Tech Giants Look to AI Subscriptions to Fund Costly New Services
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Many popular internet services like Google and Facebook have been free, supported by ads. But generative AI services will often charge subscriptions due to high costs.
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Training large AI models is hugely expensive, requiring thousands of powerful and pricey GPU chips. Companies need revenue to cover costs.
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Ads may not work as well with AI chatbots providing direct answers. Less space for ads compared to traditional search results pages.
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Pressure on big tech companies to keep demonstrating strong growth and profits. Charging for AI services creates new revenue streams.
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Tech company valuations are high compared to other industries. Generating more profit is a way to support share prices if growth slows.