Sunday, March 16, 2025

Much of the AI Chip Market Shifting to Inference

The artificial intelligence market changes fast, and not only because new models have been popping up. It seems we already are moving towards inference operations as the driver of much of the chip market, for example. 

Inference might already represent up to 90 percent  of all machine learning costs.

 As AI adoption scales, cloud and data center operations will prioritize inference-driven AI workloads. That will highlight a growing need for specialized hardware optimized for inference tasks, and that arguably is where large end users (Amazon Web Services, Google Cloud, Meta and others) have been working to create homegrown solutions. 

AWS and Google Cloud, for example, have invested heavily in developing their own AI accelerators, specifically designed for inference tasks. 

The AWS Inferentia is purpose-built for AI inference workloads. Google Cloud Tensor Processing Units are specifically designed for AI workloads, including inference. On the other hand, Meta also is developing its own custom chips for model trainingAnd lots of capital is being invested in startups aiming to improve processing efficiency. 

Friday, March 14, 2025

"Fair Use" of Content by AI Models is Another Example of Disruptive New Technology

Humans learn by reading books, watching videos, and experiencing the world, often using copyrighted material like textbooks or movies. This learning is generally not considered copyright infringement, and is known as “fair use,”  as it involves personal absorption rather than copying or distributing. 


“Fair use” principles and law come into play if humans create new works. It is not the ideas and concepts that are protected, only their form of expression. So new music, writing, songs, movies or TV shows might mirror existing works, but cannot “copy” them. 


The issue for AI training is that AI systems, particularly machine learning models, learn by training on large data sets, which may include copyrighted content that is copied. One early court case not directly involving generative AI suggests the systems do not enjoy “fair use” protection.  


Fair use is a legal doctrine under U.S. copyright law that permits limited use of copyrighted material without permission, for purposes such as criticism, comment, news reporting, teaching, scholarship, or research. 


A student reading a textbook or watching a documentary is not typically seen as infringing copyright, as the act of learning is personal and does not involve making physical copies. But that’s where computers and models, with their efficient “memory,” raise issues. 


We might argue that human memory is porous enough that “copies” of content are never made, with the possible exception of those humans with “photographic memory.” Computers, obviously, suffer no similar issues. 


So human learning is a mental process. “Plagarism” is the obvious example of a fair use violation, as it represents a purportedly new creation that really is copying. 


Proponents argue that AI training is transformative, as the model learns patterns to generate new content, not to reproduce the original works. 


Opponents argue that AI-generated content competes with originals. But that does not inherently strike some of us as a copyright violation, “merely” a case of new competition. 



Aspect

Human Learning

AI Training

Method of Access

Reading, listening, observing

Copying data into memory/storage

Copying Involved

No physical copies, mental absorption

Yes, physical copies for processing

Purpose

Personal learning, education

Model training, often commercial

Fair Use Application

Relevant for new creations, e.g., quoting

Debated for training process itself

Market Impact

Minimal, unless new work competes

Potential, if AI output competes with originals

Legal Precedent

Generally accepted, no infringement

Ongoing lawsuits, no clear consensus


Computer efficiency is among the issues, since an AI model can be trained on millions of books in hours, far surpassing human capacity. Since copyright is about commercial product protection, language models therefore raise the issue of market impact. It is not so much that humans or AI models “learn” but that they can create new content that has commercial implications. 


The commercial concern seems to center on the potential increase in content competition, not so much the knowledge ingestion. That is essentially what underlies the concern about huge amounts of AI-created content “drowning out” human authors. 


As often happens, the conflict is between legacy interests and innovators whose new products could disrupt existing economic models. Such conflicts are common when disruptive technologies emerge.


Industry Affected

Disruptive Innovation

Legacy Industry Concerns

Outcome

Music Industry (2000s)

Digital music streaming and MP3 sharing (Napster, Spotify)

Loss of album sales, piracy concerns

Industry shifted to streaming models, with revenue-sharing for artists and labels

Publishing and Journalism

Google Search and News Aggregators

Decline in ad revenue, loss of control over content distribution

Publishers adapted with paywalls, licensing deals 

TV and Film Industry

Online video streaming (Netflix, YouTube)

Cord-cutting reduced traditional TV revenue

Studios launched their own streaming services (Disney+, HBO Max)

Taxis and Transportation

Ride-sharing apps (Uber, Lyft)

Regulation circumvention, lost driver income

Ride-sharing became mainstream; regulations updated over time

Retail (Brick-and-Mortar Stores)

E-commerce (Amazon, Shopify)

Store closures, price undercutting

Traditional retailers shifted online or hybrid models

Finance and Banking

Cryptocurrencies, Fintech (DeFi, PayPal, Square)

Loss of control over transactions, regulatory concerns

Banks embraced fintech partnerships, crypto regulations emerged

Photography and Film

Digital cameras and smartphones

Film sales collapsed, Kodak and Fujifilm disrupted

Kodak filed for bankruptcy; digital photography dominated

Telecom (Landlines and SMS)

VoIP, Messaging apps (Skype, WhatsApp)

Decline in SMS and landline revenue

Telcos adapted by offering data-driven pricing models

AI and Content Creation

Generative AI (ChatGPT, Midjourney)

Copyright concerns, job displacement fears

Legal battles ongoing; potential for licensing frameworks


Fair use of content “scraped” by AI models is another example of a clash of perceived business interests.


