this post was submitted on 16 Jun 2024
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I would question the efficiency claim. Uber and the like claimed incredible market dominance, driving local food delivery and taxi services out of business. They're only now really being forced to find profitability.
I wonder if AI is going to be similar. The powerful models right now, as I understand it, have ludicrous power requirements. I don't know their balance sheets, but in the current race to market share, I'm skeptical that most of these services are in the green.
What that ultimately says about the future I don't really know. Like it could be we reach some point where the models get better, or more specialized, or something and profit arrive. Or maybe theres a point of diminishing returns where the profit just can't be made, and once the hype falls off (and investors stop clamoring for AI) these companies will ask what they're getting for the money spent.
(And of course I could just be straight up wrong about profits today not being there.)
Replacing a human with any form of tech has been a long standing practice. Usually in this scenario the profitability or the efficiency takes a known pattern. Unfortunately what you said is the exact way the market always operated in the past, and will be operating in the future.
The general pattern is a new tech is invented or a new opportunity is identified, then a bunch of companies get into the market as competing entities. They offer competing prices to customers in an attempt to gain market dominance.
But the problem starts when low profit drives some companies to a situation where either they have to go bust or dissolve the wing, or sell the company to a competitor. Usually after this point a dominant company will emerge in a market segment. Then the monopolies are created. After this point companies either increase the price or exploit customers to get more money, and thereby start making profits. This has been the exact pattern in tech industries for several decades.
In the case of AI also, this is why companies are racing to capture market dominance. Early adopters always get a small advantage and help them get prominence in the segment.
They are absolutely eating the real costs in order to gain market share. I suspect that there's going to be a mad dash to rehire humans when the bill comes due and the VCs want profits.