Time for a catch-up!

I would like to think that, however unlikely, Microsoft CEO Satya Nadella reads my weekly newsletter. You might ask why, and the answer is simple. For weeks I’ve been talking to friends about the changes happening in the World of AI, and the increasing speed at which those changes are occurring.

This culminated last week in my naming the newsletter “A tectonic shift”. So, I was slightly cuffed when, 5 days later Satya Nadella wrote to his staff stating, “We are in the midst of a tectonic AI platform shift". He used this as a way of explaining a major re-structuring of senior management positions at Microsoft, in order to ensure that Microsoft is able to fully exploit the opportunities AI is presenting.

However, then there was the news the same day from OpenAI, which again followed a pattern of development that I had outlined in last week’s newsletter. What was that?

Well, let’s dive right in on all of the news from last week and find out…

Big Sharks vs. small fish

Everyone thought that the big news of the week would be OpenAI’s anticipated release of Sora 2, the latest version of their video-audio generation system designed to compete with Google’s Veo 3. I have not tried it yet, but from the examples of output already shared via YouTube and other social media, this is another massive step-change in terms of quality, although its ability to copy other content and create new material with it raises considerable challenges in terms of copyright.

Then they also added a new, linked social video app (currently only for iOS users), also called Sora, designed to rival TikTok. This allows users to create and share clips on a TikTok / Instagram Reels-style algorithmic feed that blends AI-generated visuals with real footage.

So yes, those two items would normally have classed as the lead story … but then Sam Altman dropped news that was like an atomic bomb going off. I’ve copied below my LinkedIn post reacting to the news, which provides a summary of the details.

OpenAI just dropped a massive bombshell with the launch of its own AI-powered sales, support, and contract tools, including:

· Inbound Sales Assistant: Answers questions from prospective customers in real time and routes qualified leads to salespeople.

· GTM Assistant: A Slack-based companion that prepares sales calls, pulls customer histories, and answers product questions instantly.

· DocuGPT: Parses contracts into searchable data, flagging unusual terms for finance teams.

· Research and Support Agents: Handle support tickets and improve service quality.

The impact is already being felt in the markets, with the shares of Hubspot, Salesforce, Docusign and Zoominfo all being badly impacted. The key issue will be whether or not OpenAI charges per "seat" or based on actual usage. If it's the former, then expect further carnage in the markets.

Again, I had predicted exactly something like this happening last week, when I said:

The best example of this is OpenAI. Small start-ups were created by the hundreds to provide tools and services that OpenAI couldn’t deliver but people wanted, when ChatGPT 3 was launched, like external memory capacity, scheduling and diary tools, and the like. However, once the most popular tools reached a certain critical mass, OpenAI duplicated the functionality internally and provided it for free as part of their subscription, thus effectively killing the competition in one move.

On this occasion, the “victims” are not small start-ups, but potentially established industry players like Salesforce, whose revenue in 2024 was just under $35 billion. Again, these moves seek to consolidate on market share and are being echoed by all of the main players, as they try to build out their AI ecosystem to offer customers a complete one-stop-shop, where data is the key value.

There were other examples of that this week with Google, who revealed a range of new AI-powered smart devices for the home. These included Nest Cam devices, including “Indoor” and “Outdoor” security cameras and the Nest “Doorbell”. They also announced a Google Home speaker that will be released in 2026. Interestingly, these are all powered by the new Google “Gemini for Home” platform, which is marketed as being there to “understand what’s happening at home” and “what’s important to you” to “make it easier than ever to get things done”. This followed just a day after Amazon had launched it new range of AI Alexa+ smart-home devices.

Then, in another move that puts them into further competition with OpenAI, Microsoft today released its new Copilot Pro subscription, that now forms part of a new Microsoft 365 Premium plan for $19.99 per month.

Not only does this match OpenAI’s ChatGPT Plus subscription costs, but it also comes with access to Office desktop apps for up to six users, each with 1TB of cloud storage, and access to Word, Excel, PowerPoint, OneNote, and Outlook with AI tools embedded. It also includes exclusive features like Copilot Podcasts, Deep Research, Vision, and Actions.

Next, let’s talk about AI infrastructure and energy issues, where OpenAI was again in the news. In a week in which OpenAI was valued at $500 billion, making it the most valuable privately owned company on the planet, they then grabbed even more headline space, when they announced that in partnership with Nvidia they were building a number of massive datacentres. These centres, with $100 billion in funding from Nvidia, will require 10 gigawatts of power, which is more energy than New York uses.

Apart from the much-discussed potential of AI becoming an investment bubble, the other issue that everyone seems to be ignoring is that of current and future energy requirements. Current AI usage is already starting to place strains on the energy grids of many countries, something which is likely to increase in the short to medium term. Without significant investment in power stations or other forms of energy creation, there is an increased risk of power outages, and increased prices for the public, as demand for the limited resources pushes the price of electricity up.

Legislation, policy and other news

California was in the news this week with the Governor signing the Transparency in Frontier Artificial Intelligence Act, making it the first U.S. state to require major AI developers to publicly disclose safety protocols, report serious incidents within 15 days, and protect whistleblowers. New workplace rules also came into force on 1st October, banning discriminatory automated decision systems in employment and requiring bias audits, in a way similar to that envisaged with the EU AI Act. 

In addition, Hollywood was up in arms over the announcement and introduction of “Tilly Norwood”, a digital actress. Not surprisingly actors are complaining, fearful of the risks of being replaced by digital avatars.

Also in the US, the Federal Trade Commission announced it is investigating how companies assess safety when chatbots are positioned as companions, particularly in relation to child and teen users. This seems to be as a result of the recent revelations about Meta’s policies around this topic. However, Meta is clearly not too bothered as they announced this week that will incorporate user interactions with its AI chatbot into ad personalisation, although sensitive-topic conversations will be excluded.

That’s all for now from me at the end of yet another week … so stay informed, stay critical, and wherever possible - stay ahead.

Regards

Tom Carter