Innovator’s Dilemma and ChatGPT
Why ChatGPT wasn’t launched by big tech
Picture a reality where the tech behemoths of today, the likes of Amazon, Apple, and Google, have been dethroned and replaced by unknown upstarts. These up-and-comers, once considered insignificant and niche, have surpassed their competition and now rule over big-tech’s domain.
The sheer enormity of today’s tech giants, coupled with their unshakable grasp on the market, makes such a scenario seem impossible. Their combined market capitalizations in the trillions, immersive products, and billions of customers make them appear invincible. One would assume that their greatest existential threat is not an unknown startup, but each other. However, according to the innovator’s dilemma, the idea of niche startups overtaking big tech is not only plausible but highly likely.
First coined by Clayten Christenson in the book of the same name, the innovator’s dilemma describes the paradox at the heart of innovation. Established companies are often the most successful because they have invested heavily in existing technologies which appeal to customer wants. But this very success can make it difficult for them to embrace new and disruptive technologies, where they expose themselves to greater risks. As a result, they can be left behind by smaller companies better suited to launch the technology and take on that risk.
Today, the concept of the innovator’s dilemma is being demonstrated in the rise of ChatGPT and generative AI as a potential replacement to traditional Google search. Google has spent over two decades perfecting its search algorithm, PageRank, and integrating natural language processing through its proprietary algorithm, RankBrain, to provide fast and relevant search results. These investments have made Google the king of the search world, enabling billions to access the information they need.
Paradoxically, Google’s efforts to protect its success opened the door for ChatGPT to threaten the tech giant using generative AI. Generative AI is a type of artificial intelligence that can produce unique outputs like text or images, without relying on preset instructions. Effectively, it creates content on its own. ChatGPT, a language model released by OpenAI in late 2022, uses generative AI to understand user’s questions and generate responses. With ChatGPT, users no longer have to aimlessly browse Google’s search results; they can simply ask for what they need and ChatGPT will write the solution for them. This ease and power has made ChatGPT an instant success. It’s expected to hit a billion users by the end of this year and severely threaten Google’s dominance in search overall.
Ironically, Google made significant advancements in generative AI long before ChatGPT was released but never capitalized on the technology. In 2020, two Google researchers, Daniel De Freitas and Noam Shazeer, developed a chatbot using generative AI, similar to ChatGPT, to respond to prompts. However, when they sought to publicly demo their technology and integrate it into Google’s virtual assistant, their request was denied by executives who cited concerns about the “safety and fairness” of AI systems.
The power of Google’s established brand, which subjects the company to public scrutiny, paradoxically limited its ability to innovate by imposing stringent guidelines for safety and fairness on its products. Launching a generative AI chatbot first would have exposed Google to significant risks, in the form of the AI malfunctioning or users weaponizing it. If the chatbot were racist, insulted users or acted violently, it could result in substantial market value losses and dissatisfied customers for Google. Moreover, if harmful parties acted to weaponize the technology to influence elections or manipulate public behavior, the downside impact for Google would be catastrophic. Their public brand, once the world’s information provider, would be transformed into that of a destroyer. Given these risks, it was reasonable for Google to not invest in their own chatbot.
This reluctance to release new and disruptive technologies, even when they have the potential to revolutionize the industry, is a classic example of the innovator’s dilemma. Established companies, like Google, cannot take the necessary risks to innovate, as they prioritize protecting their brand over launching new technologies. This protectiveness opens up opportunities for smaller startups like OpenAI to develop and capitalize on new technologies, ultimately disrupting the established players.
For OpenAI, launching generative AI was the obvious choice. They didn’t have the luxury of having an established market position, so they had no market share to lose. Even in the worst case of a malfunction, they wouldn’t suffer the same financial loss as an established company like Google. In fact, such an error could even earn them notoriety points, bringing in intrigued investors and press coverage.
The story of ChatGPT and Google demonstrates the power of the innovator’s dilemma in the tech industry. Established companies, no matter how dominant, can struggle to embrace new and disruptive technologies, if it means risking their brand. Meanwhile, smaller startups, like OpenAI, can afford to take risks to leapfrog the competition. By understanding the impact of the innovator’s dilemma, we can better anticipate the rise of the other generative AI startups that are disrupting big tech. Moreover, we better understand the constraints Google has as they launch their own version of ChatGPT, Bard to the public. For more on this, follow Byte-Sized Insights — in next week’s article, we will be analyzing Google’s launch of Bard.
