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Digital Assistants: How Artificial Intelligence Competition is Undermining “Hipster Antitrust” – Part I

· November 9, 2017

There has been a lot of hype among so-called “hipster antitrust” advocates about large Internet companies, with high-profile allegations that Google, Apple, Amazon, Facebook — and yes, even Microsoft — are “monopolies” that should be broken up or regulated as “public utilities.” What these progressive calls miss is that all of these companies are aggressively competing with each other in hardware, software and services. And it is in the field of mostly speech-controlled artificial intelligence (AI) devices, or “digital assistant” services, that this hard-nosed competition is most evident today.

After Apple’s belated June entry (HomePod) into the product category — one still search­ing for a single, unifying descriptor — pioneered by Amazon’s popular Echo device barely two years ago, there has been another flurry of recent developments. Amazon announced an array of new “Alexa” products. Google introduced the Google Assistant, its availability for both Android and iOS digital devices, and the Google Home mini speaker in a direct challenge to the popular Amazon Echo Dot. Third parties like Sonos, Harman-Kardon and Garmin are putting voice assistants into everything from in-car navigation to home audio. And last month, Microsoft entered the space with a voice-controlled speaker dubbed “Invoke” that combines its Cortana voice assistant with the Office productivity franchise and Skype Internet calling.

The uncharted nature of this head-to-head competition among purported monopolists is illuminating for its implications on competition policy. As a prime example, Apple’s voice-enabled speaker is linked with Siri, the company’s erstwhile revo­lution­ary virtual assistant. Despite a substantial first-mover advantage, Siri has not kept pace over rival innovations, from Amazon’s Alexa to Microsoft’s Cortana to Google’s Assistant, Samsung’s Bixbyand Orange and Deutsche Telekom’s Djingo among others (and maybe Facebook’s Messenger M AI-powered assistant). Those very cool Martin Scorsese ads by Apple of 2012 seem quaint in today’s hyper-competitive, voice-controlled assistant space. So “dominance” in a product category is not assured, even for the biggest tech company on the planet when introducing an innovative product.

Digital assistants are a perfect example of how new technologies and innovative business concepts can disrupt established industries and facilitate competitive inflection points which few (except perhaps extremely savvy investors) are able to reliably anticipate. The reality is that hardly anyone can project how technology will actually affect competition and market structure in 5-10 years.

At the 2017 WSJ D.live technology conference, Activate’s Michael Wolf called digital assistants and the broader voice interface revolution “an existential threat to each of the major technology companies.” He could well be right.

Ever since Star Trek’s Scotty first uttered “computer” and the U.S.S. Enterprise’s ship computer woke to do his bidding, technologists have been striving to develop practical, voice-activated assistants to replace the keyboard. At their core, AI technologies promise to solve the cognitive overload problem and improve interaction with files, data and the Internet by allowing hardware and software to become more personalized and offer greater relevance. Yet digital assistants may also represent the cusp of a radical transformation of tech competition that could be far more significant than their principal functionality: the relatively more pedestrian, but none­theless transformative, replacement of mouse and gesture-based interfaces with speech control. A mere five months ago, Business Insider characterized the digital assistant space as an epic battle between only two companies:

Amazon and Google are currently in the early stages on an epic battle to control your home, the effects of which will be felt for years to come…. Both Amazon and Google are racing to bake their virtual assistants into as many devices as possible, as they struggle to gain the upper hand in an epic new frontier for tech companies: the home.

What the accelerating penetration and reach of AI already proves is that its impact will not be limited to these or any small handful of tech companies.

(Part II coming tomorrow.)

Competition

Some, if not all of society’s most useful innovations are the byproduct of competition. In fact, although it may sound counterintuitive, innovation often flourishes when an incumbent is threatened by a new entrant because the threat of losing users to the competition drives product improvement. The Internet and the products and companies it has enabled are no exception; companies need to constantly stay on their toes, as the next startup is ready to knock them down with a better product.