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Greetings! Could the artificial intelligence business develop like cable TV or cellular, where the real money is made by apps running on top of internet pipes, rather than by the telecom firms that spent billions building those pipes? That would be a big deal for AI. It implies that AI agent developers will end up more profitable than AI model makers, like OpenAI, which are spending billions on AI development costs. And yet this emerged as a possibility from a discussion on The Information’s TITV today involving Winston Weinberg, co-founder of legal AI firm Harvey, and Bret Taylor, a veteran tech executive now running customer service AI startup Sierra, who also happens to be the chair of OpenAI’s board. Taylor wasn’t speaking as a representative of OpenAI but in his capacity as a founder working on agents, we should stress. But in explaining how he thinks the AI agent market will develop, he argued that “agent companies will end up like the software as a service market,” whose players typically enjoy healthy profit margins. In contrast, he said the “frontier and foundation model companies”—the OpenAIs and Anthropics—will “look like the infrastructure as a service market,” (industry jargon for cloud firms) which is “really high-scale revenue [but] margins will always be a question.” (Read the transcript of the interview here). That’s not exactly how things are right now. As we reported today, the growing complexity of the chores agents are designed to do is requiring more computing capacity, which means the big AI model providers are getting more revenue from these agent firms than they have in the past. That’s good for the model providers and bad for the AI app developers. Taylor, though, seemed to think things will evolve over time. He argued that agent firms are tackling previously “unsolvable” problems, slashing the cost of certain functions like customer support, implying they’d have a lot more pricing power over time. It’s way too early to call this race. Taylor obviously has a big incentive to talk up the prospects for his business. And as Weinberg said in the same interview, the AI industry is changing every three months. Even if Taylor is right, OpenAI is still very well positioned. Its ChatGPT is far and away the industry leader, giving the company plenty of room to succeed with its own agent products. On the other hand, in the telecom world, companies like Verizon and Comcast proved more successful when they focused on building pipes rather than apps. Singular focus turns out to be key. Will we see a repeat of that in AI? Google’s public launch of its latest Pixel line of phones was quite the event. In an obvious move to differentiate itself from Apple, Google hired late-night talk-show host Jimmy Fallon to emcee the event—instead of a Google executive such as hardware chief Rick Osterloh. Fallon—who spoke before a studio audience, complete with an “applause” sign to ensure attendees knew when to clap—at one point even played the role of a TV shopping host, holding up different devices as a Google marketing executive talked each one up. The event was mostly a parade of personalities, including podcaster Alex Cooper, singer Nick Jonas and F1 racing star Lando Norris. Most of it was cringey, with the exception of a bit involving basketball star Steph Curry, which was genuinely funny. It’s great that Google got so many stars in on the act. But the Pixel is a niche device—a very good one, to be sure—and this event isn’t likely to change that. • Meta Platforms misled advertisers about ad performance and may have evaded Apple’s privacy restrictions, according to a complaint filed in a U.K. court by a former Meta employee and reported on by Adweek. • JPMorgan Chase and Japanese lender MUFG are in talks to underwrite a $22 billion debt financing for a 1,200-acre data center complex Vantage Data Centers is developing, the Financial Times reported. • China is considering approving yuan-backed stablecoins for the first time to boost the usage and influence of its currency globally, Reuters reported. Introducing: Applied AI. This new newsletter explores how businesses and leaders are using AI to innovate, improve efficiency, and foster collaboration. Stay ahead with insights and stories on the transformative power of AI. Sign up here. | 
