For tech giants, AI poses a multi-billion research challenge

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As Alphabet Inc. shrugs off a failed chatbot that helped wipe $100 billion off its stock market value, another challenge is emerging from its efforts to add generative artificial intelligence (AI) to its popular Google search engine: cost.

Tech executives are discussing how to leverage AI solutions like ChatGPT while factoring in the considerable expense. 

OpenAI’s popular chatbot, which can write prose and answer search queries, at « exorbitant » IT costs of pennies or more per conversation, Sam Altman, the startup’s chief executive, said on Twitter.

In an interview, Alphabet President John Hennessy shared to Reuters that AI integration would likely cost 10 times more than a standard keyword search, though careful tuning would quickly reduce that expense.

Even with revenue from potential chat-based search ads, the technology could dent Mountain View, California-based Alphabet’s bottom line with several billion dollars in additional costs, analysts said. Its net income was nearly $60 billion in 2022.

Morgan Stanley estimated that Google’s 3.3 trillion search queries last year cost about one-fifth of a penny each, a figure that would increase depending on how much text AI has to generate. 

Google, for example, could face a $6 billion increase in spending by 2024 if ChatGPT AI were to handle half the queries it receives with 50-word responses, analysts predicted. It’s unlikely that Google would need a chatbot to handle navigation searches on sites like Wikipedia.

Others have arrived at a similar bill in different ways. For example, SemiAnalysis, a research and consulting firm specializing in chip technology, said that adding ChatGPT-like AI to search could cost Alphabet $3 billion, an amount limited by Google’s internal chips called Tensor Processing Units, or TPUs, as well as other optimizations.

What makes this form of AI more expensive than conventional search is the computing power involved. 

Such AI depends on billions of dollars worth of chips, a cost that must be spread over their effective lifespan of several years, analysts say. Electricity also adds costs and pressure on companies with carbon footprint goals.

Alphabet is under pressure to meet the challenge despite the expense. 

Earlier this month, rival Microsoft held a high-profile event at its Redmond, Washington, headquarters to showcase its plans to integrate AI chat technology into its Bing search engine, and its executives took aim at Google’s 91 percent search market share, according to Similarweb estimates.

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