Welcome to Daily Zaps, your regularly-scheduled dose of AI news ⚡️ 

Here’s what we got for ya today:

• 🤑 The many ways Microsoft makes money on AI

• 📸 Google AI Ask Photos feature

• ✍️ First ever global treaty on AI signed

• 🍓 OpenAI Strawberry and Orion model pricing

Let’s get right into it!

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BIG TECH

The many ways Microsoft makes money on AI

Microsoft is capitalizing on artificial intelligence through its integration of OpenAI’s models into its products, most notably with 365 Copilot, an AI-powered tool that automates tasks in Microsoft 365 applications like Excel, Word, and PowerPoint. Priced at $30 per user per month, 365 Copilot has seen initial adoption by companies like EY and BlackRock, generating potentially hundreds of millions in revenue annually. While some businesses have expressed concerns about its performance with large datasets and complex presentations, Microsoft is working to address these issues and enhance the product’s capabilities. Beyond 365 Copilot, Microsoft’s $13 billion investment in OpenAI has also positioned the company to profit from the cloud computing needed to run OpenAI products like ChatGPT, which operate on Microsoft’s Azure platform, adding another revenue stream.

In addition to leveraging OpenAI’s GPT models, Microsoft is enhancing its profitability by transitioning some 365 Copilot functions to its in-house AI models, which are less costly to run. Despite competition from free alternatives like OpenAI’s ChatGPT and Microsoft’s own web-based Copilot, Microsoft remains optimistic about the long-term value of 365 Copilot. CEO Satya Nadella is closely monitoring its sales and believes that as the product improves, it will become a key driver of growth. With ongoing updates and enhancements, particularly in tools like Excel and PowerPoint, Microsoft is positioning itself to dominate the AI market and significantly expand its revenue from AI-powered productivity tools.

BIG TECH

Google AI Ask Photos feature

Google is rolling out its new AI-powered search feature, "Ask Photos," to select U.S. users, with plans to expand further. First announced at the Google I/O conference, the feature uses the Gemini AI model to allow users to search their photo libraries with complex natural language queries. Unlike the previous search capabilities, which focused on people, places, or objects, Ask Photos can interpret deeper questions based on photo content and metadata.

For example, users can ask for their "best photos from National Parks" or inquire about past events, such as the theme of a child's birthday party. The AI analyzes various factors like lighting and geolocation to deliver results and can assist with practical queries, such as recalling a past meal or organizing trip photos. The feature aims to enhance how users retrieve and interact with their photos.

GLOBAL NEWS

First ever global treaty on AI signed

The U.S., UK, and European Union, along with several other countries, have signed the first legally binding treaty on artificial intelligence, known as the Framework Convention on Artificial Intelligence. This treaty aims to ensure AI systems are developed and used in ways that uphold human rights, democracy, and the rule of law. It outlines key principles for AI, including data protection, legal compliance, and transparency, requiring signatory countries to implement legislative or administrative measures to align with the framework.

While the treaty is considered legally binding, enforcement will primarily rely on monitoring, which may be a relatively weak form of oversight. Despite this, the treaty is seen as a potential model for other countries crafting their own AI regulations, as the U.S., EU, and UK are all working on separate AI-related laws. The treaty will take effect three months after five countries ratify it.

STARTUPS

OpenAI Strawberry and Orion model pricing

OpenAI is considering high-priced subscriptions for its upcoming large language models, such as Strawberry and Orion, with internal discussions suggesting prices as high as $2,000 per month, though this isn't final. These models are expected to offer more advanced reasoning capabilities, requiring more computing power and driving up costs.

OpenAI’s current revenue from $20-per-month ChatGPT subscriptions, while on track to generate $2 billion annually, may not be enough to cover the significant operational costs, particularly for its free tier used by millions. As OpenAI seeks additional investment from partners like Microsoft, Apple, and Nvidia, the pricing of its new models could significantly impact not only its own business but also how competitors like Google and Anthropic price their AI services.