USC experts weigh in on ChatGPT and OpenAI’s meteoric rise – Daily Trojan Online

OpenAI is facing a stern reality check as legal and ethical quandaries loom.
The release of ChatGPT in late November 2022 marked a pivotal moment in the tech industry, setting the stage for a new era of technological advancements with a promising language processing artificial intelligence software that generates human-like text based on prompts. The application’s meteoric rise to 100 million users just two months after its launch was unprecedented at the time of its release, surpassing TikTok’s nine-month record and leaving competitors in a frenzied race to catch up. 
The surge in user adoption underscored the market dominance of OpenAI — the company that developed ChatGPT —  but this advantage may be fleeting. Amid an evolving landscape, educational institutions are all eyes and ears, aware that the rippling effects of this digital saga could significantly impact their operations.

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OpenAI’s transition to a business-to-business model in August only broadened its horizons. Businesses big and small are now recalibrating their strategies to integrate artificial intelligence. Adam Russell, director of the AI division at USC’s Information Sciences Institute, said large corporations are thinking they can no longer afford to ignore the explosion of AI technology. 
“If you’re a small business, you might see AI as a way of disrupting competition,” Russell said. “If you’re a big business, you might see it as real trouble.”
From its very inception, OpenAI positioned ChatGPT at the forefront of a technological arms race. As a private company that conducts research on machine learning, it initially intended to release its GPT-4 model in early 2023 but quickly pivoted to release a publicly available chatbot, ChatGPT, due to potential competition from rival companies. Rather than waiting to release GPT-4, OpenAI built the chatbot on GPT-3.5, an updated version of its previous model, GPT-3. 
ChatGPT’s capabilities took the market by surprise as demonstrations of its potential flooded news outlets and social media. Russell said the potential of artificial intelligence is best summarized by Yuval Noah Harari in the book, “Sapiens.” 
“This is the first technology that we’ve invented that can essentially learn by itself,” Russell said. 
Now, OpenAI is on track to generate more than $1 billion in annual revenue by September 2024 according to The Information — a stark contrast to the $28 million it reported the previous year. But OpenAI is not alone. Silicon Valley and China’s tech titans are all vying for a slice of the market: Google, Meta, the San Francisco-based startup Anthropic and the Beijing-based multinational technology company Baidu are intensifying their efforts, heightening the competition for AI dominance. 
In September, OpenAI upgraded GPT-4 to access real-time data through web browsing, though this feature is only available to users of its paid subscription tier, Plus, for $20 per month, which was introduced in February 2023. The change from a free to paid model raises ethical questions about putting a paywall behind AI tools that will become increasingly essential across industries, potentially deepening the divide between those who can and cannot afford them.
Nathanael Fast, director of the Neely Center for Ethical Leadership and Decision Making at USC, said it is important to provide access to these resources, especially given OpenAI’s mission of ensuring “artificial intelligence benefits all of humanity.” 
“It’s nice to have GPT-3 as a free tool, but to the degree that the newer ones are better, we have to think about its implications in society,” Fast said. 
On the other hand, Fast said free versions of ChatGPT might adopt the business models of social media sites like Instagram in which “the people are the product,” he said. This idea is also known as the attention economy, where AI models and algorithms compete for user engagement to monetize attention like social media platforms do, often at the expense of privacy and data security. Fast said it’s important for companies involved with AI to be transparent with consumers about how their models are trained and what they do to address these ethical concerns. 
“In the field of medicine, we would never create a powerful drug and then just deploy it out into society and then see how people use it and see if it has any effects,” Fast said. “I think OpenAI does a pretty good job of trying to vet the products ahead of time before they deploy them, but I think it’s very important that they continue to do that and then articulate what they see as some of the important use cases of these things.”

[AI] is … something that’s supposed to be for all of us, but it’s, in some cases, monopolized by the few. It causes us to sort of reflect on our own intelligence, but it’s not really intelligence.

