ChatGPT Potential Issues - You Are Betting *AGAINST* Google
Level 2 - Value Investor
Welcome Avatar! As you know we’ve been having a back and forth side convo with BowTiedSystems on the future of ChatGPT (Read here). Currently, we think it’s heavily overhyped and finally found a way to express the main concerns. This was highlighted by BuzzFeed suggesting they will switch out writers for AI generated content. In our opinion, the market reaction doesn’t make much sense and the idea likely fails.
Politics Aside: We’re aware that many have messed with the platform and realized that it leans left in terms of the data set it was solved. It would suggest more “socialistic” beliefs. This isn’t really important for this conversation instead, we want to highlight how the market is pricing in enormous success without realizing what you’re really invested in or “Betting On”
Part 1 - What Are You Betting On?
You are betting on Google failing. If you think that isn’t a great decision on day one, then feel free to read on for why we think this is the case.
Open AI: We agree with a lot of the proof points from BowTiedSystems, if you can use it to improve sales letters and solve other complex problems it certainly has a use case. The problem to us is really this “who owns the best data”. There are really only a few companies that own the most data: 1) China, 2) Google, 3) Apple and 4) perhaps - Microsoft/Amazon
OpenAI Is effectively trying to create a new massive search system. We really doubt that Google is simply going to sit back and give up all of its market share. Google spends ungodly amounts of money making sure it is #1 in search and they do their best to expand the definition of search to newspapers and other old delivery systems to try and claim they are not a monopoly (they are pretty much a monopoly on internet search in our opinion)
“Data is the New Oil”
This was a phrase created by mathematician Clive Humby around 2006.
Fast forward and around 2015 it became a popular Wall Street phrase. People started suggesting that China would own the world because they had the most granular data on all citizens.
Kai-Fu Lee, CEO of Sinovation Ventures and author of the book AI Superpowers, “If data is the new oil, China is the new OPEC.” (Source)
Short Conclusion
At this point hopefully the concept is clear. If ChatGPT works the long-term consequence is that Google has a massive competitor (arguably better) and not only that but it can easily do the work of many creative talents. We’d argue this is a far fetched conclusion and instead we’re no where near that level of skill.
Part 2: Who has the Best Data
Okay, the current argument is that OpenAI will simply be fed more and more data. This will then allow it to outcompete Google in search and innovation longer term. To us the reverse is more likely at this time.
Enter the craziest announcement we’ve seen to date. BuzzFeed decided to *publicly* announce that it is going to try to replace humans with ChatGPT algos. (Source)
This is a wild and terrible idea to announce publicly. Despite that the stock popped as people immediately assume the AI will replace humans.
Now Why Is it a Bad Idea? Well look no further than an SEO expert in the jungle (yeah he’s got some weird mannerisms but don’t we all).
As you can see as soon as the google algorithm picks up that you’re using AI. You get clobbered and sent to page infinity in search. Good luck coming back from that.
Think Through the Incentives: Now enter a smart person. Hard to argue that Google doesn’t have smart people. Of course they do. You now *KNOW* that buzzfeed is going to use AI or AI with some tweaks. Guess what? You can now clobber them for good.. You take all the data and feed it into your own algorithm. You say nothing.
You accumulate enough information to be able to pin point and target ChatGPT written content (even if modified a bit) and suddenly overnight those pages go to zero. They don’t show up anymore. Think this is crazy? It has happened to hundreds of companies in the past and even happened to META recently when Apple suddenly decided “sorry bruh no more information for you”
Short Conclusion
Whatever you do, you do not *announce* you’re going to use ChatGPT. Google probably already *has* the best data on an individual basis since they own internet search and now you’re going to give them even more information to compete directly against you? This doesn’t seem bright at all. If you had a way to use this AI to slowly take out the King, you better not miss. You don’t announce anything you simply do it until it is too late.
By announcing like this you’ve essentially guaranteed you’ll be de-ranked and zero’d ASAP. They will feed their own algorithms and build their own AI system based on all of Google’s data. There is just no way they go down without a massive counter punch.
Other Notes Upside and Downside
As usual happy to hear comments from people like BowTiedSystems who can argue against this.
For an “upside” situation, if Microsoft really feeds them tons of info and it passes google in terms of granular data then Bing should become a massively better search engine (something to watch out for)
In a “Downside” situation, Google quickly figures out how to track all OpenAI data sets and simply de-platforms them from organic search. Good night sweetheart
AI is much better suited for boring white collar work *at this time*. This would be checking for typos, rewriting basic legal memos, CIMs, Pitchbooks and other redundant tasks (filling in financial statements as well)
Creatives are unlikely to take a major hit any time soon since we can even figure out what is AI content vs. non-AI content relatively quickly. Guess that isn’t saying much since some people have terrible reading comprehension (IE. anyone brain dead enough to think BTB was sold - lol clown car circus level IQ)
Short Conclusion
On that note, this epiphany may or may not be driven by a microdose of redacted. That said, we still think the ChatGPT stuff is heavily over hyped and will die out by end of year after google Mike Tyson KO punches anyone trying to use it for ranking purposes.
