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Generative AI Applications

Generative AI Applications

Generative AI tracker: Product updates abound, amidst intensifying regulatory challenges

Key takeaways

  • Several regulatory challenges emerged in Generative AI during early 2023, with OpenAI’s alleged violations of the EU’s GDPR regulations presenting the most significant hurdle during the quarter. In the wake of mounting copyright lawsuits, privacy concerns, disinformation campaigns, and other risks of misuse, the EU and the US are actively pursuing comprehensive AI legislation. In May 2023, the CEOs of Google, Microsoft, OpenAI, and Anthropic visited Biden administration officials to discuss issues around AI safety.
  • There were ten product updates during the quarter, with three disruptors launching consecutive updates during YTD 2023, including OpenAI, Jasper, and Hour One
  • Of the seven partnerships tracked in the quarter, three were collaborations with OpenAI. Disruptors Endel and Runway also partnered with incumbent Amazon for new product development and to leverage tech infrastructure, respectively.
  • There was one notable acquisition by Contents.com, aimed at expanding international reach.
  • Excluding OpenAI’s USD 10 billion funding round in early 2023, ten generative AI companies raised a total of USD 264 million in disclosed funding during Q1 2023, with AI chatbot company Character.ai leading the pack (USD 150 million). Meanwhile, five disruptors raised a total of USD 125.1 million in disclosed funding during Q2 2023 (YTD). 
  • The short- to medium-term outlook for the industry remains positive, given the events and themes involving large AI creators like Google, Microsoft, and OpenAI. The actions of these players will continue to drive product evolution, differentiation, and investor interest in the broader generative AI startup ecosystem. 
  • On the flip side, it is difficult to predict the effect of upcoming AI legislation on innovation. Recent developments suggest that AI legislation will be far-reaching—ranging from how AI systems are trained to how they are used—with the potential for significant geographic variation. Long-term success will hinge upon the ability of Big Tech and startups to address increasingly complex demands for safety and compliance in the development and use of generative AI.

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