A new survey conducted by the U.S. Census Bureau and reported on by Apolloseems to show that large companies may be tapping the brakes on AI. Large companies (defined as having more than 250 employees) have reduced their AI usage, according to the data (click to expand the Tweet below). The slowdown started in June, when it was at roughly 13.5%, slipping to about 12% at the end of August. Most other lines, representing companies with fewer employees, are also at a decline, with some still increasing.
I know that 1.5% could mean hundreds of businesses, but this still seems like such a nothing burger.
The issue isn’t the percentage, it’s that inverse of growth. Most investors desire growth to see returns on investment for their upfront capital. If growth isn’t occurring, that’s a good sign to read the room and pull your funding.
Similar issues occurred with streaming services. Netflix is still profitable, but because the userbase isn’t growing, investors and the financial world stopped seeing it as a valuable platform to invest in.
The ai companies haven’t even found a viable business model yet, are bleeding money while the user base is shrinking
The AI data centers arnt cheap to cooldown, or power. plus the “customers” are mostly other csuites and ceos anyways.
The lack of business model is what’s freaking me out.
Around 2003 I was talking to a customer about Google going public and saying he should go all in.
“Meh, they’re a great search engine, but I can’t see how they’ll make any money.”
Still remember that conversation, standing in his attic, wiring his new satellite dish. Wonder if he remembers that conversation at well.
What gets me is that even the traditional business models for LLMs are not great. Like translation, grammar checking, etc. Those existed before the boom really started. DeepL has been around for almost a decade and their services are working reasonably well and they’re still not profitable.
Isn’t that the case with a lot of modern tech?
I vaguely recall Spotify and Uber being criticized relying on the “get big first and figure out how to monetize later” model.
(Not defending them, just wondering what’s different about AI.)
Spotify is a music streaming service with subscription fees generating recurring revenue, it would be fine in a world without an investor class obsessed with infinite growth. Uber is to taxis what crypto is to banks, essentially exploiting a gap in regulations to undercut an existing market.
“AI” is a solution desperately looking for a problem to justify all the money and resources being wasted on it.
What are you talking about? ChatGPT, Claude, Gemini, etc. all have “subscription fees generating recurring revenue” and are famously “exploiting a gap in regulations to undercut an existing market.”
Uber took 15 years to become profitable, and Spotify took 18 years.
Again, I’m not defending any of them (they all exploit the people who make their service work), but so far AI seems to be going down the same road.
Spotify provides a real, tangible service. I pay for access to music I get access to music.
What service does an LLM actually provide? They can’t be relied on for accurate information, they can’t reason, the only thing they seem to be able to do is psychologically manipulate their users. That makes money now, but in six months? A year? We’re already seeing usage fall despite some of the wealthiest companies on the planet burning unfathomable amounts of money.
“I pay for access to music I get access to music.” And with ChatGPT, you pay for access to an LLM, and you get access to an LLM.
Just because you personally don’t value that as a service doesn’t inherently invalidate it as a business model, now or in the future.
Netflix lost subscribers in 2011 and 2022, that didn’t kill the company. Uber stock tumbled during the pandemic and again in 2022. In 2023, Wired was writing about how “despite its popularity… [Spotify] has long struggled to turn consistent profits.”
This is a whole wave of companies where the survivors seem financially stable now, but had a long history of being propped up by venture capital and having an unclear path to profitability.
The only thing you’ve successfully shown is different so far is that you don’t think it’s a real service.
I generally agree, but I still don’t see anything that differentiates its trajectory from the Spotifys, Ubers, and Netflixes of the world.
That is more than a 10% loss of that customer base in 2 month.
For any industry that is huge.
But they’re already not making money, losing customers during the supposed growth phase is absolutely devastating. It’s occuring all while AI is being subsidized by massive investments from the likes of microsoft and google, and many more namelesss VCs through OpenAI, anthropic etc.