When NASA created its Apollo launch vehicles to take payloads to space (including humans), they were designed with multiple segments. The segment nearest the ground on launch (the “first stage”) contained huge rockets and fuel tanks that could get everything into the air and accelerate it to a velocity where it could escape Earth’s gravity. At this point, still some way before the edge of Earth’s atmosphere, the first stage would be jettisoned, to fall back to Earth. The rest of the vehicle would continue on its way, with escape velocity now reached.
A Frenzy of FOMO
OpenAI is the outfit that — above all others — is responsible for the rapid acceleration of interest and investment in generative AI (GenAI) technologies. The launch of ChatGPT in November 2022 kick-started a frenzy of FOMO, first for many individuals (after all, ChatGPT did surpass 1 million users in just five days) and then in businesses — as well as catalyzing conversations about intellectual property in the digital age, potential impacts of AI on employment and skills, and more.
Just over 12 months from the GenAI market launch created primarily by the attractiveness of OpenAI’s consumer services, IDC conducted a worldwide survey that demonstrated the incredible momentum behind the new technology within businesses: in January 2024, 68% of organizations already exploring or working with GenAI said it would have an impact on their business in 2024-2025, and an astounding 29% said that GenAI had already disrupted their business to some extent.
OpenAI continues to benefit from amazing levels of mindshare, thanks to the good old rule of “be first”, but also to the undeniable PR power of its CEO Sam Altman — not least within senior business leadership circles. But mindshare is not enough; it also benefits from a strategic partnership with Microsoft, which has seen Microsoft committing to provide $13 billion of investment, in return for an exclusive license to OpenAI’s IP and an agreement that it would be OpenAI’s exclusive cloud provider.
The heavily promoted downstream results of that partnership (Azure OpenAI Service, use of OpenAI models in CoPilots, and so on) have continued to create mindshare momentum.
And yet: OpenAI is not currently traveling along the route that businesses want to take.
OpenAI’s Alignment Problem
The outfit was founded as a not-for-profit research institute, focused on developing artificial general intelligence (AGI) — a currently hypothetical future level of capability that envisions AI systems that can perform as well or better than humans on a wide range of cognitive tasks — with a capped profit company subsidiary (which is the entity invested in by Microsoft and others).
However, when we ask organizations what they need from GenAI in order to create business value from the technology, they typically cite qualities such as accuracy, privacy, security and frugality. For example: 28% of organizations are concerned that GenAI jeopardizes control of data and intellectual property; 26% are concerned that GenAI use will expose them to brand or regulatory risks; and 19% of respondents are concerned about the accuracy or potential toxicity in the output of GenAI models.
OpenAI is innovating fast, but the dominant innovation focus is on breadth and depth of functionality (e.g., the introduction of “multimodal” models that can manipulate multiple content types, including text, images, sound, and video). Not on accuracy, privacy, security, frugality, and so on.
Currently, it is vendors “higher up the stack” (enterprise application and enterprise software platform vendors) who are attempting to bridge the gap with functionality aimed at addressing trust issues and minimizing risks. But it is clear that foundation model providers also need to bear some responsibility for… being responsible.
Beyond OpenAI: An Explosion of GenAI Model Providers
OpenAI might have amazing mindshare right now, but it is already far from the only source of GenAI model innovation. Fueled by venture capital and corporate investment, competitors have flooded into the space, including:
- GenAI research-focused vendors like Anthropic, AI21, and Cohere
- Hyperscale public cloud providers AWS and Google
- Enterprise technology platform vendors including IBM, Oracle, ServiceNow, and Adobe
- Sovereignty-focused providers, including Mistral, Aleph Alpha, Qwen, and Yi
- Industry-specialized providers, including Harvey (insurance) and OpenEvidence (medicine)
- A vibrant and fast-growing open-source model community, with thousands of GenAI-related projects hosted by Hugging Face and GitHub
Open-source communities are a particularly energetic vector of innovation: open-source projects are quickly evolving model capabilities in terms of model size and efficiency, training and inferencing cost, explainability, and more.
Microsoft Is Clearly Looking Beyond OpenAI
In late February, Microsoft President Brad Smith published a blog post announcing Microsoft’s new “AI Access Principles”.
There’s a lot of detail in the post, but underpinning it all is a clear direction: in order to reinforce its credentials as a “good actor” in the technology industry and minimize the risks of interventions by industry regulators around the world, Microsoft is committing to support an open AI (no pun intended) ecosystem across the full AI technology stack (from datacenter power and connectivity and infrastructure hardware to services for developers). As part of this, it is increasingly emphasizing the importance of a variety of different model providers. For instance, it’s made a recent small investment in France’s Mistral AI and is expanding support for models from providers like Cohere, Meta, NVIDIA, and Hugging Face in its platform.
Will OpenAI Fly or Crash?
In order for OpenAI to reap significant rewards from business demand for GenAI technology implementation, it is going to have to evolve its approach. While the initial success of ChatGPT captured market attention, the rapidly evolving landscape of both GenAI technology supply and demand requires a stronger business focus. OpenAI is faced with tension between its research-oriented ethos and the market’s demand for practical AI applications. This alignment problem raises questions about its identity and future strategy.
Lastly — what about Microsoft? It must back its new principles with tangible actions that genuinely advance AI responsibly. It needs to ensure transparency and avoid actions that would suggest it only uses “responsible AI” as a PR tool for driving profits. It needs to promote both innovation and competition. Nobody wants a world where one model’s dominance could stifle competition and limit options for developers.
Hence, fostering an open and inclusive ecosystem where smaller players can grow will be imperative for Microsoft’s credibility and allow for a trustworthy AI ecosystem benefiting everyone.
Want to know more? Join IDC’s experts on the 19th of the March from across EMEA for an exclusive peek into our latest research to:
- Uncover real-world use cases from organizations aiming to maximize positive impact of GenAI on their business,
- Learn about evolving GenAI technology, supplier dynamics, and the shifting regulatory landscape,
- Gain actionable insights to reveal a roadmap to get through GenAI possibilities and challenges in 2024 and beyond.
Register for the webcast here: How EMEA Organizations Will Deliver Business Impact With GenAI – Beyond the Hype.