An AI arms race is underway between two tech giants. Here's who has an edge.

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Zooming In

A deep-dive into one big theme or news story every week.?

Though I hesitated to call it as such until recently, the rapidly unfolding events of the past week would suggest that we’re squarely in the midst of an AI arms race.

ICYMI: Last Friday, Google invested $300 million into Anthropic on the heels of Microsoft’s (LinkedIn's parent company) recent $10 billion investment into ChatGPT-creator OpenAI. Google quickly followed with an unveiling of its own AI chatbot, Bard, on Monday. Microsoft then made waves when, a day later, it announced ChatGPT’s integration with its search engine Bing.?

Google has had an indisputable stranglehold on search for a long time, but the heralding of AI as the next big frontier in technology has somewhat leveled out the playing field. And the viral popularity of ChatGPT is only adding more heat, with the OpenAI chatbot recently becoming the fastest-growing consumer app in internet history.

“The internet search wars are back,” declared the Financial Times’ Richard Waters, noting that AI has “opened the first new front in the battle for search dominance since Google fended off a concerted challenge from Microsoft’s Bing more than a decade ago.”

And this time around, Google is at a disadvantage, not just because of Microsoft’s first-mover advantage or Bard’s bumpy debut this week, some experts say.

For tech advisor and investor Meghana Dhar, Google fell prey to what is known as the innovator’s dilemma – where it got caught between the need to innovate by disrupting itself and staying the course to keep its stakeholders happy.

“Google had the means and the opportunity to invest more heavily in AI and bring a world-class & world-changing product to market. But… that very product would jeopardize its primary business,” Dhar wrote in this LinkedIn post.

That’s because an AI-optimized search tab would lead users directly to answers they are looking for, versus surfacing multiple results – many of which are sponsored results powering its gigantic advertising business.?

“Had ChatGPT been integrated into Google Search (or Bard built/integrated earlier), all that real estate it sells on the Google domain (and frankly the entire SEO industry)... well, that gets decimated,” she wrote.

In other words, Microsoft is not just threatening Google's search users — it’s also taking aim at its advertisers, as my former colleague Lara O'Reilly reported for Business Insider . And even a small dent in Google’s search advertising business could pay huge dividends for Microsoft, with? Philippe Ockenden calling every 1 point of share gain “a $2 billion revenue opportunity” on a call with analysts on Tuesday.

It’s an exciting time from a product perspective too, wrote Atlassian senior product manager Sushant Koshy, with Microsoft breaching what was long thought of as Google’s insurmountable moat – and attacking multiple products such as Google Search, Chrome and Google Suite in one swoop.

Even Microsoft chairman and CEO Satya Nadella said while unveiling the OpenAI-Bing integration that search was just the beginning – “AI will fundamentally change every software category, starting with the largest category of all: search.”

But not everyone is quick to pick a side just yet. Google is the default search engine across many web and mobile browsers, including Android, iOS and Chrome, as venture capitalist Pramod Gosavi wrote. Another disadvantage for Microsoft is that it does not directly control or build OpenAI’s technology, he added.

Microsoft may have taken “a pole position in the race to lead in this space,” but so did Internet Explorer at one point, before Chrome displaced it, said Maya Mikhailov, founder of machine-learning startup SAVVI AI.

“Time will tell who will emerge as the winner in the Generative AI Battle of the Titans,” she wrote.

Others are hesitant to call it a battle at all. For ad exec Jared Belsky, former CEO of ad agency 360i and founder of Acadia, the AI moves represent a return of healthy competition.

“Google has had little to no real competition for 15 years in search. Digital media history shows that when a leader goes unchallenged for a decade, they are weaker for it,” he wrote. “Yahoo & AOL are fine examples in digital, and maybe Sports Illustrated is a wonderful example in publishing, or Kodak before it in film/cameras. Without real rivals, bad things happen.”

The rapid emergence of such AI technology also raises questions around ethics, especially given the breakneck speed at which Big Tech is developing and employing AI. Google CEO Sundar Pichai himself said that all hands are on deck “to help shape Bard” in an internal note to staff.

“Anyone that launches a revolutionary product had better make sure there are guardrails to ensure that it doesn’t do bad things or spread false information,” wrote tech advisor Andrew Grill.?

And that does not seem to be what's happening as the AI race heats up, wrote former Google researcher Timnit Gebru, founder and executive director at The Distributed AI Research Institute.

“With ZERO regulation the ONLY thing we'll see is more racing to ‘beat’ each other from companies,” she wrote. “You can't do that with cars. You can't just decide to shorten your timelines and race, because there are safety laws you have to follow. That's not the case here.”

To read more about how AI will reshape search, click here. And to read more of what members are saying, scroll down here.?

TechTok?

Catch up on the tech headlines you may have missed this week and what our members are saying about them on LinkedIn.

• Tech companies may not be done with layoffs, and the next target could be middle managers. Meta has embarked on a “flattening” process that involves asking many of its managers to become individual contributors or leave, Bloomberg reported, citing unnamed sources.
• Speaking of layoffs, cuts hit companies including GoDaddy and Microsoft-owned GitHub and GitLab this week. While GitHub’s layoffs will affect 10% of staff, GitLab and GoDaddy are slashing 7% and 8% of their employees, respectively.
• But it’s not all doom and gloom. As tech companies continue to lay off employees at alarmingly high rates, D.C. and New York are taking the tech spotlight from Silicon Valley.?

Movers and Shakers

Here’s keeping tabs on key executives on the move and other big pivots in the tech industry. Please send me personnel moves within emerging tech.

• Longtime Snap Inc. exec Ben Schwerin , currently senior vice president of content and partnerships at the social media company, is joining investment firm Coatue to focus on consumer internet startups.
• General Catalyst managing director Steve Herrod , formerly also the CTO of VMWare, has left the firm to join Juxtapose as a partner. Chris Hidalgo and Erica Anderson , GitHub’s chief financial officer and chief revenue officer, have both left the company. Anderson is joining the productivity app Notion as its CRO and Hidalgo will become CFO at health startup Forward.The Chernin Group’s Matthew Brown has joined VC firm Headline as a VP. The firm has also promoted Taylor Brandt, Jacob Conger and Nicolas Von Blottnitz to VPs.

This Week in AI

A new section where we bring you up-to-speed with the latest advancements from the world of AI.

• The AI craze has sent some stocks soaring by as much as 300%. Insider Business lists more than 74 stocks picked by the sector's leading fund managers.
• The creator of ChatGPT thinks AI should be regulated.
• ‘There is no standard’: A Guardian investigation finds that AI algorithms objectify women’s bodies. H/T to my former professor Hilke Schellmann.

ICYMI

Here are other top stories of the week from beyond LinkedIn in the broader world of tech.

Khosla Ventures — the venture capital firm known for backing Square and GitLab — nabbed the top spot on the latest Founder’s Choice VC Rankings.? Shopify unveiled a range of product updates this week, including a deal with digital-focused freight forwarder Flexport, and plans to expand its logistics services.Layoffs have started to impact the cybersecurity industry too, with Sophos, Okta and Secureworks cutting staff.A person claiming to be behind the recent T-Mobile data breach has come forward to reveal his identity and to criticize T-Mobile’s security.

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