… financial desperation to delay the popping of the AI bubble?
Yesterday, Sam Altman tweeted this:
In response, The Guardian reported that,
Part of broader trend
OpenAI is not the first Big Tech to allow erotica into their generative AI chatbots’ products. Before that, Elon Musk’s Grok came up with “Ani”, a sultry, flirty female chatbot that can reportedly be ‘persuaded’ to undress partially. There are also lots of other AI chat apps in the app stores that entice young men to have a ‘girlfriend experience’.
So, we can establish that there are some forms of ‘competition’ among generative AI platforms and apps to allow erotica into their ecosystems, with varying levels of guardrails.
But why?
Addiction
Both Grok and ChatGPT are adding features to turn them into addictive products. Erotica is one of the most effective means of causing addiction. Why do they want to make their products so addictive?
Attention economy
Eleven years ago, as I wrote in my book, The Google Trap,
Basic economic theory says that the more abundant something is, the less valuable it becomes. Conversely, the scarcer something is, the more valuable it becomes. Today, information is dirt cheap, while attention is incredibly expensive. So, anyone who knows the secret art of attracting sustained attention of the masses will become rich.
OpenAI and X want to create addictive products to monopolise your attention. Once it has captured your attention, the road to profiting from it is wide open for plunder.
For example, they can sell some form of ‘advertisements’, although it may not be in the form of annoying ads you see on social media and websites. Instead, the ‘advertisements’ will be more surreptitious in nature. It will be something similar to what I wrote in my book,
The ‘advertisements’ will come in the form of ‘help’. Advertisers will have to pay a premium to be first in the line to ‘help’ you.
Alternatively, they can profit from ‘value-added’ subscriptions that you have to pay. Once you are addicted to their products, you will be compelled to pay to sustain your addiction.
In any case, once they have monopolised the attention of their users, there will be too many creative ways to profit from it, at their users’ and society’s expense.
How does it relate to the AI bubble?
AI is in a bubble!
Make no mistake, AI is in a Wall Street financial bubble.
As Alan Kohler reported yesterday on the news,
He explained that AI is responsible for ALL the economic growth in the US. If not for AI, US economic growth will be close to zero!
Absurdity of AI in Wall Street
David Bahsen wrote here,
The circularity in the AI thesis is that the hope and promise of a new technology has understandably led to higher valuations, and those higher valuations have attracted more capital all chasing this hope and promise (this revolution), and then that higher level of capital and subsequent elevated valuations have become the proof of the thing the capital is, itself, supposed to be pursuing: Genuine gains in productivity and profit. There is no need for this new technology to be monetized when it is already monetized by everyone believing it is going to be monetized. And my friends, this is, structurally, one of the most dangerous things I have ever seen in my adult lifetime (besides the fact that I have already seen it a couple of times).
Elsewhere, he wrote,
A company like OpenAI (the maker of ChatGPT) was given a $500 billion valuation in its most recent funding round. They have committed to buying $300 billion of computing power from Oracle. Oracle has committed to buying tens of billions of dollars of chips from Nvidia. As you can imagine, Oracle’s stock went up because OpenAI promised them a big order; Nvidia’s stock went up because Oracle promised them a big order; and how does OpenAI pay for this big order from Oracle?
Oh, with a $100 billion investment from Nvidia, of course.
As this Bloomberg article reported, there are concerns that the AI boom is propped up by interconnected business transactions that are being described as being “circular”.
To put it simply in accounting terms, these “circular” transactions have the outcome of reducing expenses and increasing profit and assets in the balance sheet.
Bubbles are unsustainable
All financial bubbles are unsustainable. They are pop eventually. The AI bubble in America is so enormous that if it pops, it will bring down the economy with it. And the consequences of this will reverberate to the rest of the world to countries that are hitched to the American economy.
What has this got to do with ChatGPT’s erotica?
All financial bubbles are unsustainable because they lack this fundamental: a sustainable business model that can bring in sustainable profit. There is no shortage of analysts doing the numbers that show that hyper-scalers like Microsoft, Google, Amazon, Meta, and Tesla are pouring hundreds of billions into AI capital expenditure with little revenue in return.
Without adequate revenue, there is no profit. Without sustainable profit, the bubble will eventually burst.
So, there is a desperate need to find ways to bring in additional revenue. Hence, the entry of erotica into their products.