Will Big Tech's AI Needs Solve Energy Issues?

0:00Today on the AI Breakdown, we're talking about the good and the bad of big tech and AI. The AI Breakdown is a daily podcast and video about the most important news and discussions in AI. Go to breakdown.network for more information about our YouTube, Discord, and our newsletter.

0:24Hello friends, it is the weekend and that means it's time for another Long Reads episode of the AI Breakdown. Today we are going to build this off of two different op-eds, both of which are focused on very different topics, but which have an intersection in the role of big tech. The first we're going to read is called The AI Races Generating a Dual Reality, and it's by the FT's John Thornhill. John writes, Two seemingly contradictory stories are told about the impact of artificial intelligence. The first is that the industry will be dominated by a handful of tech giants which boast the data, compute power, and expertise to transform our lives.

0:58These will make the most money. The second is that AI is a wildly disruptive technology that is going to kick over the chessboard on which the current economy is played, enabling nimbler insurgents to invent new games. The reality is, both stories may be simultaneously true. The publication this week of the Artificial Intelligence Index report, a 500-page pulse check on the global industry from Stanford University, provides ammunition for both arguments. But most striking is the current omnipresence of the big US companies, including Google, Meta, and Microsoft, in terms of research, investment, and AI model development.

1:27Private sector companies have certainly captured many of the smartest AI researchers. In 2011, about 41 % of newly minted AI PhD researchers in the US and Canada stayed in academia, with the same proportion entering industry. By 2022, only 20 % remained in academia, with some 70 % joining industry. Those researchers have enabled the US to build 61 of the most notable AI models over the past 20 years, compared with 25 in the EU and the UK combined and 15 in China, according to the report. But the cost of developing those models has skyrocketed. OpenAI spent$78 million on compute power to train its GPT-4 model, while Google spent$191 million on Gemini Ultra, the report estimates.

2:03Last year, private sector AI investment in the US totaled$67.2 billion, significantly higher than the next two biggest countries, China$7.8 billion and the UK$3.8 billion. Some people argue that AI will be the new rail tracks or telecommunication networks of the 21st century economy on which everything else will run. If so, the giant U.S. tech companies may be steadily usurping some of the traditional functions of governments, investment firms, and legislators in building and running the infrastructure themselves while writing and enforcing the rules. Says Russell Wald, deputy director of the Stanford Institute for Human-Centered Artificial Intelligence that produced the report, The main takeaway is that industry dominates.

2:37We need to find a way that the public sector still has a seat at the table. But while the U.S. tech giants might produce the most powerful AI models, they cannot control all the ways in which they are applied. On that score, there are vast opportunities for other countries and smaller companies to compete. One of the most intriguing aspects of the Stanford report is how surveys of public perception show that people in emerging economies appear more enthusiastic about the possibilities of AI than those in the developed West. More than 70 % of Indonesian, Thai, and Mexican respondents thought that AI would be more beneficial than harmful, according to an Ipsos survey last year that compares with just 37 % in the US and France.

3:09A higher proportion of respondents claim to be active daily users of ChatGPT in Pakistan, Kenya, India, and Brazil than in the US or the UK, according to another survey by the Schwartz-Riesman Institute. China has been quick to apply AI to real-world uses, accounting for 61 % of global AI patents, compared with 21 % in the US. It is also accelerating away from the pack when it comes to industrial robots, installing 21 % of the global total. Demography plays a big role in shaping attitudes. About 90 % of the world's youth live outside the developed West and are keen to engage with the digital economy, says Payal Arora, an Indian-born academic and author of the forthcoming book, From Pessimism to Promise.

3:43To many of them, technology looks like opportunity. Aurora told the Mindaroo Center for Technology and Democracy conference in Cambridge in the UK this week,

3:55As others at the conference responded, the dominance of US AI companies risks creating new forms of techno-feudalism or data colonialism, as happened with social media. Emerging economies will be the rule-takers, not rule-makers, in this new world order and further stripped of sovereignty. But some think that only reflects current reality. AI may give them a chance to rewrite the script. Hello, friends. Quick note before we get back to the show. I'm so excited to share that Super Intelligent is now live. Super Intelligent is a platform for fast, fun, and super practical, useful AI learning. We have something like 300 video tutorials adding 30 to 50 each week, covering every topic in AI you can imagine from LLMs to image generators to case studies, use cases, basically everything that tells you how to use AI and what to use it on.

4:42in short, fast, four to seven minute tutorial videos, which are paired with step-by-step instructions that help you actually use these tools as well. It's$20 a month for unlimited access, and I would love to see you there. Check it out at besuper.ai. That's besuper.ai. All right, breakers. Consensus 2024 marks the 10th gathering of the biggest event that's devoted to all sides of the crypto, blockchain, and Web3 ecosystems. Join pioneering thinkers and builders as they delve into the future of DeFi and explore game-changing tech, from AI to ZK proofs and everything in between. The event is three days of jam-packed content, networking, and so much more.

5:20Some of the speakers at the event include Chris Dixon, the founder and managing partner at A16Z Crypto, Sergey Nazarov, the co-founder of Chainlink, Kathy Wood, the CEO of ARK, Hester Peirce, commissioner of course from the USSEC, and Tom Emmer, Republican Majority Whip for the US House of Representatives. Visit consensus2024.coindesk.com to learn more and save 15 % on registration with the code BREAKDOWN. That is 15 % on registration with the code BREAKDOWN. So super interesting little piece here. I agree with John entirely that the difference in optimism around AI between the developed world and emerging markets is hugely notable.

