Artificial intelligence seems to have its limits. AI chip maker Nvidia is one of the hottest stocks on the market.
AI has become so big that it is scaring politicians who are concerned about the social impact of computers running so much of our lives. OpenAI, the largest generative AI company, is moving away from a nonprofit model. Tesla chairman and technology innovator Elon Musk fears the public market will fund robots that take over the world, and he is suing to block the move.
But on the ground, there is growing anxiety among investors considering funding AI startups. That's not to say that this technology won't be innovative at some point, but rather that much of what's currently being employed in AI is a bit vague.
In other words, the information that AI services spit out is not new or innovative. Instead, it is plagiarized from various sources without adhering to copyright laws.
One of my private equity sources (who manages a multi-billion dollar portfolio) told me that he has pulled out of some AI venture investments due to copyright infringement concerns.
When discussing the AI business model with the company's founders, he concluded that the computer programs used to sift through data points and other information were not properly vetted to comply with the law. Ta. He pointed me to several lawsuits that have been filed. These include lawsuits by artists who claim the AI has created images that are “built to a significant extent on copyrighted works,” according to The Hollywood Reporter.
PE experts attribute this situation to early Internet companies, once popular “peer-to-peer” file-sharing services that allowed users to download songs for free from a variety of artists simply by tapping into their vast database of artists. I likened it to the Napster situation. ' work.
The service was sued for copyright infringement by artists such as rock legends Metallica and rapper Dr. Dre, and was forced to shut down after just a few years of operation under the weight of lawsuits.
“We see the same scenario with AI,” said a PE source. “There is no mention of the source of the information or whether it complies with copyright law.”
So far, the majority of AI services remain in private hands, including the most popular ChatGTP from OpenAI. The aforementioned nonprofit that created the chatbot is approaching a valuation of $100 billion. It has over 100 million users.
Litigation can slow innovation and hurt growth. Meanwhile, the broader AI ecosystem could take a hit in the public markets if plaintiffs' regulatory pressure increases. Stocks of chipmakers like Nvidia, but also Microsoft and, more recently, Amazon, could come under fire if lawsuits begin to overwhelm nascent technologies and slow growth.
“We are already hearing that plaintiffs’ lawyers are planning a slew of lawsuits against AI companies for using copyrighted information at unknown sources,” the PE source added.
