Tim’s Tech Tidbits #11 — Threats and Implications of AI & Automation
Hi friends,
The 50th Davos gathering ended late last month. Davos, or the World Economic Forum, has been drawing flak by critics who assert it is merely a forum for the rich and powerful to feel as if they are making a difference. Despite some shortcomings, there are many reasons why Davos remains relevant. I, for one, think it is an effective platform to introduce new ideas and raise awareness for pressing matters which may be overlooked in our everyday lives. In particular, global issues require global solutions beyond the capabilities and resources of a single country.
For example, back in Davos 2020, historian Yuval Harari warned global leaders to focus on the three existential threats facing humanity: nuclear war, ecological collapse and technological disruption. Most of us are familiar with the first two threats and there is a general consensus to prevent these. However, the third threat is more complicated and nuanced. While the immense power of technologies brings great promise, it can also fundamentally disrupt and question the very meaning of human life, in the form of mass job automation, unprecedented inequality (favoring capital over labor), and rise of surveillance to list a few.
ChatGPT is certainly one such technological innovation. It has been a while since a software release has generated such a splash, that even Microsoft could not resist betting big on the project with a $10 billion investment. If you’ve played around with ChatGPT, it is evidently one of the biggest leaps in AI-human communication. The next question that arises in everyone’s minds without a doubt: Will this replace me in my job? In this newsletter, I will cover how companies are positioning themselves to take advantage of this opportunity, why I remain optimistic about harnessing such potential for the benefit of mankind, and where does being differentiated fit into all of this.
Today’s topics
- Race to dominate AI — Microsoft vs. Google
- Maintaining our relevance in the era of AI and automation
- The increasing importance of being differentiated and unique
Race to dominate AI — Microsoft vs. Google
- ChatGPT took the tech community by storm when it was released by OpenAI last December. This AI chatbot, trained on massive pools of data, is capable of stringing together eloquent responses to any questions. Despite being far from perfect and relatively untested commercially, that has not prevented Microsoft from investing copious amounts of money into the company. It was a cause for celebration: for the first time in decades, Microsoft has a technological advantage and is now a credible threat to Google and other competitors. The possibilities of integrating this technology into Microsoft’s product offerings are endless. One area which holds great promise is incorporating ChatGPT into Bing. Rather than “googling” something and waiting for a variety of ad-supported answers to come back, people can simply ask a chatbot and get an immediate answer in the near future
- In fact, Google has been dealing with competition on all fronts. Millennials have increasingly relied on Instagram to search for things, and GenZs revert to TikTok. And not to mention the recent anti-trust lawsuit filed by the Department of Justice against Google’s monopolistic dominance in search and search advertising, which represents close to 80% of its revenue today. It is hard to understate the importance of the ChatGPT-Microsoft transaction and could be the final nail in the coffin in chipping away at Google’s stronghold over the market
- Microsoft and other large, “cash-rich” companies such as Meta have historically been criticized for inefficient, “lazy” deployment of capital, as excess cash should be invested in positive NPV projects or paid out as dividends. Ironically, companies with strong balance sheets are now able to make large, high-conviction bets, and holding an excessive amount of cash could be the genius move — it provides a comfortable cushion from black-swan events, allows for opportunistic moves, and confers strategic and adaptive advantages, particularly in a volatile macro / geopolitical environment where things don’t always go as planned
Maintaining our relevance in the era of AI and automation
- Undeniably, automation has eliminate millions of jobs and will continue to do so. Historically, the threat of job displacement has centered around blue-collar jobs. Contrary to popular belief, white-collar professions may surprisingly be more susceptible moving forward. While most blue-collar jobs have a greater degree of variability, many white-collar jobs involve formulaic processes or information processing, while AI has become increasingly sophisticated in knowledge-based fields such as medicine and law. At times, AI can think better than humans. Just a scary thought experiment? Think again. ChatGPT has already passed the US medical license exam, the Bar exam, and even an MBA course exam!
- As humans, will we be resigned to fate and relegated to playing second fiddle to machines? Well… turns out automation may not be the nightmare we’ve all imagined. While automation has reduced certain jobs, it is also responsible for creating new ones. Study after study has found that automation can boost efficiency and quality of work, lowering cost and allowing businesses to serve more people. As firms become more productive, there is a need for more skilled workers to meet increasing demand for goods and services. Ultimately, consumers benefit from lower prices, businesses benefit from more profits, and workers benefit from more jobs — a triple win scenario! It is estimated that technology will create at least 12 million more jobs than it destroys, according to a study by the World Economic Forum. It is an encouraging sign for society in the long run
- Technology, however, is only technology. Automation helps eliminate most of the grunt work. But it is up to us to redirect our time and efforts on things that truly matter. Access to instant methods of communication, such as text or email, does not necessarily makes one a good communicator. Nor does having access to PropertyGuru makes one a good property agent. It ultimately depends on the flair and creativity one brings to the table. Louis Gerstner Jr, best known for his tenure as Chairman and CEO of IBM, sums it up nicely: “Computers are magnificent tools for the realization of our dreams, but no machine can replace the human spark of spirit, compassion, love, and understanding.”
The increasing importance of being differentiated and unique
- The previous paradigm rewarded people for doing things better and efficiently, whereas the future paradigm rewards people for being different. Differentiation is doing something that no one else is doing and that no one else possibly can. Ultimately, it is the only defensible moat left in a world where ideas and knowledge can be easily copied or taught. This is not an entirely new concept — we see this in nature where genetic variation increases the chance of survival for any species and allows a greater ability to adapt to changing environments
- Differentiation is critical in a world where pervasiveness of AI only makes it easier for people to quickly build, exacerbating the challenge of meaningfully outperforming your competitor. In the past, companies would build according to a tried and tested playbook, after which competitors would take months, if not years, to catch up through a mix of reverse engineering and talent poaching. The time lag gives a perpetual head start to players who do it better. With AI, however, whatever can be taught can be learned better. If an idea can be copied, AI can copy it faster — creating a world where only differentiated, irreplicable ideas can survive
- For today’s AI, machine learning is only as good as the data that AI is trained on, and algorithms cannot generate new training data sets themselves. The quality of AI-generated outputs will depend on the integrity of the data source. That means humans who are able to make novel contributions to the data source will be increasingly valued. It is futile trying to get better at someone else’s game — but my wishful thinking hopes that AI could shape a future world where people are liberated to fully embrace each one’s differences and encouraged to create things that only he or she can, drawing from a unique set of experiences and interests!
If you found this useful or interesting, please feel free to share with a friend or colleague who may find this interesting and/or relevant. If there is any topic you would like me to cover or expand on, please let me know and I will see what I can do.
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