Published on January 31, 2024, 12:15 pm

Artificial intelligence (AI) giants Microsoft and Alphabet recently reported their quarterly earnings, with generative AI being a prominent topic for both companies. While the specifics were not disclosed, it is evident that both companies are investing heavily in generative AI due to the technology’s immense potential.

The significance of generative AI lies not only in its capabilities but also in the cloud infrastructure required to support it. The cloud market presents a growth opportunity for tech companies like Microsoft and Google, and generative AI serves as a catalyst for this growth. In the previous quarter, both Google and Microsoft experienced accelerated growth in their cloud businesses thanks to generative AI.

Microsoft’s cloud business grew by 30%, slightly higher than the previous year’s growth of 28%. This can be attributed in part to Microsoft’s partnership with OpenAI, which gives them a competitive advantage. On the other hand, Google witnessed a 25.7% growth in its cloud business compared to the previous quarter’s growth of 22.5%. However, Google’s growth rate still falls short of last year’s figure of 32%.

During an earnings call, Sundar Pichai, CEO of Alphabet, mentioned that Google’s GPT-4 competitor Gemini Ultra will launch soon. He also stated that his team is already working on future versions and implementation into Google products. Meanwhile, Satya Nadella, CEO of Microsoft, shared that studies have shown productivity gains of up to 70% through generative AI. For instance, Microsoft 365 users employing Copilot work approximately 29% faster on tasks such as research, writing, or summarization.

Generative AI has proven particularly effective in summarization tasks according to Nadella. As he explained during an interview: “In terms of what we’re seeing…summarization is number one…I do summarization of Teams meetings inside Teams…Word document summarization…I get something in email on summarizing. So summarization has become a big deal.” Another widely used feature is the generation of PowerPoint files from Word documents.

Looking ahead, the future of Google’s generative AI search, known as SGE, remains uncertain. Pichai described it as being in its early stages and sounded cautious about it. While generative AI offers an alternative approach to search by providing better answers to certain types of queries, Pichai emphasized that the breadth and depth of traditional search cannot be underestimated.

To create a compelling product, Google aims to combine different aspects of generative AI into one offering. For example, Pichai mentioned the evolution of Bard into an AI agent capable of answering questions and performing actions. This product could complement traditional search. A paid version of Bard with access to Gemini Ultra is anticipated to be released soon.

Nevertheless, there are risks associated with pushing AI-powered search forward. Aside from financial considerations, Google would also face challenges related to taking responsibility for the accuracy and reliability of AI-generated answers provided in response to billions of queries. There could also be antitrust implications as well as social and political consequences due to its potential dominance in the publishing business.

Ultimately, developing an AI-powered search product that surpasses traditional search is not without its hurdles. As Microsoft’s Bing chatbot demonstrated when it spread false information about elections, there are risks involved in deploying AI at such a large scale. While Google continues investing time and resources into this venture, the outcome remains uncertain.

In conclusion, Microsoft and Alphabet’s emphasis on generative AI in their recent earnings reports highlights its importance as both a technological advancement and a growth engine for their respective cloud businesses. As these companies continue to develop and refine their offerings in this field, we can anticipate further advancements that will shape the future of artificial intelligence.


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