Last week, on the heels of DeepMinds breakthrough in using AI to predict protein-folding, came news that the U.K.-based AI company is still costing its parent company Alphabet hundreds of millions of dollars in losses each year.
A tech company losing money is nothing new. The tech industry is replete with examples of companies that burned through investor money long before becoming profitable. But DeepMind is not a normal company seeking to grab a share of a specific market. It is an AI research lab that has had to repurpose itself into a semi-commercial outfit to ensure its survival.
And while its owner, which is also Googles parent company, is currently happy footing the bill for DeepMinds expensive AI research, there is no guarantee that it will continue to do so forever.
According to itsannual report filed with the U.K.s Companies House register, DeepMind has more than doubled its revenue, raking in 266 million in 2019, up from 103 million in 2018. But the companys expenses continue to grow as well, increasing from 568 million in 2018 to 717 million in 2019. The companys overall losses grew from 470 million in 2018 to 477 million in 2019.
Above: DeepMinds AlphaFold project used AI to help advance the complicated challenge of protein-folding
At first glance, this isnt bad news. Compared to previous years, DeepMinds revenue growth is accelerating while its losses are plateauing.
But the report contains a few more significant facts. The document mentions Turnover research and development remuneration from other group undertakings. This means DeepMinds main customer is its owner. Alphabet is paying DeepMind to apply its AI research and talent to Googles services and infrastructure. In the past, Google has used DeepMinds services for tasks such as managing its datacenters power grids and improving its voice assistants AI.
Above: DeepMinds revenue and losses from 2016 to 2019
What this also means is that there isnt yet a market for DeepMinds AI, and if there is, it will only be available through Google.
The document also mentions that the growth of costs mainly relates to a rise in technical infrastructure, staff costs, and other related charges.
This is an important point. DeepMinds technical infrastructure runs mainly on Googles huge cloud services and its special AI processors, the Tensor Processing Unit (TPU). DeepMinds main area of research is deep reinforcement learning, which requires access to very expensive compute resources. The companys projects in 2019 included work on an AI system that played StarCraft 2and another that playedQuake 3, both of which cost millions of dollars in training.
A spokesperson for DeepMind told the media that the costs mentioned in the document also included work on AlphaFold, the companys celebrated protein-folding AI, another very expensive project.
There are no public details to indicate how much Google charges DeepMind for access to its cloud AI services, but Google is most likely renting its TPUs at a discount. This means that without Googles support and backing, the companys expenses would have been much higher.
Staff cost is another important issue. While participation in machine learning courses has increased in the past few years, scientists who can engage in the kind of cutting-edge AI research DeepMind is involved in are very scarce. And by some accounts, top AI talent commands seven-digit salaries.
The growing interest indeep learning and its applicability to commercial settings has created an arms race between tech companies to acquire top AI talent. Most of the industrys top AI scientists and pioneers are working either full- or half-time at large companies like Google, Facebook, Amazon, and Microsoft. The fierce competition for top AI talent has had two consequences. First, as in every other field where supply doesnt meet demand, it has resulted in a steep incline in the salaries of AI scientists. Second, it has driven many AI scientists from academic institutions that cant afford stellar salaries to wealthy tech companies that can. Some scientists continue to stay in academia for the sake of continuing scientific research, but they are too few and far between.
And without the backing of a large tech company like Google, research labs like DeepMind cant afford to hire new researchers for their projects.
So while DeepMind shows signs of slowly turning around its losses, its growth has made it even more dependent on Googles financial resources and large cloud infrastructure.
Above: DeepMind developed an AI system called AlphaStar that can beat the best players at the real-time strategy game StarCraft2
According to DeepMinds annual report, Google Ireland Holdings Unlimited, one of the investment branches of Alphabet, waived the repayment of intercompany loans and all accrued interest amounting to 1.1 billion.
DeepMind has also received written assurances from Google that it will continue to provide adequate financial support to the AI firm for a period of at least 12 months.
For the time being, Google seems to be satisfied with the progress DeepMind has made, which is also reflected in remarks made by Google and Alphabet executives.
In Julys quarterly earnings call with investors and analysts, Alphabet CEO Sundar Pichai said, Im very happy with the pace at which our R&D on AI is progressing. And for me, its important that we are state-of-the-art as a company and we are leading. And to me, Im excited at the pace at which our engineering and R&D teams are working both across Google and DeepMind.
