It seems that artificial intelligence has all the limits. AI chip maker Nvidia is one of the hottest stocks on the market.
AI is growing so big that it is sparking fear among politicians worried about the societal effects of having computers run so much of our lives. OpenAI, the largest generative AI company, is moving away from its nonprofit model. Elon Musk, Tesla’s chairman and technology innovator, is suing to block the move because he fears public markets are funding robots to take over the world.
But on the ground, among investors considering financing AI startups, concern is growing. Not that the technology isn’t revolutionary at some point, but much of what passes for AI today is a bit fleeting.
In other words, the information spit out by your AI service is neither new nor revolutionary. Instead, it is ripped from various sources without respecting copyright laws.
One of my private equity sources – who manages a multi-billion dollar portfolio – said he had backed out of making several venture capital investments in AI due to concerns about violations of the copyright.
In discussing the AI business model with the company’s founders, he concluded that the computer programs used to extract data points and other information were not properly vetted for compliance with the law. He pointed out to me several lawsuits that were filed, including one by artists who claimed that AI created images “built to a large extent on copyrighted works,” according to the Hollywood Reporter.
The physical education professional compared the situation to early Internet groups Napster, the once-popular “peer-to-peer” file-sharing service where users could download songs from various artists for free simply by tapping into its library. extensive artist database. ‘ work.
The service was sued by artists, including rock legends Metallica and rapper Dr. Dre, for copyright infringement, and forced to shut down after only a few years of operation, due to the weight disputes.
“I see the same scenario with AI,” said PE’s source. “There is really no reference to where the information comes from or whether it complies with copyright laws.”
So far, the vast majority of AI services, including the most popular – OpenAI’s ChatGPT – remain in private hands. The aforementioned non-profit organization that created the chatbot has a valuation approaching $100 billion. It has over 100 million users.
Lawsuits could hamper growth by slowing innovation. Meanwhile, the broader AI ecosystem could take a hit in the public markets if the plaintiffs’ bar increases the pressure. Shares of chipmakers like Nvidia, but also Microsoft and more recently Amazon, could come under fire if litigation begins to overwhelm the nascent technology and slow growth.
“I’ve already heard that the plaintiffs’ bar is considering tons of lawsuits against AI companies for using copyrighted information without attribution,” PE’s source added.