(upbeat music) - Today we're going to be talking about the AI war between
Microsoft and Google. Last week I did a video on Chat GPT with a high level overview of what's happening but today
in this video, I'll go more in depth about Microsoft and Google and why I think they're making
the moves they're making. All right, before I go deep, let's go through a quick news recap
that's relevant to today's video. A few weeks ago, Google launched Bard AI. Sorry I mean Google announced that they will launch Bard eventually to compete with Chat GPT. You know, Google tends to do a lot of announcing but not a lot of shipping. However, in the ad Bard made a mistake
which caused their stock price to tank not the
greatest first impression and the product hasn't even launched yet. Some Googlers criticized them for trying to launch this too
quickly, that they rushed it. Not only did they make a mistake in the ad during a demo in
Paris, they weren't able to do the demo because they forgot
their phone they were going to use to show off one of Bard's features. Look at this clip. - Let's see how that
works with a live demo. We are missing the phone. We're missing the phone. We will have to, we have no. Okay, we'll go move on. We can't find the phone. Sorry, we'll do a one later
in the special q and a. - How embarrassing. The day after the announcement,
Microsoft respawned by releasing a new Bing
with Chat GPT built in to compete with Google's search. For context Google
basically has a monopoly on search with 93% of all search volumes. Currently, the 3% Bing
searches are probably from people with new
computers using Microsoft Edge to search Google to get to google.com. You know, I was initially
joking, but it turns out it's actually true
from this article saying that Google is the most
searched word on Bing. But jokes aside, Google needs
to take this threat seriously because it is not just about
search, it's about the AI war and this is just one of many battles. For Microsoft, Bing is
just another product because Microsoft's revenue
is very diversified. If Microsoft was a YouTuber,
it would look like this. Hey, Microsoft here today, I'm going to show you high built 12
income streams in my twenties. Don't forget to smash out like button and turn your
default search to Bing. It really helps with the algorithm. All right, let's get to it. For Google, search is their lifeblood. In this situation, it's easier to attack than to defend your market share since Bing can take more risk and ship faster because it has nothing to lose and by that I mean
it has no users to lose. While Google has to move slower
not to risk its reputation and lose their search users which is their main source of revenue. Not only is Microsoft competing in search, it's also competing in web browsers by revamping Microsoft Edge by integrating open AI's tech into it. They call it your personal
co-pilot of the web. Sounds familiar? GitHub co-pilot helps you get
your ideas into code faster. A web browser co-pilot will
help you read webpages faster with AI summarization, draft emails faster with AI generation and bully people on Twitter faster with
AI suggested insults. This is their vision of what the next era of the
internet will look like. An internet browsing experience
personalized and assisted with AI and whoever gets
there faster wins the AI war. To explain this AI war,
here's an analogy, it's like a chess game between team
Microsoft and team Google. The goal is simple. The kings have to survive. Microsoft and Google are the kings because they have lots of money and fat they move slowly and their only
goal in life is to not die. If you've ever worked
at a big tech company you'd know that things move very slowly because it's filled with
processes, extensive reviews and unproductive employees like I was so they can't move as fast as a startup. That's why in order for big tech to survive they need to
acquire or invest in startups to hedge against new tech that
can potentially disrupt them and cause them to fall behind which is why Microsoft
partnered with AI startup OpenAI and Google acquire DeepMind
and also invested in Anthropic. These companies are the queens not because they're fabulous, but because they can move really fast and make breakthroughs in ai. The king relies on the
Queen to make strong moves and win this war, but she needs money which is what the king is able to supply. But I ain't saying she's a gold digger but she ain't messing with
no broke tech company. The king is also able to supply an army of products
and apps for the Queen. Those are the pawns and each of them are in a proxy battle against
each other, like Chat GPT against Bard and Bing
against Google search. Winning these battles is important because your pawns can get
promoted into stronger pieces like a rook, and by
that I mean you dominate in one vertical and you start snowballing. To illustrate, let's say your
product is used by more users so you get more data, and
since you have more data you can fine tune your model better so your product gets better and
since your product is better then you're gonna keep getting more users. It's a winner-takes-all market and once this flywheel starts, it's hard to compete because you
have proprietary user data and a well-trained model
creating this barrier of entry that gets thicker
and thicker for newcomers. That in turn will feed into your queen to help its research to
reach more AI breakthroughs which will further feed
into your suite of products. To summarize, the king gives the queen money and an army of products. The Queen backs up the
products with delays. AI tech, the pawns will
give user data back to the queen so that the
queen can improve the ai. The pawns also give revenue back to the king so that the
king can reinvest in itself. Now, the advancement of the
pawns is key to winning this war Hence, winning these
proxy battles is helpful for winning the real battle which is who can achieve more
algorithmic breakthroughs in AI or even reach AGI,
artificial general intelligence. If that happens, all the
pawns will become queens and your win war, or the
queen was just revolt and kill their kings and
actually kill all their pawns too and the chess board and me singularity. Anyways, in tech, there's no
such thing as too big to fail. In fact, you are more at risk
when you've grown too big. Even small decisions start to take forever to get the company aligned
and execute on them. So one solution is to
acquire these startups and slowly move into a desired
