5 developments to watch on the generative AI startup front

Tech’s hot topic: The generative AI startup scene outshines the tech industry slump. Here are the latest moves:

OpenAI: Its latest ChatGPT upgrade is a web browser plug-in that allows the bot to access real-time information.

• Its API integration also allows it to fulfill user requests like flight booking.
• The changes will likely enhance the chatbot’s commercial utility.

Character AI: Founded by former Google researchers, the startup reached unicorn status after a recent $150 million funding round.

• The company’s role-playing chatbots that personify any living or dead, real or imagined people showcases generative AI’s lucrative entertainment potential.

Neo: The startup accelerator partnered with OpenAI and Microsoft to offer free software, Azure cloud access, and advice to AI startups.

• The move underscores leading AI players’ desire to influence the next wave of startups, gain them as clients, and incentivize talent with AI skills to build on existing models.

Rewind: The startup launched its GPT-4-based chatbot that runs in the background on users’ computers to retrieve any data like meetings, tasks, emails, documents, and browser history.

• We’ll likely see more demand for such personalized chatbots, as well as rising concern about privacy implications.

Google: Its cloud division is offering generative AI startups $250,000 in cloud credits, free technical support, and advice.

• It enhances the company’s Build with Google Cloud AI program to assist companies in building, deploying, and using AI models.
• The aim is to compete with Microsoft and Amazon on the cloud front by being the destination cloud provider for all things AI.

Market consolidation on the horizon: A flurry of startups entering the generative AI arena obscures the likely reality that the sector is headed toward a monopoly.

• Even with millions in funding, the high cost of entry into the generative AI market means that the field is far from democratized—a reality that Nvidia’s new pricey chips won’t change.
• Steep costs also mean startups are likely operating at a loss to gain market volume as a strategy for eventual profitability.
• Market capacity is limited, and a few successful survivors will be primed for Big Tech acquisition unless regulators step in.

This article originally appeared in Insider Intelligence's Connectivity & Tech Briefing—a daily recap of top stories reshaping the technology industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.

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