The Death Of Consumer AI Is Coming
They can't have their cake and eat it too…
AI is in a really weird place right now. The public’s collective sentiment towards the technology is at an all-time lowand is somehow still going down. Corporations have only just discovered how expensive and useless AI is and are poised to majorly U-turn on their AI rollout plans (read more here). Yet valuations of AI companies are through the roof. For example, OpenAI was only worth $29 billion back in 2023. Since then, its annual revenue has increased by roughly seven times, but it is expected to be valued at over $1 trillion in its coming IPO, or 34 times its 2023 valuation. There is a tension here that is begging to break, and it might soon. You see, over the past few months, people have put actions in motion that could lead to the death of consumer AI.
Okay, that is a bold statement, so I should probably define what I mean by death. I don’t mean the technology will no longer be available or used. I mean that the current vision of consumer AI — where it sits between us and what we want at every conceivable place possible — dies. LLMs, chatbots, and people dabbling with AI will most certainly still exist; that isn’t up for debate. But the consumer AI business model that this entire bubble is partially predicated on will no longer be viable.
If you have been paying attention to the news, you might already know where this is going.
Google recently lost a court case regarding its AI-generated search summaries in Germany. The court ruled that these AI summaries are the company’s own content and are therefore legally liable for any false claims the bot spits out. The implications for Google are immense, which we discuss soon, but this will also seriously impact other AI companies. For example, xAI’s proclivity for producing unconsensual sexualised images or even CSAM could be framed as xAI’s legal liability and not the users’.
Now, Google plans to appeal this ruling, but I don’t rate their chances, as any defence they could make is nonsensical from a copyright point of view. AI labs have been able to get away with stealing vast reams of copyrighted data to train their AI under the guise of ‘fair use’. To qualify the unpaid use of copyrighted material as ‘fair use’, you need to transform the material and make it something different. This is why YouTube film critics can use clips of films without facing a copyright claim, because they are transforming the material into something fresh, rather than just reproducing it. AI labs like Google, OpenAI and Anthropic have claimed that training an AI on copyrighted material counts as transformation. But that, in turn, means that they are the originator of the AI’s output and are therefore liable for whatever it claims. Again, if a film critic YouTuber were slanderous, they would personally be liable for it, rather than the creator of the movie they clipped. So, if Google wants to claim that the AI isn’t transformative and that it simply regurgitates what it finds in its training data, then it will undermine the entire industry’s argument of fair use. And boy, if you think the AI industry’s financial woes are bad now, just wait until they have to pay the people they stole from!
But I can see why Google has appealed, because they have to if they want to continue rolling out AI in the same manner.