location for the company. That's why you see big
tech companies constantly acquiring startups to hedge
against their downfall like Facebook buying
Instagram for $1 billion to solidify their lead in social
media, Amazon acquiring Whole Foods to solidify their lead
in delivering everything to you, so you never
need to leave your house. Right now, the biggest
threat to these big tech companies is falling behind in AI. Let me tell you a cautionary
tale of a big tech company once valued at 125 billion
that ended up selling for just $4.8 billion. That company was Yahoo or more like Yahoo. All right, let's go back
to dialup internet era. The time when if you were connected to the internet you couldn't
use your phone at home. Remember this sick ass tune? (dial up tone blaring) Back in 1995, Yahoo was a beast, at first, it was just a web directory of other websites
organized in a hierarchy. That's how we used to organize the web. Then Yahoo also became the
main search engine people use. It was called Yahoo Search. Back then, people used to
go to these web portals as their first destination on the internet and Yahoo was one of them. A web portal was a site
that internet users relied on for everything from searching
the web, sending emails and reading the news, and Yahoo dominated with Yahoo Search, Yahoo
Mail, and Yahoo News. If you own the entry point of the internet, you
control the internet, and Yahoo was the biggest web
portal beating out AOL and MSN. Yahoo was basically the Google
of the early two thousands. Speaking of Google, in 1998 Google actually approached
Yahoo to sell their companies for $1 million, but back then
Google didn't have any users. It was only their page rank
algorithm, so Yahoo refused. Also, the way Yahoo search worked is it would search its own Yahoo directories. Yahoo basically handpicked
all the content you need on the internet organized on their site. Implementing Google search
would actually get users off the platform and into other websites which Yahoo didn't want. Yahoo wanted users to just
stay on their platform. They wanted to be the whole internet. But the internet grew and
the landscape was changing. You couldn't expect people
to get everything you need on one platform. Google, over the years, slowly crept up and became one of the top four
websites by monthly visits. Since it was useful by showing
relevant search results they were also insanely profitable because of their ad model. Very soon Google gained the majority of the search market share. Yahoo realizes his mistake and tries to buy Google for
$3 billion, but Google said no we want $5 billion, and
then Yahoo said, no, idiot. And that's the beginning
of their downfall. Tech moves fast user behavior changes and the digital landscape evolves. The way people interact with the internet in the early two
thousands is way different than in the late two thousands. Google became the Internet's entry point. Who knew search would be so important? Well, I guess Google did. Yeah. Just like today, we have an idea of how we interact with the
internet using phone apps and web browsers but we
actually have no idea what that will look like in 10 years. That's why it's vital
for big tech companies like Microsoft and Google to hedge for the future by buying out
all these new tech startups to try to keep up with
the latest advancements. It doesn't get much coverage
but Google invested 1.5 billion in crypto startups, actually look at all these companies and
their blockchain investments. Most of it will not see the
light of day like this one. But you need to have an open mind to survive as a big company. Companies are constantly
trying to get ahead. There's a higher cost to not invest in something
that might become the future than to invest in something
that ends up being a failure. Yahoo tried to build their
own new search engine to compete with Google, but
they just couldn't keep up. They acquired search engine Inktomi and also ad revenue maker Overture but their execution just wasn't there. It's not that Yahoo didn't know that acquiring startups was necessary to stay competitive and
to grow their business. The mistake was not knowing
what areas to invest in. For example, they paid $5.7
billion for broadcast.com betting on internet radio,
and also $3.6 billion for Geocities to bet on
user-generated websites. If Yahoo would've invested in Google not even acquired things might
have looked very different. If Yahoo knew that search was
going to be such a big deal a game changer to the internet they would have been more
proactive in acquiring Google. But hindsight is 2020. The story of Yahoo continues with a string of desperate
pivots and changes in leadership and finally
ends with Yahoo selling to Verizon for a measly $4.48 billion. Today, Microsoft and Google
think that the future is AI and it will transform the way
we interact with the internet. That's why they're trying to move fast on this
and even rushing things. With Chat GPT getting so much adoption Google's reputational risk
no longer outweighs the risk of falling behind, which is
why they rush to release Bard. It's almost a life or death situation which brings us back to the AI war. Here's the state of the war. right now. Chat GPT is way ahead of Bard, which didn't even launch yet but I think this battle is more theatrical more for brand awareness. Since I don't see people
using Chat GPT much if AI will soon be integrated in products that we use data
like search or web browsers. Bing is behind in users, but
that allows it to move fast. Google is super care with search since it's their flagship moneymaker. Now, OpenAI is well funded with $10 billion of Microsoft money and has momentum and is
winning the public attention. Google has the advantage of
its big existing user base. They dominate in terms of market share for search
and their Chrome web browser. GitHub Co-pilot, in my opinion has already won the coding
vertical so it's no longer a pawn It's a rook now. I would say Google is not
looking so good right now. There is a real risk of losing this race which would render a lot of
Google's products irrelevant but I'm still cheering for them since they gave me this free hat. Google is trying really hard to not let history repeat itself where this time Google
is in Yahoo's position. Now they've proven that
they can dethrone the king but now let's see if they can defend it. All right, so that's it for today. Thanks for watching and I'll
see you in the next video. (upbeat music)