Adam Russell
Director of the AI division at USC’s Information Sciences Institute

ChatGPT has already made waves in creative industries, Fast said. He brought attention to the significant switch from a “producer mindset” to an “editing mindset”; individuals are no longer solely generating original content, but are instead refining and adapting AI-generated outputs. 
Abriana Stewart, a sophomore majoring in arts, technology and the business of innovation, said she experienced this switch in mindset firsthand. In her “Art and Design Studio II” class last semester, AI played an integral role in a project she worked on. Stewart said crafting detailed text prompts to convey and execute her vision felt like “a method of creative direction.” 
“It’s a really quick way to realize ideas,” Stewart said. “Some fashion designers have been training AI to design in their style. It’s essentially like a personal assistant.” 
In this emerging landscape, an employee’s job offer may lie in their skill in prompt engineering and curating the results to meet job-specific demands. This evolution underscores the emergence of a “Creative Direction Economy,” where human-AI synergy takes center stage. 
“[AI] is … a tool, but it’s a partner,” Russell said.”It’s something that’s supposed to be for all of us, but it’s, in some cases, monopolized by the few. It causes us to sort of reflect on our own intelligence, but it’s not really intelligence.”
OpenAI has so far managed to situate itself at the center of these discussions, providing a diverse product portfolio in addition to ChatGPT with offerings that include Codex, a proficient code generator; DALL-E 2, a state-of-the-art image generator; Whisper, an automatic speech recognition system; and CLIP, which merges image recognition and language processing to enhance multimodal learning capabilities. 
More than 80% of Fortune 500 companies have adopted the tools that OpenAI has developed. The company’s distinguishing factor may lie in the consistent evolution of its products through research and strategic partnerships, adapting to the growing needs of both individuals and businesses. 
A study on “Generative AI and Firm Values” by USC and UCLA researchers found that stock market values reflect AI’s ability to either replace human jobs or enhance job productivity, with companies apt for AI use outperforming in the market. Miao Ben Zhang, one of the study’s researchers and an assistant professor of finance and business economics at USC, told Bloomberg that OpenAI is helping drive this trend.
“ChatGPT had a sizable positive effect on the value of firms whose labor forces are most exposed to Generative AI,” Zhang said. 
Microsoft has invested $13 billion into OpenAI since 2019, becoming a significant stakeholder in advancing the company’s capabilities and market presence. In August, OpenAI transitioned to a business-to-business model, offering its products directly to businesses through GPT Enterprise. By initially catering to individual consumers with GPT-3.5 and GPT-4, OpenAI not only generated a significant user base but also created a need in the marketplace for AI solutions in business settings.
Deloitte’s 2023 Global Marketing Trends executive survey shows that chief marketing officers’ top priorities for the next year include “accelerating the move to new digital technologies/platforms, expanding into new markets, and implementing systems and algorithms to create greater customer personalization.” Embracing a business-to-business model may seek to address this and similar needs.
Furthermore, the business-to-business transition offers advantages such as a sustainable revenue model, higher revenue potential and deeper engagements with business clients through customized solutions and value-added services. However, it also presents challenges like ensuring seamless integration into existing business operations. Additionally, data security concerns could deter many businesses from adopting OpenAI’s technology.
Russell said OpenAI also must navigate other unforeseen challenges, including legal hurdles associated with the use of online data to train its models: If OpenAI were to face legal actions for data scraping, a method used to extract information from websites, it could significantly affect its business model by potentially incurring hefty fines. 
“OpenAI has a competitive edge when it comes to branding at the moment,” Russell said, “but [OpenAI CEO] Sam Altman knows that the advantage they enjoy now is not going to be there forever.”     
As OpenAI continues to make its incursion into business, education and countless other spheres, Russell said this journey is both a long time coming, and completely unpredictable.
“This is a result of many, many years of efforts to essentially create machines that can do things at least as human level if not above,” Russell said. “If you think you have a clear vision of the next five to 10 years, I can guarantee you’re wrong.”
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