After years of everyone claiming to be an AI company, corporations are now retracting that claim. In the Q2 earnings season, leading companies drastically reduced the number of claims to be AI-focused. Let us dive into this change of heart and explore why the AI hype is slowly retracting back into the AI and maybe wider tech sector.
Costs vs. Benefits
When the wider public became aware of large language models, evangelists sold “AI” as the solution to many of our current technological and societal pains. From exceptional customer service to an end to the cybersecurity nightmare, the new tech was the solution. Consequently, every company, from logistics to game development, wanted to be an AI company. After all, that was where they would make the big bucks. AI was where the talent was. AI was what shareholders wanted. Even so, LLMs were only ever a tiny part of AI.
The flip side of the equation wasn’t as apparent in the beginning. Experts could easily see that the models generated a lot of dubious content. Yet, it was all fun and games for the general public and even some business leaders. The lawsuit against Air Canada and the public debacle of Google’s diverse Nazis brought the business and reputational risks of AI to the forefront of many business leaders.
Additional privacy and environmental concerns forced most businesses to avoid wanting to present themselves as AI companies. After all, you can reap the benefits without being associated with the costs.
AI Is Just A Tool
If you ask many business leaders today about AI, you can see that their mindset has shifted. AI has become a simple tool, similar to corporate laptops or websites. It is still a powerful tool but a far cry from the early days of the public release of ChatGPT. As with all technology tools, the IT department drives most of the discussion on today’s tools.
Consequently, Airlines, Banks, and Management Consultancies have stopped calling themselves “AI Companies.” After all, they likewise don’t brag about using computers or telephones. To most companies outside the IT sector, large language models are now nothing more than a commodity they can buy from specialized companies to enhance their customer experience, employee performance, and, most crucially, bottom line. Gone are the days when these companies wanted to work on AI for the sake of working on AI.
Stay Out of AI Regulations
Yet, not only did the commodification of AI play a significant role in changing this perception, but the increasing number of specialized AI legislations and regulations has also contributed. With every misstep of an AI developer, regulators and legislators worldwide found another reason to reign in the worst excesses. Today, AI developers have to work around regulations in most countries to offer their services.
Most companies do not want to get involved unless it has a tangible benefit to their business. Thus, companies will outsource AI developments and deployments to a few specialized AI and big tech companies. While that might create a dependency on another big tech supplier, it also allows the AI provider to focus on building systems that are compliant with worldwide legal requirements.
Thus, the specialization allows everyone to focus on what they do best. Banks can focus on loaning money, Airlines on loyalty programs, and LLM developers on building new language models and handling AI regulations.
Shareholder Value
Ultimately, companies do not exist to generate hype about technology. They are there to sell goods and services and increase shareholder value. For far too long, financial analysts expected future value increases simply from companies claiming they are now AI businesses. After two years with an ever-increasing number of AI products and chatbots around, it has become clear that the mere announcement of doing AI doesn’t mean that a company will have significant AI talent.
Thankfully, shareholders and analysts have seen the writing on the wall. Now, companies and boards can focus on the factors critical to them in the earnings report and forget about everyone trying to be an AI company.