Disclaimer: None of this is to be deemed legal or financial advice of any kind. These are *opinions* written by an anonymous group of Ex-Wall Street Tech Bankers and software engineers who moved into affiliate marketing and e-commerce. We’re an advisor for Synapse Protocol 2022-2024E.
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If Big G allowed sites to spam AI content they would destroy their business model.
The benefit of searching on Google for the user is getting unlimited perspectives on different topics. If everyone just spams ChatGPT then there's only one perspective.
If all the information on the internet is generated by chatGPT then there's no incentive for anyone to use Google instead of going directly to the source.
Google has the smartest people in the world working for them. They won't let that happen.
This will end terribly for everyone using chat gpt on their site
A bit of commentary from the trenches:
1) Google is not the "place where the smartest people in the world work". It's Silicon Valley tech company like any other - pay well, hire a lot of woke capital, run some really exciting projects, mishandle investments badly into bad ideas and pull the plug late.
Fundamentally their success in the last 10 years revolves around google.com, reasonably good play into the market with the GSuite for Work and half-hearted performance for GCP. All of these have some glaring holes which have allowed for other players to push them hard:
- Google is becoming less and less useful for practical searches, with several different information venues attracting interest in recent years (whether alternative search engines, the "tik tok as search" teen crowd or now chat gtp). The real dominance is serving web traffic via SEO, but thats only one angle of the story (if very $ valuable).
- GSuite for Work was one of the big winners of the pandemic, with a lot of adoption in the tech scene, together with other SaaS work tools like Zoom and Slack. That has mostly cooled off now due to the revamp of Teams, which is slowly going back to the "default" choice. MS's dominance on work tools is extremely difficult to overcome and they've invested smartly into improving the quality of the apps and rolling it out on any platform.
- GCP and the GCP Marketplace is an also-ran in the cloud space. AWS is the default choice, with Azure going hard at it as well. GCP is competitive and arguably has an interesting set of native tools on the platform but they continue to be very slow at integration of external apps. They try to cover it with rather approachable GTM initiatives with external partners but so do the rest of the players. To give you an idea of how silly some of their decision making can be - if you want to onboard new resellers for private offers between you and the end customer (i.e. big ticket business), if they were registered until 1/1/2022 they can't allocate margin to them since they stopped onboarding the new resellers. They stopped onboarding them since they were keeping the margin allowances per reseller and sub customer on a manual spreadsheet and the process completely grinded to a halt. They were supposed to fix it 6 months ago, it's still not fixed. They launched a full new private offer platform and STILL didn't fix it.
2) Most of you are looking at the topic from an end user perspective and e-Commerce/twitter creatives hustling for crap. The actual big money topic is related to the infrastructure required to run this and how do you scale it across applications. MS is making a very aggressive bet here of utilising Azure capacity (which atm is very valuable) on running this at an affordable scale and baking it in into native apps.
Bing getting Chat GPT integrated is one thing, adding it to Office 365 is an exponential power bet for both customer retention and new subs (both private and corporate), putting it as advanced ML tool you can implement within your apps natively and run them on Azure is another upside for going with a MAC committed spend (1M+ annual cloud commit to MS). Adding integrations further into LinkedIn, GitHub, etc further changes the info value of those products.
Ultimately the outcome will be that if you are a user and you want to find information, you can go on google and get ads and dubious results, or you can use a search bar integrated in most platforms that MS servers and get low ms usable result on the spot (powered by Azure infrastructure). One way or another this will divert significant traffic away from google.com as a platform and a lot of websites relying on that traffic.
As other players start to make their own plays into it (AWS will not sit on the sidelines), who is willing to reserve capacity and take a margin hit to gain market share will become a big topic of deploying this type of ML into applications with significant downstream effects. There is not enough hardware long term to cover all of the computational needs of the economy, and that was based on existing usage. Big play into AI powered search will eat a lot of cloud capacity, both due to the ML jobs as well as the expectation for fast search results (several miliseconds at best). That means hot machines, which means the most expensive hardware to keep the service running AND do relevant ML jobs on additional hardware.
3) Google is dominant in search - it's dominant in one subset of search which is indexing the web and moving traffic around for money. The majority of day-to-day applications doing search and running in the backend are powered by Apache Lucene open source forks and utilized in a variety of use cases. Google might be referring traffic to H&M webstore, but the actual search on the store, keeping the store running, storing the backend dataset of SKUs and tracking usage, fulfilment backend search etc it's all other platforms.
It might be contrarian, but this is more of a "the emperor has no clothes" moment rather than Google can just flex around and do whatever they want.