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Griffin on Tech: AI’s true cost, Hamas horror, and the mood for change

Peter Griffin, Editor. 13 October 2023, 12:15 pm

Microsoft is losing money on its popular Github Copilot AI-powered code automation tool, according to a report this week in the Wall Street Journal.\

According to unnamed sources, Microsoft is losing “on average more than US$20 a month per user”, on a product it charges $10 a month for.

That’s because, adds the WSJ, “AI often doesn’t have the economies of scale of standard software because it can require intense new calculations for each query. The more customers use the products, the more expensive it is to cover the infrastructure bills.”

Microsoft may have a vast network of Azure data centres, but it faces a dilemma in trying to make its AI services pay as it builds artificial intelligence into virtually every product and service it sells. The picture may change as new chips optimised for AI - Nvidia is currently the big provider, but the likes of Microsoft and AWS are developing their own hardware - are increasingly installed in data centres, and smaller large language models (LLMs) are utilised for more specific tasks taking the load off infrastructure.

But the difficult cost equation underpinning generative AI explains the hefty US$30 a month free Microsoft floated a few months back for a user to add Copilot features to Microsoft 365. Google is charging the same to add its Duet AI features to its Workspace platform.

AI assistance - for some

So much for the idea of an AI assistant for everyone. Given the high price of access, only certain people in an organisation will be given a licence to use these sorts of tools - and AI companies may struggle to make money from them.

We are also starting to get a handle on the energy consumption of generative AI. A study released this week looking at the projected supply of Nvidia AI chips out to 2027 suggests AI will be consuming 0.5% of global electricity use by then, enough to power a small country like the Netherlands.

We used to hear the same thing about the energy used for bitcoin mining operations. But AI is much more pervasive and transformative. Our country is lucky to have large sources of renewable energy, with more to come online. That’s made us an attractive option for the public cloud vendors to base data centres here. But do we have a good handle on what the energy usage of them will be later in the decade? RNZ’s Phil Pennington has been asking that question and the lack of detailed analysis the Government has done is a tad concerning. 

Still, the promise from the AI companies is that the use of the technology, through enabling automation and efficiency, will help cut emissions across the economy. Dark factories will manufacture products, smart networks will run transport systems, and back office systems will take care of the mundane jobs - posing a question about what to do with displaced workers.

That better be the case, because if AI proves to be a significant additional drain on power at a time when we desperately need to cut greenhouse gas emissions, it will face the same backlash as the bitcoin miners have.

Hamas horror

I was at a birthday party in Havelock North last Saturday when I got a news alert on my phone about the surprise Hamas attacks in southern Israel. Subsequent alerts revealed the growing carnage, the murder of civilians as Hamas terrorists smashed through Israel’s border defences and rampaged through nearby towns. Now Gaza is without power, its buildings being demolished by Israeli missiles, with the threat of a full scale invasion by the Israel Defence Force.

I’ve visited Israel once, in 2015, to check out the tech scene there. It’s an incredible place, its history so rich. I was walking out of Jerusalem’s old town in the blistering heat when Wally Hawa, a Palestinian tour guide beckoned me into his air-conditioned car.

I spent the rest of the day with him as we took me on a meandering tour around the West Bank, out to Jericho and the Dead Sea, and to Bethlehem where Wally pulled some strings for me to jump the sprawling queue and made me kiss the ground where Jesus was born. A lapsed Catholic, I was re-baptised in the Jordan River (Wally insisted!) as several heavily armed Israeli soldiers watched on in amusement.

Wally was happy to talk politics. He seemed resigned to his fate, living a precarious existence in close quarters with Israelis, scoffing at my suggestion that a two-state solution to the Israeli–Palestinian conflict was still possible.

He chuckled heartily at my naivety. “Nothing will change,” he said.

Hamas wants change, but it won’t get the outcome it craves, just more pain and misery for its people. Some sort of deal like the IRA did in Northern Ireland that resulted in the Good Friday Agreement, is not coming to the Middle East any time soon.

A world away, we can be both outraged at the brutal murder of Israeli civilians, while at the same time sympathetic to the plight of the people of Gaza who live in barely tolerable conditions. That rich history underpins the intractable nature of the current conflict.

“Let’s address the elephant in the room,” Jewish tech entrepreneur Ben Kepes wrote this week.

“I firmly believe that Israel’s handling of people in the West Bank and in the Gaza strip has left much to be desired. But none of this changes the very real fact that all around the world there are people chanting “Gas the Jews” and painting swastikas on synagogue walls.

“And the one place where we have the autonomy to determine our future, and not be reliant on being hosted by others, is Israel.”

Fair enough. Israel has fought hard for what it sees as its turangawaewae, its place to stand. Israelis will fight to the death to preserve it. That’s the reality the Hamas political leadership watching on from their offices in Qatar need to accept. A murderous assault on its well-armed neighbour aimed at igniting conflict throughout the region is unlikely to work out well for the Palestinian people.

The mood for change

It looks like we will see a change of Government following the polling booths closing tomorrow. Everyone is nervous about whether a coalition of right-leaning parties will be able to play nicely together for the good of the country.

Zeroing in on our industry, I think National has done a better job of articulating its vision for the tech sector and the digital economy. Labour laid the groundwork for some much-needed, but took too long to deliver it.

If Judith Collins is appointed tech minister in the new cabinet she has the bones of a good plan to run with, in the form of the digital strategy and the work gradually getting underway with the industry transformation plans. I hope she builds on this work, but with an urgency around delivery that was lacking from Labour, distracted as it was for a period by trying to save us all from the virus.


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John Martin 10 November 2023, 1:06 pm

There are some organisations creating new AIU chips to overcome the costs associated with with AI:

I don't personally think it is wise to comment on the current situation between Israel and Hamas, there are many historical issues (which without people actually taking the time to understand these) cause more issues than it solves. Having been in war time situations, myself, sometimes you have to take action directly. Unfortunately there are lots of players involved, and a lot of misinformation at play as well worldwide.

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