Thursday, March 13, 2025

Will AI First-Mover Disadvantage Dethrone ChatGPT?

Most entrepreneurs in new computing markets including generative artificial intelligence prefer to be “first movers,” on the theory that this helps ensure longer-term leadership by creating scale and enhancing network effects. 


Of course, much hinges on the metrics used to estimate market share. Recurring users, habitual and regular users and samplers are all different ways of measuring share. Estimates of routine use might suggest a market with ChatGPT models having 40-percent share.

ModelMarket Share
OpenAI (DALL-E, ChatGPT)40%
Google (Imagen, Bard)25%
Stability AI (Stable Diffusion)15%
Midjourney10%
Other (Adobe, Baidu)10%

If we measure using the "ever used it once, even if you no longer do so" metric, ChatGPT might t end to rank higher. 

So computing giants are spending big to get big. And, right now, most observers would tend to agree that ChatGPT is the market share leader.


But the history of new computing markets actually suggests the opposite: pioneering companies that create new product categories often don't become the eventual market leaders. The "first-mover disadvantage" might help us avoid the mental trap that the early innovators will inevitably lead the market longer term. 


In fact, the pattern is so frequent it might come as a surprise, given the attention paid to early-mover strategy emphasized by venture capitalists, for example. 


Computing Market Pioneers and Ultimate Market Leaders

Product Category

Notable Pioneer(s)

Year

Pioneer's Fate

Ultimate Market Leader

Year

Key Advantage of Later Entrant

Personal Computers

Altair 8800 (MITS)

1975

Company sold in 1977, eventually disappeared

IBM PC/Compatible makers (Dell, HP)

1981+

Open architecture enabling third-party development

PC Operating Systems

CP/M (Digital Research)

1974

Marginalized after failing to secure IBM PC deal

Microsoft Windows

1985+

Secured IBM partnership; better graphical interface

Spreadsheet Software

VisiCalc (Personal Software)

1979

Company sold; product discontinued

Microsoft Excel

1985+

Better features, integration with Office suite

Word Processing

WordStar (MicroPro)

1978

Declined in 1980s, company bankrupted

Microsoft Word

1983+

WYSIWYG interface, better Windows integration

Web Browsers

Mosaic/Netscape Navigator

1993

Lost browser wars, sold to AOL

Google Chrome

2008+

Faster performance, better security features

Search Engines

AltaVista, Yahoo

1995

AltaVista absorbed by Yahoo; Yahoo search declined

Google

1998+

Superior algorithm and minimalist interface

MP3 Players

Diamond Rio PMP300

1998

Limited storage and features; company exited market

Apple iPod

2001+

Larger storage, better design, iTunes integration

Smartphones

IBM Simon, Palm, BlackBerry

1992-2002

Market share collapsed after iPhone introduction

Apple iPhone/Android devices

2007+

Full touchscreen UI, app ecosystem

Social Networks

Friendster, MySpace

2002-2003

User exodus, both eventually failed

Facebook (Meta)

2004+

Better reliability, features, and network effects

E-commerce

CompuServe Mall, Internet Shopping Network

1984/1994

Early initiatives failed to gain traction

Amazon

1995+

Customer-centric approach, broader selection

Tablet Computers

Apple Newton, Microsoft Tablet PC

1993/2001

Newton discontinued; Windows tablets had limited success

Apple iPad

2010+

Mature touchscreen technology, app ecosystem

Streaming Video

RealPlayer (RealNetworks)

1995

Overtaken by competitors, lost market relevance

YouTube, Netflix

2005, 2007+

Better user experience, content libraries

Voice Assistants

IBM Simon, Microsoft SPOT watches

1992/2004

Limited capabilities, poor market reception

Amazon Alexa, Apple Siri

2011, 2014+

Cloud computing advances, better natural language processing

Virtual Reality

Sega VR, Nintendo Virtual Boy

1991/1995

Technical limitations led to commercial failures

Meta Quest, Valve Index

2016+

Superior technology, computing power, content ecosystem

Cloud Storage

Xdrive, MediaMax

2000-2003

Early services closed due to business model issues

Dropbox, Google Drive

2008, 2012+

Better synchronization, freemium business model


That might be the biggest cautionary tale for today’s early generative AI market share story. It is too early to know which firms will eventually emerge as the market leaders.


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