But the corporate world and scientific research move at different paces.
Scientific research is measured in decades. Much of the AI technology used today in commercial applications has been in the making since the 1970s and 1980s. Likewise, a lot of the cutting-edge research and techniques presented at AI conferences today will probably not find their way into the mass market in the coming years. DeepMinds ultimate goal, developing artificial general intelligence(AGI), is by the most optimistic estimates at least decades away.
On the other hand, the patience of shareholders and investors is measured in months and years. Companies that cant turn over a profit in years or at least show hopeful signs of growth fall afoul of investors. DeepMind currently has none of those. It doesnt have measurable growth because its only client is Google itself. And its not clear when if ever any of its technology will be ready for commercialization.
Above: Google CEO Sundar Pichai is satisfied with the pace of AI research and development at DeepMind
And heres that DeepMinds dilemma lies. At heart, it is a research lab that wants to push the limits of science and make sure advances in AI are beneficial to all humans. Its owners goal, however, is to build products that solve specific problems and turn profits. The two goals are diametrically opposed, pulling DeepMind in different directions: maintaining its scientific nature or transforming into a product-making AI company. The company has already had trouble finding a balance between scientific research and product development in the past.
And DeepMind is not alone. OpenAI, DeepMinds implicit rival, has been facing a similar identity crisis, transforming from an AI research lab to a Microsoft-backed for-profit company thatrents its deep learning models.
Therefore, while DeepMind doesnt need to worry about its unprofitable research yet, as it becomes more enmeshed in the corporate dynamics of its owner, it should think deeply about its future and the future of scientific AI research.
Ben Dickson is a software engineer and the founder of TechTalks. He writes about technology, business, and politics. This post was originally published here.
Read more:
DeepMinds big losses, and the questions around running an AI lab - VentureBeat
- Chinese national arrested and charged with stealing AI trade secrets from Google - NPR - March 8th, 2024 [March 8th, 2024]
- President Biden Calls for Ban on AI Voice Impersonations During State of the Union - Variety - March 8th, 2024 [March 8th, 2024]
- Revolutionize Your Business with AWS Generative AI Competency Partners | Amazon Web Services - AWS Blog - March 8th, 2024 [March 8th, 2024]
- Broadcom Expects AI Demand to Help Offset Weakness Elsewhere - Yahoo Finance - March 8th, 2024 [March 8th, 2024]
- Micron Hits Record High With Analysts Calling It an 'Under-Appreciated AI Beneficiary' - Investopedia - March 8th, 2024 [March 8th, 2024]
- The Adams administration quietly hired its first AI czar. Who is he? - City & State New York - March 8th, 2024 [March 8th, 2024]
- AI likely to increase energy use and accelerate climate misinformation report - The Guardian - March 8th, 2024 [March 8th, 2024]
- This Artificial Intelligence (AI) Stock Could Double, and It Is Way Cheaper Than Nvidia - Yahoo Finance - March 8th, 2024 [March 8th, 2024]
- Fake images made to show Trump with Black supporters highlight concerns around AI and elections - The Associated Press - March 8th, 2024 [March 8th, 2024]
- Artificial intelligence and illusions of understanding in scientific research - Nature.com - March 8th, 2024 [March 8th, 2024]
- Analysis | House AI task force leaders take long view on regulating the tools - The Washington Post - March 8th, 2024 [March 8th, 2024]
- Don't Give Your Business Data to AI Companies - Dark Reading - March 8th, 2024 [March 8th, 2024]
- NIST, the lab at the center of Bidens AI safety push, is decaying - The Washington Post - March 8th, 2024 [March 8th, 2024]
