AI Sustainable Advantage?

 One obvious observation always applies for applied IT: when every company has access to the same technology, the long-term competitive advantage is dulled or eliminated. That is not to say that hundreds of billions of dollars worth of  investment in AI will prove useless. 

It is to say that AI will become “table stakes.” Every firm will use it. And so sustainable competitive advantage based on AI and large language models will prove elusive. 

But what remains to be seen is whether one or a few firms will somehow gain such a first-mover lead for a variety of reasons not restricted to technology (network effects, especially) that important medium-term advantages can be sustained. . 

Think of Netflix in video streaming, Amazon in e-commerce, Microsoft in enterprise applications, Apple in phones, Meta in social apps or Google  in search. At least in the medium term, each of those firms has built advantages over competitors, though arguably not entirely because of technology deployment. 

Firm	Market	Network effects	How network effects have helped the firm gain market leadership
Google	Search	The more people use Google Search, the more data Google has to improve its search results. This attracts more users to Google Search, creating a virtuous cycle.	Google is the market leader in search, with over 90% of the global market share.
Meta	Social media	The more people use Meta's social media platforms, the more valuable they become to users. This is because users can connect with more of their friends and family on Meta's platforms than on any other social media platform.	Meta is the market leader in social media, with over 3 billion active users.
NVIDIA	Graphics processing units (GPUs)	The more people use NVIDIA GPUs, the more developers build applications for NVIDIA GPUs. This attracts more users to NVIDIA GPUs, creating a virtuous cycle.	NVIDIA is the market leader in GPUs, with over 80% of the global market share.
Apple	Smartphones	The more people use Apple smartphones, the more valuable they become to users. This is because users can access a wider range of apps and services on Apple smartphones than on any other smartphone platform.	Apple is the market leader in smartphones, with over 20% of the global market share.
Microsoft	Cloud computing	The more people use Microsoft's cloud computing platforms, such as Azure, the more reliable and scalable they become. This attracts more users to Microsoft's cloud computing platforms, creating a virtuous cycle.	Microsoft is the market leader in cloud computing, with over 20% of the global market share.
Netflix	Video streaming	The more people use Netflix, the more data Netflix has to improve its content recommendations. This attracts more users to Netflix, creating a virtuous cycle.	Netflix is the market leader in video streaming, with over 220 million subscribers worldwide.
Amazon	E-commerce	The more people use Amazon to shop, the more selection and lower prices Amazon can offer its customers. This attracts more customers to Amazon, creating a virtuous cycle.	Amazon is the market leader in e-commerce, with over 30% of the global market share.

Many would argue that what mattered was network effects, not technology in a direct sense. Following that playbook, would-be AI leaders will seek to create network effects as rapidly as possible. 

That aside, most early IT adopters who do not gain network effect benefits might gain some temporary advantage over laggards, but the advantage is not sustainable, any more than “using personal computers, spreadsheets, mobile devices, software or search engines” has proven to provide sustainable advantage. 

IT tool	Benefits from using the tool	Accessibility of the tool to other companies	Sustainable advantage?
Customer Relationship Management (CRM) software	Improved customer service, increased sales, and reduced costs	Yes, any company can purchase and use CRM software	No
Cloud computing platform	Scalability, flexibility, and cost savings	Yes, any company can subscribe to a cloud computing platform	No
Enterprise Resource Planning (ERP) system	Integrated business processes, improved efficiency, and reduced costs	Yes, any company can purchase and implement an ERP system	No
Artificial intelligence (AI) software	Increased productivity, improved customer experience, and new product development	Yes, any company can purchase and use AI software	No
Cloud computing	Scalability, agility, cost savings	Can be used to quickly and easily launch new products and services, or to scale existing products and services up or down as needed.	No
Big data analytics	Insights into customer behavior, trends, and market opportunities	Can be used to develop more effective marketing campaigns, improve product development, and optimize operations.	No
Machine learning	Automated decision making, predictive analytics, and personalization	Can be used to improve customer service, reduce costs, and increase sales.	No