The Economic Case for Generative AI and Foundation Models

Artificial intelligence has been a staple in computer science since the 1950s. Over the years, it has also made a lot of money for the businesses able to deploy it effectively. However, as we explained in a recent op-ed piece for the Wall Street Journal—which is a good starting point for the more detailed argument we make here—most of those gains have gone to large incumbent vendors (like Google or Meta) rather than to startups. Until very recently—with the advent of generative AI and all that it encompasses—we’ve not seen AI-first companies that seriously threaten the profits of their larger, established peers via direct competition or entirely new behaviors that make old ones obsolete.

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