- Essay | AI is Coming! Tips for Staying Calm and Carrying On - The Wall Street Journal - March 8th, 2024 [March 8th, 2024]
- AI can be easily used to make fake election photos - report - BBC.com - March 8th, 2024 [March 8th, 2024]
- 5 Artificial Intelligence (AI) Stocks That Could Make You a Millionaire - Yahoo Finance - March 8th, 2024 [March 8th, 2024]
- AI could be an extraordinary force for good. So why do our politicians still not have a plan? - The Guardian - March 8th, 2024 [March 8th, 2024]
- Mapping Disease Trajectories from Birth to Death with AI - Neuroscience News - March 8th, 2024 [March 8th, 2024]
- India plans 10,000-GPU sovereign AI supercomputer - The Register - March 8th, 2024 [March 8th, 2024]
- SAP enhances Datasphere and SAC for AI-driven transformation - CIO - March 8th, 2024 [March 8th, 2024]
- Jim Cramer names companies and sectors poised to rally on the AI wave - CNBC - March 8th, 2024 [March 8th, 2024]
- The job applicants shut out by AI: The interviewer sounded like Siri - The Guardian - March 8th, 2024 [March 8th, 2024]
- Microsoft confirms Surface and Windows AI event for March 21st - The Verge - March 8th, 2024 [March 8th, 2024]
- Adobes new Express app brings Firefly AI tools to iOS and Android - The Verge - March 8th, 2024 [March 8th, 2024]
- A Google AI Watched 30,000 Hours of Video GamesNow It Makes Its Own - Singularity Hub - March 8th, 2024 [March 8th, 2024]
- Palantir CEO Karp on TITAN, AI Warfare Technology - Bloomberg - March 8th, 2024 [March 8th, 2024]
- Elliptic Curve Murmurations Found With AI Take Flight - Quanta Magazine - March 8th, 2024 [March 8th, 2024]
- 5 AI Stocks to Buy in March 2024, According to Analysts - TipRanks.com - TipRanks - March 8th, 2024 [March 8th, 2024]
- Wix's new AI chatbot builds websites in seconds based on prompts - The Verge - March 8th, 2024 [March 8th, 2024]
- Amid record high energy demand, America is running out of electricity - The Washington Post - March 8th, 2024 [March 8th, 2024]
- AI Crypto Tokens in 5 Minutes: What to Know and Where to Start - Inc. - February 26th, 2024 [February 26th, 2024]
- 'The Worlds I See' by AI visionary Fei-Fei Li '99 selected as Princeton Pre-read - Princeton University - February 26th, 2024 [February 26th, 2024]
- AI is having a 1995 moment, analyst says - Business Insider - February 26th, 2024 [February 26th, 2024]
- Vatican research group's book outlines AI's 'brave new world' - National Catholic Reporter - February 26th, 2024 [February 26th, 2024]
- Honor's Magic 6 Pro launches internationally with AI-powered eye tracking on the way - The Verge - February 26th, 2024 [February 26th, 2024]
- Google explains Gemini's embarrassing AI pictures of diverse Nazis - The Verge - February 26th, 2024 [February 26th, 2024]
- Google cut a deal with Reddit for AI training data - The Verge - February 26th, 2024 [February 26th, 2024]
- What's the point of Elon Musk's AI company? - The Verge - February 26th, 2024 [February 26th, 2024]
- AI agents like Rabbit aim to book your vacation and order your Uber - NPR - February 26th, 2024 [February 26th, 2024]
- Announcing Microsofts open automation framework to red team generative AI Systems - Microsoft - February 26th, 2024 [February 26th, 2024]
- After Nvidia's latest blowout, here are 20 AI stocks expected to rise as much as 44% - Yahoo Finance - February 26th, 2024 [February 26th, 2024]
- 1 Exceptional AI Chip Stock Investors Need to Know About in 2024 - The Motley Fool - February 26th, 2024 [February 26th, 2024]
- Nvidia briefly hits $2 trillion valuation as AI frenzy grips Wall Street - Reuters - February 26th, 2024 [February 26th, 2024]
- AI Chatbots Can Guess Your Personal Information From What You ... - WIRED - October 18th, 2023 [October 18th, 2023]
- Harvard IT Launches Pilot of AI Sandbox to Enable Walled-Off Use ... - Harvard Crimson - October 18th, 2023 [October 18th, 2023]
