AI models race to commoditization: Here's what to expect

Andrew Ross Sorkin (Anchor) 00:00.190

it's been a tough year this year trying to keep up with all the incremental advances in AI steve kovac joins us now with what to expect in twenty twenty six given how busy and crazy this past year has been steve

Steve Kovach (Business News Correspondent) 00:14.430

yeah andrew and look there's this bubbling trend in the AI model race i've been kind of clocking all year long we talked about that race between these models that you know they do video or image generation some are better at coding than others or writing than others they all

Steve Kovach (Business News Correspondent) 00:27.990

improve though but they all generally do the same thing and what we're really seeing here guys is a race towards the commoditization of these LLM 's and there are plenty of examples of that happening this year i want to use apple and microsoft as sort of case studies here to

Steve Kovach (Business News Correspondent) 00:43.030

show what i'm talking about neither of those companies have a real frontier model like open AI or anthropic so what they're doing instead is investing and partnering in those to make their products happen now for apple of course earlier this spring they failed to launch that new

Steve Kovach (Business News Correspondent) 00:57.150

AI version of siri and they started hinting that they're going to do partnerships with these LLMS instead now tim cook was actually asked this last july on their earnings call if he thought LLM's were becoming commoditized and he gave kind of an interesting answer here

Steve Kovach (Business News Correspondent) 01:12.590

commenting on saying commenting on that would give away apple strategy but later in the year when i met with him i pressed him a little bit more on that and he talked even more about partnering with these other LMS he told me in addition to the current integration that you have

Steve Kovach (Business News Correspondent) 01:27.790

on your iphone now with chat GBT quote our intention is to integrate with more people over time think about that ahead of that big launch next spring now microsoft they've been hosting anthropic models and they are also investing up to five billion dollars in the company they

Steve Kovach (Business News Correspondent) 01:44.190

just announced that last month they're also started using anthropic for some copilot products in addition to open AI now they also struck that new deal with open AI which frees open AI open AI up to work with other cloud providers while microsoft can work with more model makers

Steve Kovach (Business News Correspondent) 02:01.350

i spoke with judson although he's the commercial CEO over at microsoft last month and he told me customers are actually asking for more model options in his products he also said they originally invested in open AI to make that a standard now they're doing the same with

Steve Kovach (Business News Correspondent) 02:17.630

anthropic now let's look ahead to next year what all this can mean and this commoditization and action we're going to have that siri the new version with AI powered by a third party LLM likely google 's gemini although anthropic has been in the conversation and it could be a

Steve Kovach (Business News Correspondent) 02:32.390

future where you just choose your own model within siri and also i'm expecting to see copilot adopt anthropic for more features now that that relationship has tightened up the look it's becoming this sort of ultimate commodity users don't really see what LLM they're using it's

Steve Kovach (Business News Correspondent) 02:48.150

that product layer on top of it that is really going to matter guys so

Andrew Ross Sorkin (Anchor) 02:53.270

here's the question if you do ultimately think that all these LLM 's converge in some way that makes them a commodity what does that ultimately mean towards all the investment that's going into that space not necessarily the privatization of it but the actual underlying LLM

Steve Kovach (Business News Correspondent) 03:09.270

yeah and that's what's interesting i was talking with frank holland about this last hour it's it's we're going to likely see some consolidation like i mean we're already seeing some winners bubble up jim cramer 's talking about this on squawking the street yesterday how it's

Steve Kovach (Business News Correspondent) 03:21.990

really going to come down to anthropic google and open AI and everyone else is going to kind of race for that fourth place i know X AI just got that big deal with the military yesterday but we'll have to see how that forms out but right now it's just going to be people building

Steve Kovach (Business News Correspondent) 03:35.710

their software layers on top of it and trying to productize it right now andrew the best company at making products out of this is open AI but we're starting to see hints that apple and others are going to do it too next year