2024: The year AI gets real

• AI providers are hunting for profitable business models that can support expensive-to-run generative AI systems.
• Business leaders want to move beyond AI brainstorming and pilot phases and begin offering leaps in efficiency, productivity and creativity.

The big picture: The industry's rise in the second half of 2023 created a mismatch between AI's sky's-the-limit potential and its challenging realities — hallucinating chatbots, hard-to-obtain GPU chips, potentially huge liabilities around copyright, and many other concerns about bias and accuracy.

• With the arrival of smaller and specialized AI models, and the availability of more AI tools on mobile devices, the landscape could improve — and the wide deployment of multimodal AI, which works seamlessly with both text and images, could provide more excitement for users.

Zoom in:

• AI at work: For millions of workers, 2024 will be the year of the AI copilot. But for many others, it could be the year that AI-linked job losses move from theory to reality.
• In daily life: More AI tools will run on mobile phones, transforming our relationships and hobbies as much as business. "[Google's new] Gemini nano is built for this," notes AI analyst Nina Schick.
• Enterprise: The EU AI Act provides some regulatory exemptions for open models, and VCs are racing to invest in open-source providers. Look for companies to focus on new ways to apply AI models to their own products, rather than on general products like ChatGPT.
• Markets: Wedbush analyst Daniel Ives predicts a "new bull market for the tech sector" driven by a 20-25% increase in cloud and AI spending. At the same time, tougher regulation of mergers and acquisitions in both the U.S. and Europe could dampen venture capital and startup growth.

The prospect of AI breakthroughs in health generates the most enthusiasm among both the general population and experts.

• 2024 should see more early disease detection and more personalized medical treatment plans with the help of AI "by analyzing patient data, improving surgical precision and enhancing post-operative monitoring," per Omar Arnaout, a neurosurgeon at Brigham and Women's Hospital.
• For example, AI will enable the wider treatment of cancer with fine-tuned versions of drugs and new combinations of drugs tailored to the patient's individual physiology.
• Marc Succi, a Mass General Brigham radiologist, predicted to Axios that patients would increasingly turn to AI chatbots for medical triage advice, leading the biggest tech companies to go on a health-tech acquisition splurge.

What we're watching: Copyright disputes around AI, particularly around the use of protected content to train AI models without consent and compensation, will produce significant legal decisions in the coming year, experts expect.

• "Courts and the Copyright Office are going to have to learn about the creative choices involved in creating and prompting models," James Grimmelmann, professor of digital and information law at Cornell Law School, told Axios.
• One problem is that AI developers don't divulge what content they have used in training, and in many cases, they can't explain why or how their tools arrive at any particular output. As the technology advances, such opacity will deepen unless industry practices change.
• OpenAI, Microsoft, Google, Getty, Adobe and other tech giants have agreed to indemnify users swept up in lawsuits against creations they've made using their AI tools. "No one is going to cry for the AI titans if they have to share some of their mind-boggling valuations with copyright owners," Grimmelmann said.

The big picture: There's little prospect of comprehensive federal AI legislation during the 2024 election cycle — but state houses are becoming active AI legislators.

• Congress may agree on targeted federal privacy legislation, and AI election restrictions could emerge from either Congress or state houses, according to the Center on Technology Policy at the University of North Carolina at Chapel Hill.
• AI players around the world will continue to adjust to President Biden's AI executive order and the EU AI Act, which will start to be enforced in part beginning in late 2024.
• Up to 2 billion people could vote in elections globally in 2024, and AI may also be used as a scapegoat for election losses by candidates who don't respect electoral processes.

Be smart: No one knows exactly how quickly AI will move from Silicon Valley to Main Street.

• According to Upwork research, executives are significantly more confident in their organization's AI plan and products than the managers and individual workers delivering them, by a margin of 73% to 53%.
• Even as Bill Gates argues that today's AI advances will trigger "a massive technology boom later this decade," he notes that mass market adoption may still be two years away.

What's next: OpenAI is set to open its delayed GPT store — an app store for customized versions of the chatbot — in early 2024.

• Taiwan goes to the polls on Jan. 13 with unpredictable consequences for geopolitics and chip supply chains.
• U.S. and U.K. antitrust regulators are moving to investigate Microsoft's relationship with OpenAI.