- Advancing policing through AI: Insights from the global law ... - Police News - October 18th, 2023 [October 18th, 2023]
- Hochul announces new SUNY, IBM investments in AI - Olean Times Herald - October 18th, 2023 [October 18th, 2023]
- Nvidia's banking on TensorRT to expand its generative AI dominance - The Verge - October 18th, 2023 [October 18th, 2023]
- AI expands from MRFs to vehicles - Plastics Recycling Update - October 18th, 2023 [October 18th, 2023]
- AI Reads Ancient Scroll Charred by Mount Vesuvius in Tech First - Scientific American - October 18th, 2023 [October 18th, 2023]
- A DEEPer (squared) dive into AI Harvard Gazette - Harvard Gazette - October 18th, 2023 [October 18th, 2023]
- Florida bar weighs whether lawyers using AI need client consent - Reuters - October 18th, 2023 [October 18th, 2023]
- Cognizant and Vianai Systems Announce Strategic Partnership to ... - PR Newswire - October 18th, 2023 [October 18th, 2023]
- How AI could speed up scientific discoveries, from proteins to ... - NPR - October 18th, 2023 [October 18th, 2023]
- AI challenge to deliver better healthcare | Western Australian ... - Government of Western Australia - October 18th, 2023 [October 18th, 2023]
- Henry Kissinger: The Path to AI Arms Control - Foreign Affairs Magazine - October 18th, 2023 [October 18th, 2023]
- Stability AI releases StableStudio in latest push for open-source AI - The Verge - May 18th, 2023 [May 18th, 2023]
- Google CEO Sundar Pichai Predicts That This Profession Will Be ... - The Motley Fool - May 18th, 2023 [May 18th, 2023]
- Frances privacy watchdog eyes protection against data scraping in AI action plan - TechCrunch - May 18th, 2023 [May 18th, 2023]
- Investing in Hippocratic AI - Andreessen Horowitz - May 18th, 2023 [May 18th, 2023]
- As Alphabet flexes its AI prowess, there's a 'new elephant in the room' for Google - MarketWatch - May 18th, 2023 [May 18th, 2023]
- The Boring Future of Generative AI | WIRED - WIRED - May 18th, 2023 [May 18th, 2023]
- OpenAI readies new open-source AI model, The Information reports - Reuters.com - May 18th, 2023 [May 18th, 2023]
- What every CEO should know about generative AI - McKinsey - May 18th, 2023 [May 18th, 2023]
- AI creates images of the 'perfect' man and woman - Sky News - May 18th, 2023 [May 18th, 2023]
- Audit AI search tools now, before they skew research - Nature.com - May 18th, 2023 [May 18th, 2023]
- 3 Reasons C3.ai Stock Could Be Your Golden Ticket to the AI ... - InvestorPlace - May 18th, 2023 [May 18th, 2023]
- Zoom makes a big bet on AI with investment in Anthropic - VentureBeat - May 18th, 2023 [May 18th, 2023]
- AI voice phone scams are on the rise. Here's how to avoid them - USA TODAY - May 18th, 2023 [May 18th, 2023]
- Amazon is building an AI-powered conversational experience for ... - The Verge - May 18th, 2023 [May 18th, 2023]
- AI speculators need to 'differentiate between actual spending and investment' and hype: Strategist - Yahoo Finance - May 18th, 2023 [May 18th, 2023]
- AI Can Be Both Accurate and Transparent - HBR.org Daily - May 18th, 2023 [May 18th, 2023]
- You're Probably Underestimating AI Chatbots | WIRED - WIRED - May 18th, 2023 [May 18th, 2023]
- AI presents political peril for 2024 with threat to mislead voters - The Associated Press - May 18th, 2023 [May 18th, 2023]
- We need AI to help us face the challenges of the future - The Guardian - May 18th, 2023 [May 18th, 2023]
- End Of Googles Dominance? Stock Gets Rare Analyst Downgrade Over AI Fears - Forbes - May 18th, 2023 [May 18th, 2023]
- Watch 44 million atoms simulated using AI and a supercomputer - New Scientist - May 18th, 2023 [May 18th, 2023]
- AI Is The New Electricity: Bank Of America Picks 20 Stocks To Cash In On ChatGPT Hype - Forbes - March 2nd, 2023 [March 2nd, 2023]
- Tech Giants Are Barreling Headfirst Into an AI Arms Race - February 20th, 2023 [February 20th, 2023]
- Bing's AI Is Threatening Users. That's No Laughing Matter - TIME - February 20th, 2023 [February 20th, 2023]