions to human chats, up from less than one-quarter about 18 months earlier. A BofA Securities note out this week on AI's potential referenced an IE University poll from 2021 that found more than half of Europeans were in favor of giving government seats to AI algorithms with access to their personal data.

Years into VR's development, only one-fifth of Americans use virtual reality. An Axios survey last year found that more than three times as many Americans say the idea of the metaverse makes them more scared than excited. Crypto has been even more cautiously received: Bitcoin has been available for over a decade, but as of last year 16% of U.S. adults had invested in, traded or used any cryptocurrency, Pew Research found.

Compare that with ChatGPT, which Similarweb data show racked up 100 million users in its first two months. The firm found the chatbot is attracting some 35 million daily visits, roughly as much global web traffic as Microsoft Bing. The appeal of AI chatbots varies -- they are fun, free, impartial, always available and, despite their relative omniscience, they are humble (just ask them!).

But in business, timing is everything. Dating giant Match Group credits its success with Tinder -- the top-grossing dating app for roughly the past decade -- partly for its timely ascendance with the iPhone. Now, after years of somewhat empty promises, a tech industry starved for growth might have finally found what analysts at BofA have called a new "iPhone moment."

With that as context, it is no wonder tech companies are racing into AI with seemingly reckless abandon.

"Sorry in advance!" Snap said Monday of any havoc its new chatbot may cause. Snap said like "all AI-powered chatbots" its My AI chatbot is "prone to hallucination," or making statements with false certainty, and "can be tricked into saying just about anything." Evidently, Snap is sorry but not that sorry." [1]

1. AI Has Its 'iPhone Moment'
Forman, Laura.  Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 03 Mar 2023: B.11.