Microsoft Is Attempting To Block Google Via ChatGPT?

Credit: om-siva-prakash-unsplash

Google, which accounts for about 60% of parent firm Alphabet’s total revenue from the selling of online adverts, is seen to have more to lose than just its complete dominance of internet search requests, according to Cathie Wood’s ARK Invest, as reported by Fortune.

Cloud computing 

In a research note released on Monday, ARK analyst Will Summerlin makes the case that Microsoft CEO Satya Nadella might be planning to steal Google customers, particularly in the burgeoning cloud computing sector.

According to him, Microsoft’s goal is to discourage Alphabet from operating Google Cloud and other businesses at a loss as well as reduce Google’s search profits.

Three major global firms now dominate the server hardware rental market for independent businesses looking for easily scaled computing capacity.

The biggest is Amazon, which through its AWS division essentially invented the business model. Although most people would assume the e-commerce behemoth makes money from online sales, they really had a deficit for the year.

Only the $23 billion in profit from AWS prevented a disastrous year for the firm.

Microsoft Azure is ranked second, followed by Google Cloud Platform, the newest and smallest player in the market.

They are referred to as hyper scalers as a group. By scaling up or down the computational capacity made accessible, they can provide flexibility and dynamically for whatever data processing demands your business may have from day to day.

The triumvirate has consistently produced outstanding development in cloud computing services. The recent quarterly revenue increases of 20% to 30% or more—which are mostly attributable to cautious corporate IT expenditure despite recessionary fears—are in this case viewed as subpar by historical standards.

Microsoft’s Nadella is still upbeat, though, as businesses can immediately reduce costs by outsourcing their computing needs and so reduce costly investments in their own gear.

He told investors late last month that “we are still in the early stages” of the long-term cloud opportunity.

A.I.-enabled search is far less profitable for Google

Summerlin contends that Google’s roughly 8.5 billion daily Internet searches finance significant investments in key emerging markets like the cloud, which posted a $480 million loss in the fourth quarter.

Summerlin thinks that Nadella’s recent multiyear, multibillion-dollar investment in OpenAI, the company that developed the ground-breaking ChatGPT, may have forced Google to introduce an artificial intelligence feature in search that could be financially ruinous.

That’s because, according to Summerlin, inference costs for language models, like OpenAI’s ground-breaking GPT-3.5, are “much higher” than those for search, Google’s main source of revenue.

In contrast to the ad-based approach that Google has so expertly established, the revenue strategy for A.I.-based conversation is still questionable.

To put it another way, any effort to keep up with Microsoft and OpenAI could push Alphabet into a monetary bind.

If the effect is to reduce investment in present loss-making ventures like Google Cloud in order to safeguard margins, this could lead to a loss of market share to Microsoft and its Azure platform.

Summerlin asserted that Microsoft might exert pressure on other Alphabet businesses, many of which compete with Microsoft, by reducing Google’s search margins.

Google and Microsoft could not be reached right away for comment.

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Source: Fortune


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