A smart computer answered all humankind’s burning questions in a 1958 Isaac Asimov story — with a sting in the tale. Tech businesses such as Microsoft, Google and Baidu are now vying to create a similar product.
The chatbots employ artificial intelligence to generate convincingly human language from vast data samples. This promises to sharply narrow the communication gap between humans and machines.
Baidu, China’s online search giant, has announced plans to deploy chatbot Wenxin Yiyan. This follows Google’s decision to launch its own chatbot Bard for public use. Microsoft has riposted that headline-grabbing AI programme ChatGPT will help it disrupt Google’s search monopoly.
Baidu is right to invest in an unstoppable technology. But it will not inevitably be lucrative. The methodologies behind rival chatbots appear similar. If outputs are similar too, chatbots may create little competitive advantage.
Baidu is struggling to hold on to margins, let alone increase them. Growth started slowing a decade ago. Operating margins halved over five years to 10 per cent in the year to September. Local giants Tencent and ByteDance have eaten into core advertising revenue.
Baidu has the advantage of a well-known chatbot that can write poems, compile reports and generate images. It also has two decades of data from running China’s biggest search engine. But the group is weighed down by legacy businesses. Third-quarter revenues grew 2 per cent, but its online marketing sales declined 4 per cent.
The group will have to spend more on AI. Monetising Wenxin Yiyan will be tricky. Baidu will have to charge fees, attract more advertising, or both. AI chips will be another challenge. Nvidia makes the fastest. US export bans mean Baidu cannot buy the most advanced models.
The shares trade at 18 times forward earnings, 50 per cent higher than peers such as Alibaba. Commodity chatbots are one risk to the AI premiums of developers. Another is that accretive machine learning will produce wild-card outcomes. Weary with toil, Asimov’s sentient AI became suicidal.
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