Tech giants struggle to justify huge AI costs | The World | ABC NEWS

0:00 Well, last week Open AI announced it

0:02 was scrapping its video generation app Sora.

0:05 Industry experts say Sora is not able to enjoy sufficient financial returns

0:09 for the vast and expensive amounts

0:11 of computing required to create images and videos.

0:15 And as the war in the Middle East rages

0:17 on, the rising cost of energy is having a huge

0:19 impact on the cost of running the massive data

0:22 centers required for a range of services including artificial intelligence.

0:27 Let's get more on this with Toby Walsh.

0:29 He's the chief scientist at the AI

0:31 Institute at the University of New South Wales.

0:34 Uh Toby, good to have you with us this evening.

0:37 So, um Open AI killed its video platform uh this month

0:40 and despite a licensing deal with Disney and then huge investment.

0:44 So, is AI video you know struggling to make enough money to justify its costs?

0:51 Uh it wasn't.

0:53 They were spending perhaps $15 million or losing $15 million

0:56 a day running the service because people weren't paying enough subscriptions.

1:00 So, Open AI is focusing much more on corporates who can pay more than consumers.

1:05 But it also reflects the fact of course energy costs impacting us all,

1:09 impacting the people running data centers.

1:11 60% of the cost of running a data center is paying for the electricity.

1:15 They're generating they're using lots of energy

1:17 to to run those data centers and the cost

1:19 of energy is going up for them as just as it is for us.

1:22 Yes.

1:22 So, why don't we see other companies follow suit if they're not

1:25 finding sort of these positive benefits from the costs in the long run?

1:30 Well, I mean a lot of what we have, a lot of the AI we have today has been

1:33 offered uh free or at least at much reduced cost, not not the actual cost.

1:38 So, I think you can see a lot of belt tightening happening

1:41 where uh things that we had that were cheap or for free,

1:44 uh we might have to start paying for.

1:46 Yes.

1:47 So, do you know generative AI uh models that so many people are using?

1:51 You see it in your social media feeds

1:53 every few seconds um to generate text and images

1:56 and videos consume significantly more energy than than sort

2:00 of traditional computing methods to to produce these images.

2:04 Uh they certainly do.

2:05 Um just generating a ask ask answering a chat GPT query

2:09 uses 10 to 100 times the energy that asking a Google search.

2:13 And then generating video is again orders of magnitude more.

2:17 Um that's why they were charging $4 for a 5-second clip uh video clip.

2:22 It's uh using lots and lots of energy to make those uh those funny memes.

2:27 It's not clear that those funny memes are worth that amount of money.

2:30 Yeah, so with this, you know, might this force big changes uh by tech companies,

2:36 you know, who who offer consumers almost you know,

2:38 these unlimited possibilities in creating images and videos?

2:42 Would would they have to sort of like formulate, you know,

2:45 um I suppose a subscription service that is uh

2:48 more blanket than what it is currently at the moment?

2:51 Yeah, I think we're going to have to face up

2:53 to the fact that we might start having to pay a bit more

2:55 for AI services that they lured us in as usual by by offering

2:59 them free to begin with, but then as the market settles down,

3:03 we're going to have to start paying uh more

3:05 for those services because it is costing them money.

3:07 And they have to somehow get that money back.

3:09 Yes, and and you mentioned earlier, you know,

3:10 that uh uh these data centers, you know, how much energy that they're using.

3:16 Um are tech companies, you know,

3:17 transparent about that at a time when the world is uh you know,

3:21 feeling the pinch uh from these high energy costs,

3:24 not least because of the war in the Middle East?

3:27 Yeah, we it would be good if there was a bit

3:29 more transparency as to uh what the energy were being used.

3:32 I mean, it all fits in the bigger picture of the the energy transition

3:36 that that we're increasingly electrifying our lives.

3:40 They're using a lot of renewable energies to run data centers.

3:43 Um but equally, maybe that's taking renewables away from where we

3:47 need them to to run our homes and offices and factories.

3:50 Yeah, so what might be the impact of these costs to the industry

3:53 itself and all the industries that do depend on these data centers,

3:58 you know, in in in the medium to longer-term future?

4:01 Well, we've seen remarkable scale of investment,

4:04 billions of dollars being put into data centers

4:06 in the expectation that they were going to make a profit.

4:09 I suspect we might see a bit

4:10 of a cooling in that market realizing that it's going

4:13 to be much harder to to make returns

4:15 if energy costs are going to be more greater,

4:18 if the economy is also going to be slowed

4:19 down by the by the energy crisis and everything else.

4:22 So, I think it's going to the the AI

4:24 boom that we're seeing might be starting to deflate

4:27 a little bit that it won't be rolling out

4:29 as quickly or as as vigorously as we expected.

4:32 Yeah, so is the war in the Middle

4:33 East you believe hastening this this deflation?

4:38 It is and I mean the other thing that's really

4:40 important to work out is not just the energy cost,

4:42 it's also the fact that several data three data centers have been attacked.

4:46 But they're a vital part of the infrastructure and they're now

4:49 being used for the very first time as targets of war.

4:52 So, again, that's putting a chill on people's expectations.

4:56 The the Gulf was hoping to be a major AI data center, a major AI center.

5:01 That's certainly people are reassessing whether

5:04 that's going to be the case because

5:05 the the world is a much more uncertain place than it was six months ago.

5:09 Yeah, I do wonder, you know, there's so much investments that are going

5:12 into these data centers and and I'm wondering,

5:14 you know, what sort of investment in general do they

5:17 have in sort of using renewables to be able to power,

5:21 you know, their their functions there because

5:24 you see so many of them in Australia,

5:26 but many popping up across the Middle East as well.

5:30 Well, many of the tech companies have made

5:32 very good promises about about their their climate credentials,

5:36 about using renewable energies,

5:38 also about the water that's used to cool those data centers.

5:41 But the problem is that they've been expanding at such a rate

5:43 it's not clear that they've been keeping up to those promises.

5:46 We need to really make sure that they do not actually add

5:50 to our carbon footprint by by spending ever more on these data centers.

5:53 So but again, to go back to your question at the start of this report,

5:57 it'd be great to see a bit more

5:58 transparency from them to understand exactly what's going on.

6:02 And Toby, just one more question.

6:03 I mean, one one of the commodities that's threatened

6:06 by the war in the Middle East is helium.

6:08 That's used to make chips for smartphones to be used for AI.

6:12 Why is helium firstly such a critical element here and and how

6:16 vulnerable are all these data center projects in order to possible shortages?

6:23 Well, chip shortages will have a huge great knock-on effect.

6:26 Helium is used in the manufacturing of lithography of them.

6:29 Helium is a byproduct that they get from making natural gas.

6:32 As big significant percentage of the world's helium is extracted in the Gulf.

6:37 And we're discovering that it's not just oil that's going to be impacted

6:40 by by the the Gulf the bottlenecks that are sitting in the Gulf.

6:46 It's many other commodities, helium being one of them, fertilizer being another.

6:50 We're discovering how connected the world is and how

6:53 critical some of those things are going to be

6:55 and that that would be another significant stop on the AI

6:58 boom is if we couldn't have the AI chips anymore.

7:02 Okay, Toby Walsh, really a good to get

7:04 your insights and your thoughts on the program today.

7:06 Thank you so much.

7:08 My pleasure.