Google Sets off Code Red

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Deep Dive: Google Sets off Code Red 

ChatGPT wouldn’t beat any bank’s superday. But it just beat Google as the fastest-growing tech platform in existence.

Let’s discuss the code-red Google just set off and its newest hitman. 

A Brief History of Today’s Hype

Let’s get something clear – this isn’t going to be a puff or hype piece on the chatbot the internet won’t stop screaming about. That’s what Twitter and every tech journalist are for right now. We’re here to dive into what it means for the future of the tech sector as it pertains to some of index’s biggest players.

TL;DR - The chatbot your “entrepreneur” cousin won’t shut up about has finally penetrated finance. In the last week, ChatGPT has passed a Wharton MBA exam and the CFA Level 3 Exam. Bloomberg even challenged it to create a winning portfolio for the US stock market. 

If you have the pleasure of not knowing this much, ChatGPT is the artificial intelligence tool that – as literally every financial or tech journal will detail – is “taking the world by storm.” Guess they’ve finally retired “making the world a better place.”

OpenAI, the research lab behind the viral ChatGPT chatbot, is reportedly in early talks to sell existing shares in a tender offer that would value the company at around $29B. That would make it one of the most valuable U.S. startups on paper, despite generating little revenue. It would roughly double OpenAI’s valuation from a 2021 tender offer, when OpenAI was valued at about $14B. 

Buzzfeed on Thursday announced it would use AI to "enhance" certain kinds of content, which brought its stock out of its dumpster fire and onto a tear. It also amplified fears of machines coming for white-collar jobs, especially amidst the hysteria already present in tech over layoffs. 

This hysteria isn’t isolated to tech. A couple of weeks ago, venture capitalist Marc Andreessen openly mused on Twitter whether ChatGPT could write venture-focused writing. 

Skeptics remain. Consolidating the criticism, ChatGPT is that intern with a negative chance of getting offered back and clocks out at six. It, at times, has been found to be long-winded, repeat itself a lot, make a lot of broad statements, and insert a lot of inaccurate details.

Despite the seeming disruption, plenty are still bullish on its most direct competitor – Google. 

The First Battle in the AI Wars 

The short history of search engines such as Bing, Yahoo and Ask Jeeves are nowadays mostly regarded as nostalgic predecessors of the number one present-day concierge of the internet: Google.

For the past 20 years, Google has dominated the digital realm as the gateway to get online. It has approximately four billion users and over eight billion searches per day. Unsurprisingly, it is the most visited website on the planet.

Google’s rapid growth and adaptability have kept competition from other search engine species at bay for an impressively long stretch of time, preventing a newer, shinier, or faster model from usurping its spot at the top. But in today's world of low attention spans, burnout and high expectations, people have increasingly little time to invest in recreational online research anymore. 

So investors and innovators began hypothesizing that digital natural selection may begin to favor methods of obtaining larger volumes of multi-sourced information in simpler, more bite-sized amounts. 

A Brief Background on the Challenger 

Enter ChatGPT – OpenAI’s latest conversational chatbot and learning tool and information oracle. The elevator pitch is that it can find answers faster and explain them simpler than you can. 

After gaining over one million users in under a week after its launch in November, ChatGPT is the fastest-growing tech platform in existence. Many are now suggesting that it may eventually reinvent or replace the traditional search engine. 

As a result, Google is scrambling. CEO Sundar Pichai has issued a “code red” to urgently refocus the company’s resources into expediting the rollout of its AI pipelines and prototypes. Many of Google’s teams have been directed to repurpose their efforts into AI portfolios that can address the threat Google now faces from OpenAI’s ChatGPT competition. 

Ironically, the AI world Google has played a major part in creating, is rising up to meet them and threatening to reinvent the traditional search engine.

Not Google’s First Rodeo 

It's not like Google is behind in the AI space. They are notorious for testing different technologies and approaches for better search results. 

Google is also already using ML/artificial intelligence (AI) to understand the queries asked in order to determine what kind of results to show – and whether there is a featured snippet to be shown, product images or the weather forecast. 

With the acquisition and continuous backing of DeepMind back in 2014, it's not like Google doesn’t have access to these evolving technologies. Earlier this year, DeepMind launched the GPT3 competitor, Chinchilla. And that's beside the thousands of internal developers at Google.

In 2009, Wolfram Alpha (a search engine that directly answers factual queries by computing the answer from structured data, rather than providing a list of documents or web pages that might contain the answer) was speculated to be a Google killer. Heard of it? Unless you’re a quant, that’d be a hard “no.”

Over the years, not only has Google squashed many other search engines, but the company has also been a major player in catalyzing progress in computer science, connectivity and artificial intelligence. Part of ChatGPT’s code was even written by Google alumni who now work at OpenAI, so it was only a matter of time before the products of their “world-changing” work came back to bite them. 

The Newest Hired Hitmen 

OpenAI is a non-profit AI research laboratory based out of  Silicon Valley, founded by Elon Musk and Sam Altman. The lab aims to develop “friendly AI” and openly share it with the world to “benefit humanity as a whole.” 

