Follow the AI money
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Illustration: Tiffany Herring/Axios
The most important question about AI right now isn't whether it will destroy humanity or become sentient — neither of which looks likely any time soon — but how its creators intend to profit from it.
What's happening: Investors are pumping AI-related valuations into the stratosphere. That means companies seeking "monetization" will start getting creative and aggressive about revenue any day now.
Why it matters: Where the money comes out of the system will determine who the new technology serves — and whether it empowers or exploits us.
Driving the news: Big tech companies start reporting their quarterly results this week, in what will be the third earnings season since the debut of ChatGPT last November — and investors, having bid up anything with an AI label for months, are starting to ask harder questions.
How it works: So far, the AI business looks like every other internet-era tech business when it comes to making money: You can charge for subscriptions, you can sell ads, or you can sell services to other businesses.
- OpenAI is giving away basic access to ChatGPT but selling $20-a-month enhanced subscriptions.
- Google and Microsoft are both making their AI-enhanced chat-based search products free, so expect advertisements — and the data mining that makes them more valuable — to kick in at some point.
- Image-based AI startups are going the freemium route, while giants like Adobe try to build new capabilities into their existing subscription models.
Between the lines: Running these services burns through computing cycles (and the energy that powers them) at a staggering rate, so the "free" AI tier is likely to get less attractive over time.
Microsoft, Google, and many other firms also have big plans to crank up subscription and consulting fees for customers that want AI enhancements to their software.
- Microsoft recently announced it would charge $30 per user per month for its AI "copilots." That could quickly add up to billions in new revenue.
- SAP's CEO told Axios that his B2B giant expects customers will pay a hefty premium for AI add-ons, too.
What to watch: Startup founders like to say things like "just find product-market fit and the revenue will come," but dollars don't just magically materialize — you still have to figure out who's going to pay, for what, and how.
- Companies' pledges of "responsibility" will last only as long as investors' cash.
- When the choice is between running out of financial runway (i.e. shutting down) or prioritizing revenue over ethics, there's never much doubt what will win out.
- One area that could get ugly fast: when AI starts collaborating with ad targeting, users can expect further privacy erosions, greater spam assaults and even less control of their online experience.
Yes, but: Some of the key companies in the AI boom are organized in a way that suggests they'll balance profit-seeking against other desirable goals.
- OpenAI was founded as a non-profit, but in its current form it's operating a for-profit subsidiary with a cap on investor returns.
- Anthropic, another high-profile AI startup, is structured as a public benefit corporation, which means it can consider other goals besides maximizing shareholder return.
- Still, there's nothing in these firms' charters that determined leaders (and smart lawyers) can't undo whenever they want.
- The record isn't great: Etsy, which went public as a certified B corporation, ditched that status when times got hard.
Go deeper: Investing in the AI "mafias"