5:56It's something that I think about a lot. And frankly, I'm not exactly sure what combination of reasons produce the situation. How much of it is depressing effects of media in those bigger developed world markets that focus only on the risks and the downsides of AI, versus the more structural fact that one of the big impacts of AI seems to be bringing people's skills up to parity with other people with more experience than them. One of the big impacts of AI could be that international labor markets are better able to compete with their domestic alternatives. If that's the case, that could be both reason for optimism in markets like Indonesia, Thailand, and Mexico, and reason for skepticism or nervousness in developed markets like the US.

6:34My gut tells me it's a little bit less sophisticated than that in general, but I don't know. And I think either way, it's an interesting fact. Now, in terms of how much big tech will dominate, this is a very meaningful question. One of the things that has been surprising, of course, about the rise of AI is the extent to which it has been big tech companies dominating, as opposed to what we've traditionally seen, which is new startups coming in and debuting and premiering new technology while other older companies are slower to compete. There are tons of reasons why it's not exactly playing out like that in AI, with the obvious exception of OpenAI and Anthropic being two of the big leaders.

7:07Part of the reason, though, of course, is just the incredible capital needs of competing in this space. The capital needs are so significant, in fact, that even traditional venture capital has been sidelined because it can't keep up with the need. There are some fairly big implications of this, and I think it's not wrong to ask how there is going to be balance between the increased aggregated power of these big tech companies and every other type of institution and sector. It's why I've thought for a while that one of the unexpected consequences of AI might be an increase in state power, as it feels it needs to claim more power in order to counterbalance these big tech companies.

7:41But another potential solution is the rise of open source. This week, we caught glimpses of the first GPT-4 class open source models in the anticipated forthcoming Llama 3 400B, and it could be that those sort of open source forces put downward power pressure on the other big tech companies. But now let's shift over to another op-ed, again focused on the big tech companies, which is more optimistic about how they might use their power for good. It's by the editorial board at Bloomberg and is called AI is a Humongous Electricity Hog. That's great! They write, Next time you ask ChatGPT for a lasagna recipe, consider how much computing power you're using.

8:15On a typical day, the AI chatbot handles an estimated 195 million queries, consuming enough electricity to supply some 23 ,000 US households. By 2026, booming AI adoption is expected to help drive a near doubling of data centers' global energy use to more than 800 terawatt-hours, the annual carbon emission equivalent of about 80 million gasoline-powered cars. Will this voracious energy appetite undermine efforts to combat climate change? To the contrary, it can and should be harnessed to speed the green transition. It's easy to envision how things could go wrong. In the US, power-hungry AI applications are already adding to strains on electricity grids and pushing utilities to burn more fossil fuels.

8:48In Ireland, a global computing hub, data centers are expected to consume nearly a third of all electricity by 2032. Cue a vignette of people unwittingly boiling the oceans in pursuit of the perfect dog portrait. There's also a more positive scenario. The users and owners of these data centers, including Alphabet, Amazon, Meta, and Microsoft, are among the world's largest companies with ample cash, long strategic horizons, and public commitments to the environment. Who better to drive some of the tens of trillions of dollars in investment required to build clean generation, enhance power grids, and achieve net zero carbon emissions?

9:16To an encouraging extent, it's already happening. Tech companies have long been top buyers of renewable energy and have lately breathed life into technologies such as hydrogen storage and small modular nuclear reactors, ideal for providing the stable power that data centers require. The more they invest, the more they'll help such innovations reach economies of scale, lowering the cost of clean energy for everyone. They might also help solve one of the biggest challenges of renewables. Wind and sun are highly variable, requiring a lot of fossil fuel capacity to fill sometimes extreme gaps between supply and demand.

9:43With the aid of AI, data centers can help a grid meet peak demand by dialing back non-essential operations or shifting work elsewhere, a technique that Google has pioneered. In doing so, they can reduce emissions and increase the whole system's resilience. What then can policymakers do? The best approach by far would be a tax on carbon emissions. This would encourage investment in clean energy, help displace fossil fuel generation, and induce more innovation. Officials should also remove bureaucratic obstacles to building much-needed capacity, especially nuclear. Beyond that, the authorities who approve new data centers should be more selective.

10:10They should require, for example, that owners pay for transmission infrastructure instead of shifting the cost to other consumers, and invest in added clean energy capacity that can supply the grid when needed. Some of these conditions already apply in places like Ireland and Singapore. They should be standard everywhere, particularly for the data centers that governments use. Finally, the public needs better information. Although many companies have pledged to achieve net zero emissions, disclosure standards are lacking. Exactly how much energy data centers consume is hard to say. If they all reported their true energy mix, power efficiency, and capacity to support the grid, they'd illuminate best practices, enable better planning, and ensure accountability.

10:41To be sure, data processing isn't necessarily the biggest challenge of the green transition. By one estimate, it accounted for less than 2 % of global electricity demand as of 2022. Growth forecasts often prove wrong. Technology breakthroughs can change the picture. Yet the need for cleaner energy could hardly be clearer. Even if AI proves to be a bubble, let it be a bubble with benefits. Now, obviously I don't think it's a bubble, but I do think the point that the incredible need for electricity and power of the AI sector is more likely to produce innovations and forces to increase our generative capacity than it is to just suck up and prohibit others from accessing the same electricity.

11:15I think thinking about it like that and entering the policy conversation with that idea in mind, that the demand need can be a source of incredible opportunity, is exactly the right way to think about this sector. Anyways guys, that is going to do it for today's AA Breakdown. Until next time, peace.

11:41Thank you.