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Tech Giants Face Challenges in Monetising AI Technology

Big Tech Giants Monetising AI Artificial Intelligence
By Nicolo Finazzi
Nicolo Finazzi

2 Min

October 16, 2023
  • Tech giants like Microsoft and Google investing in AI technology.
  • Generative AI tools challenging to profit from due to high operational costs.
  • Strategies like tiered pricing being tested to make AI more financially sustainable.

Major tech companies like Microsoft and Google are making significant strides in the field of artificial intelligence (AI), developing generative AI tools that can produce business memos, computer code, and more. However, the translation of AI hype into profits has proven to be a challenge.

Generative AI tools are cutting-edge but expensive to operate, demanding robust servers equipped with costly chips and substantial power consumption. Companies like Microsoft and Google are experimenting with various approaches to make these tools marketable and financially sustainable. One tactic involves introducing AI-backed upgrades to their software, albeit with higher price tags. For instance, Microsoft is launching an AI-infused version of its Microsoft 365 office suite with an additional $30 monthly charge, enabling features such as composing emails and creating PowerPoint presentations.

AI products entail significant time and financial investments for building and training, often requiring hundreds of millions of dollars. They lack the economies of scale associated with standard software, as each query necessitates intensive new calculations, resulting in higher running costs as usage increases. Microsoft, for instance, has deployed AI from its partner OpenAI to power GitHub Copilot, a service aiding programmers in coding tasks. Despite its popularity among coders, it has incurred losses due to the high operational expenses.

Companies anticipate that generative AI will become more cost-effective as technology evolves. Despite current challenges, the enthusiasm for AI's potential has driven soaring valuations of AI-related companies.

Lab51 Insights on AI Monetisation

In this advanced industry, Lab51 underscores the pressing need to make AI financially sustainable. The high costs associated with generative AI tools demand innovative pricing models like consumption-based charges. We advocate for continuous advancements in AI tech, exploring cost-effective alternatives, and fostering industry collaboration. Our vision is an AI future that balances innovation with profitability through strategic investments and smart pricing strategies.

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