SAN FRANCISCO – There is growing public alarm about how generative AI might obliterate established (“legacy”) industries and professions, ranging from lawyers to Uber drivers to accountants. But what is often overlooked is that the first major victim of AI disruption will undoubtedly be the technology sector itself. AI is already starting to cannibalize established giants, and also to reshape the profession of software engineering, with major implications for research, antitrust policy, and safety regulation.
Since the invention of modern computers during World War II, technological progress has enabled us to make computers ever more convenient for normal humans. But all those systems have continued to rely on rigid, highly structured ways of programming and using computers. This is true even of many consumer applications: Think of how we search for information, fill out forms, navigate screens, create spreadsheets, and specify document formatting.
But with the advent of AI, that is starting to change.
The most obvious victim of AI disruption within the technology sector is Google, whose revenues derive primarily from ads inserted in search results. Using traditional Google Search has become a cumbersome process of sorting through too many links and ads. But with OpenAI’s ChatGPT, Anthropic’s Claude, or Perplexity, you simply request the information you want and get it. They are still imperfect, but already vastly superior to the Google hunt-and-peck model. Their usage is growing about 10% per month, and this year ChatGPT alone will probably exceed $10 billion in revenue. Google has belatedly released AI Mode, but it’s hard to see how the company can respond effectively without destroying itself. Google’s management is clearly aware of this, and thoroughly terrified – as they should be.
Something broadly similar appears to be true of a high fraction of the technology sector. The current industry’s giants – the likes of Microsoft, Apple, Salesforce, SAP, Nvidia, Amazon, Intel, and Dell – were themselves built on technologies that disrupted earlier incumbents, particularly IBM and its mainframes. But those once-revolutionary technologies are all several decades old now. AI may well supersede them, and it is already opening space for new disruptors.
Read more here.
A message from Advisor Perspectives and VettaFi: To learn more about this and other topics, check out some of our webcasts.
