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Microsoft says OpenAI is now a competitor in AI and search

Also: Meta’s advertising growth is proof that hefty AI spending is already paying off

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AI KATANA
August 01, 2024

Morning!

In today’s newsletter, we delve into the shifting dynamics between Microsoft and OpenAI as the tech giant now identifies OpenAI as a competitor in AI and search sectors, despite their substantial investment and ongoing collaboration. In Japan, a lawmaker proposes that AI companies share a portion of their revenue to support manga artists and other creators, balancing AI innovation with cultural protection. Meanwhile, Meta’s substantial investment in AI shows significant returns, with a 22% growth in advertising sales driven by enhanced AI-powered recommendations and ad effectiveness. Additionally, Midjourney’s surprise v6.1 update delivers significant advancements in image realism, and Israel’s Yozma 2.0 initiative launches a $155 million fund to bolster venture capital investments in local high-tech startups.

Sliced:

  • ⚠️ Microsoft says OpenAI is now a competitor in AI and search

  • 🇯🇵 AI companies should share revenue with manga artists: Japan lawmaker

  • 📈 Meta’s advertising growth is proof that hefty AI spending is already paying off

  • 🌏 Mark Zuckerberg says Meta’s AI tool is on pace to be the ‘most used’ in the world

Microsoft has identified OpenAI as a competitor in its latest annual report, highlighting the evolving dynamics between the two companies. Despite a long-term strategic partnership and Microsoft’s significant $13 billion investment in OpenAI, the announcement of OpenAI’s SearchGPT prototype underscores the competitive shift. OpenAI is now seen as a rival in AI offerings and search and news advertising. The relationship complexities are further reflected in past events, such as Microsoft’s non-voting board seat and CEO Satya Nadella’s strong collaboration with OpenAI’s CEO Sam Altman. This development indicates both companies are moving into each other’s core business areas, navigating the balance between partnership and competition in the AI sector.

Ken Akamatsu, a Japanese manga artist turned lawmaker, is advocating for AI companies to allocate a portion of their revenue to support cultural projects. He proposes that AI companies set aside approximately 1% of their earnings to help content creators, addressing concerns about the negative impact of generative AI on the creative industry. This initiative, which Akamatsu suggests should be voluntary rather than legally mandated, is aimed at reinvigorating creators who feel demotivated by the unauthorized use of their work in AI training. Despite Japan’s ambition to become the most AI-friendly country, balancing innovation with the protection of creative rights remains a challenge. Akamatsu emphasizes the importance of supporting manga, anime, and gaming industries, highlighting their global cultural significance for Japan. The Japanese government has also expressed caution towards regulating AI, advocating for industry-led solutions to ensure creators benefit from AI advancements.

Meta’s significant investment in AI is proving beneficial as the company’s advertising sales grew by 22% in the second quarter, outpacing rivals like Google. CEO Mark Zuckerberg highlighted AI’s role in enhancing content recommendations and ad effectiveness, which has been pivotal for Meta’s revenue growth. The company’s earnings call underscored AI’s contribution to the revamped advertising platform, particularly after Apple’s iOS privacy changes. Analysts praised Meta’s AI-driven strategy for not only boosting user engagement but also improving ad prices and performance. Meta’s continued investment in AI infrastructure, including the acquisition of Nvidia GPUs, is seen as a commitment to both immediate gains and long-term revenue opportunities, despite the high costs associated with developing generative AI technologies.

🌏 Mark Zuckerberg says Meta’s AI tool is on pace to be the ‘most used’ in the world

Microsoft has officially recognized OpenAI as a competitor in its annual report, a significant shift in their relationship marked by the recent announcement of OpenAI’s SearchGPT, a prototype search engine. Despite Microsoft’s substantial $13 billion investment in OpenAI and their ongoing partnership, including the use of OpenAI’s AI models in Microsoft’s products and services, the two companies are now competing in the AI and search sectors. This development comes amid a year of corporate drama, including the brief ousting and reinstatement of OpenAI CEO Sam Altman and the appointment of Mustafa Suleyman as CEO of a new Microsoft AI unit. Both companies acknowledge the competitive aspect of their partnership while continuing to collaborate.

🧑🏽‍💻 AI Jobs

🛠️ AI tools updates

Midjourney has released an unexpected v6.1 update, significantly enhancing the realism of human depictions. The improvements include more natural-looking skin, better text rendering, and overall image quality enhancements. Notable changes affect how arms, legs, hands, and bodies are portrayed, with upgraded texture mapping providing new skin textures. The update also features a new upscaling model and a –q 2 mode for higher texture detail, resulting in more realistic images. Midjourney v6.1 is now 25% faster and improves coherence, personalization, and small image details, making text in images more accurate when placed within quotations. These updates signal promising advancements ahead of the anticipated v7 release.

💵 Venture Capital updates

Israel has launched the Yozma 2.0 initiative, a $155 million fund designed to support 18 institutional entities in making venture capital investments in local high-tech startups. This program, a collaboration between the Israel Innovation Authority and the Ministry of Finance, aims to address the investment gap in early-stage Israeli startups caused by the global economic slowdown and Israel’s geopolitical challenges. The initiative has been highly successful, with demand exceeding available funds by approximately $474 million, prompting plans for a second phase in the 2025 budget year. This effort mirrors a similar successful program from the 1990s that helped establish Israel’s venture capital industry.

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⭐️ Generative AI image of the day