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Top stories today:1) Google to launch new AI features in search in May2) Google CEO: urgency to work and deploy AI keeps him up at night3) Bing is testing text, photo, and video ads in AI chat4) Elon Musk forms X.AI company to compete with OpenAI5) Apple working on 2 follow-up models to Reality Pro headset6) SpaceX attempts 1st launch of Starship today at 9 AM ET

0. Data and calendar

1. Google to launch new AI features in search in May

• Project Magi: essentially integrating AI-generated answers in search when they are relevant, for example, answering questions about software coding.

  • It will have ads: which is essential for Google Search, which had $162B in revenue in 2022 (57% of all Alphabet's revenue).

  • U.S. launch in May: just for 1M users, which would then expand to 30M by the end of the year.

• Samsung might not renew its $3B/year deal with Google, to have it as the default engine. Google executives reacted with "panic." - NYT

Our view: ChatGPT is the 1st real threat to Google Search: while unlikely to succeed in dethroning, it must be taken seriously

• The most likely scenario is still one of Google Search dominance. Twitter does not reflect reality: billions of users worldwide still use and love Google Search, and while ChatGPT is a cool tool, Google today has the best answer for most queries.

• The risk: Google could suffer from a vicious self-fulfilling prophecy: If the world's top developers believe that Google's no longer the leader in search, they might not want to work there, and instead take jobs at OpenAI, Elon's X AI, or Microsoft.

2. Google CEO: urgency to work and deploy AI keeps him up at night

Pichai doesn't think AI kills search cash cow

Our view: Pichai is probably right, as conversational AI is only useful for a small percentage of searches

• For most queries, users want a direct answer (e.g. a map or a weather projection) or links to websites. And Google already provides that.

• The queries where AI chats can be useful are the NORA ones (No One Right Answer):

  • They are only an estimated 10% of total searches, according to Google's own estimates.

  • Google can also insert ads on them, as Bing is doing.

Google showed off its text-to-image to text-to-video capabilities

It's not clear if Google's products are better than competitors, as Google won't release them:

Pichai supports global AI regulation

• "Over time, we would need to figure out global frameworks. We would need that [AI treaties] -- that's my prediction over time."

• In related news, the EU is drafting the AI Act, to give regulators the power to govern AI rules. - WSJ

Check out the full 60 minutes interview below

3. Bing is testing text, photo, and video ads in their AI chatbot

• Text ads already exist in Bing Ads, but where would photo and video ads even fit? - WSJ 

  • Previously, Microsoft said they'd share revenue: "We’re also exploring placing ads in the chat experience to share the ad revenue with partners whose content contributed to the chat response."

Our view: This is another threat to CTR and Google's ad revenue

• We expect a lower clickthrough rate (CTR) compared to traditional search. CTR in AI chats should already be lower than in a 10-blue-links search, and the user having to click on "Ad" makes it even worse.

• Long-term, this could threaten search revenue, which would hit Google harder than Microsoft.

4. Elon Musk forms X.AI company to compete with OpenAI

It was legally incorporated in Nevada on March 9:

Elon and his family office director, Jared Birchall, are officers, and the company has 100M shares

Read more: FT, WSJ.

Our view: Elon will attract top developers, but is likely years behind OpenAI

• Unlike Google, who is losing its brand strength, Elon is currently worshipped in Silicon Valley. We expect him to be able to attract many of the world's top AI engineers, currently working at OpenAI, Deepmind, Google, Microsoft, etc. His problem is that he is very late to the party.

  • For example: Anthropic, who was founded in 2021 by former OpenAI employees, is likely 6-12 months behind OpenAI, given their model Claude is comparable to GPT-3.5 (the first ChatGPT).

• Will LLMs be winner-takes-all or competitive? The thesis on the former is that GPT-4 is already a few years ahead of its competitors and will use its Plugins capabilities to build a community of apps around its software, thus establishing a strong moat.

  • The counter-argument is that competitors like X.AI and Anthropic can catch up in a few months and that Plugins might be cross-compatible. We'll have to wait and see

5. Apple working on 2 follow-up models to Reality Pro mixed reality headset expected at WWDC

• "The company is already working on two follow-up models: an updated high-end version that will offer more processing power and a downscale product that should help make the technology more accessible to ordinary consumers." - Bloomberg

Our view: AR will be the real game-changer, but not yet available

• Light AR glasses are something we see the whole world using, as potentially an iPhone replacer/augmenter -- but that might take decades, as AR technology is still incipient and very heavy. Meta reportedly expects to have their first AR glasses in 2027, and Apple will probably be ready at the same time.

6. SpaceX attempts 1st launch of Starship, today at 9 AM ET

• Starship is SpaceX's massive rocket, which the company hopes will take humans to Mars someday.

• Elon is cautious: "We’re going to be pretty careful about this launch. If it does go wrong, it’s a lot to go wrong," he said in a Twitter Space. - WSJ

• Follow it live here: Youtube

7. GPT Plugin hackathon in San Francisco attracts 60 teams

8. Other headlines

Tech

• Sega to acquire Angry Birds maker Rovio for $776M.

• Apple to open Mumbai and Delhi retail stores this week.

• Chrome emergency update 112.0.5615.121 fixes 1st zero-day exploit of 2023.

• Twitter: high API costs make some services shut down.

• OpenAI's red team: 50-person team earning $100/hour to make GPT-4 safer.

Biotech

• NewLimit, Brian Armstrong's longevity startup, provides a video update.

• Keytruda performs even better when coupled with Moderna mRNA vaccine.

• Smart Immune gets $5M from Gates Foundation for experimental cancer trial.

Business

• Yellen: credit crunch could be a substitute for further hikes.

• $200B committed to semiconductor and clean tech investments since IRA passed.

• Saudis to sell 4% of Aramco, worth $78B; ownership will go to 90.18%.

• Merck to acquire Prometheus Biosciences for $10.8B.

• Poland and Hungary defy EU and halt Ukrainian imports of grain.

• America's smallest bank: a profile of the $3M asset Indiana bank.

Crypto

• House members release new draft of stablecoin bill.

• Ethereum net withdrawals total <1M; 17.3M ETH still staked.

• Shaquille O’Neal served in FTX class action after 3-month chase.

U.S. politics

• Greenwald: mainstream media cares more about leaker than leak's content.

• Lindsey Graham attacks defenders of leaker Jack Teixeira.

• McCarthy to propose cuts to food stamps program as part of debt deal.

• Dominion trial start delayed to Tue, as settlement talks are set for today.

• DeSantis ads continue to be super weak on Trump.

• San Francisco killer planned the attacks, say prosecutors.

World

• Taiwan highly vulnerable to Chinese air attack, U.S. believes: leaked docs.

• Russian operators boasted that bots were only detected 1% of the time: leaked docs.

• Pro-Russia Telegram organizer, Donbass Devushka, is actually an American.

• Saudis seeking to renew diplomatic ties with Hamas, another blow to U.S.-Israel.

• Chinese are now also crossing the U.S. southern border, searching for better lives.

• Taliban increasing tax collection efforts, after GDP fell 21% in 2021.

9. Interesting tweets, memes, and images

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