Before you sigh and ask “who funded that BS,” we’ll spare you – it was the normal Silicon Valley players. The organization was founded in San Francisco in 2015 by Sam Altman, Peter Thiel, Reid Hoffman, Jessica Livingston, Elon Musk, Ilya Sutskever and others, who collectively pledged $1B.

In addition to ChatGPT, the lab has developed several other publicly available machine learning algorithms such as “Whisper,” “Dactyl,” “Jukebox” and “DALL-E.” Each is said to be able to “do anything” from composing musical scores or translating spoken language, to solving a Rubik’s cube or creating images from text. 

The aim of OpenAI’s algorithms is to create autonomous systems that are able to outperform humans. ChatGPT’s goal is to answer all search queries for you in no time at all. In other words, why spend time Googling?

That’s exactly what Google is worried about. 

Chatbots Are a Risk to Google’s Revenue and Reputation

Given the changing generational climates, some investors believe chatbots have a gross potential to gain popularity going forward. You would have thought that given Google’s enormous capital, field-leading workforce and market dominance, they would have beaten everyone else to the chatbot finish line by now. 

Well, they do in fact have their own conversational technology called “LaMDA” (Language Model for Dialogue Applications) in development. Its release has stalled due to two main factors: 

• Chatbot infrastructure doesn’t really support the incorporation of ads (Google’s main source of revenue).

• Given that chatbots’ core functionality essentially distills the internet into a few short paragraphs, the uncensored content that’s churned out could have a great capacity for harm. If produced under Google’s name, it could tarnish its brand. 

Chatbots pose an enormous existential threat to Google’s main business model. Believe it or not, Google is actually an advertising company which inherently relies on users’ questions being left partially unanswered. This continued need for answers prompts them to click on personalized ads presented in search results. 

This business model is employed by many big tech companies. But it has also come under harsh scrutiny recently for its growing carbon footprint. Personalized ads have been shown to have hefty data requirements and also promote unsustainable consumerism.  

Despite all the recent noise about AI displacing journalists in the future, the reality is that newsrooms have been using software to write some of their content for years now.

The Associated Press has been automating sports match recaps, and corporate earnings coverage, via a partnership with Automated Insights for several years, for example. Bloomberg News even has its own AI, named Cyborg, that pumps out key coverage like corporate earnings summaries. The Washington Post and Forbes also have AI tools that write business and other content, per a 2019 NY Times story.

But Does ChatGPT Actually Stand a Chance

There is a spectrum of opinions about how great of a threat ChatGPT poses to Google’s ad business. Some voices, like Bloomberg Intelligence analyst, Mandeep Singh, maintain that Google has a strong moat. Others such as Edwin Chen, founder of another AI company, expressed that competitors no longer need hundreds of millions of dollars to beat Google. 

Despite these differing opinions, the bottom line still remains: if more users are making the switch to ChatGPT for their search queries, then less traffic will reach Google’s money-making advert links. 

Aside from maintaining its economic integrity, Google also remains cautious about preserving its ethical integrity as well, a value that is hard to uphold in chatbot development.

The personal touch of ChatGPT is what makes it most appealing, but also most dangerous. When searching for information on the internet, sometimes it’s hard to know where to look, what to trust, and which iteration of the answer you’re looking for is the right one. That’s why comfort can be found in the confident, concise and seemingly correct answers ChatGPT is able to provide inquisitors with. But, as many experts have expressed, this comfort is naively misplaced because ChatGPT is not immune to misinformation, mistakes and bias. 

ChatGPT has no way of validating the sources it uses, nor does it provide a reference list or paper trail to show where the information has come from. Reliance on the accuracy of ChatGPT’s answers is just another form of blind trust in the internet. 

Like many chatbots before it – Microsoft and Meta have both launched and subsequently lynched their own versions – ChatGPT has been shown to have a significant capacity for harm by somewhat randomly producing uncensored content. This inability to censor harmful or misleading narratives make launching a chatbot as part of the Google portfolio a particularly risky move for the brand-focused giant. 

This risk does still exist for smaller organizations such as OpenAI, but is outweighed by the benefits of releasing such software on the company’s growth and visibility.  

Given the myriad of concerns raised about ChatGPT’s reliability as an information source, it will depend entirely on OpenAI’s ability to evolve their chatbot algorithm to do better. Now eyes are on whether the buzz generated by its initial release will level up into long-term success and even user preference over Google. 

Fear of Being Replaced

OpenAI’s release of ChatGPT (as well as all their other AI models), some analysts claim, may in fact be beneficial for Google and other big tech companies exploring machine learning. The chatbot has put AI further into the public spotlight, which could bring more interest – followed by investment – to the sector.  

The most likely outcome of the dawn of ChatGPT will be Google putting the pedal to the metal on its own AI chatbot initiatives, bringing forward the rollout of LaMDA or another similar software that enables conversational searching in a similar way. 

Up until now, Google has had the luxury of supreme rule over online searching to somewhat complacently hold off on pushing out their own AI chatbot. But, the pressure they now face from OpenAI and their human-like information companion could back Google into a corner. God forbid a CEO actually has to make a tough decision, but the competition could lead to a forced one that puts economic principles back over ethical priorities. 

As we all know, the only phrase tech CEOs love more than “making the world a better place” is “creating value for shareholders.”