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Companies like Microsoft, Salesforce, and Zendesk are racing to shift from AI chatbots to AI agents that integrate more effectively into business operations. Use case鈥擝aca Systems: Industrial equipment manufacturer Baca Systems uses AI agents to improve response times and customer satisfaction.

Our take: ChatGPT may have defined the genAI chatbot revolution, but it鈥檚 late to the AI agent party. OpenAI鈥檚 challenge lies in demonstrating safe and compelling AI agent use cases. Failure to do so risks falling behind in the increasingly lucrative enterprise AI market.

Google鈥檚 Gemini generative AI (genAI) chatbot faced similar public fallout in November for going rogue. In June, Microsoft paused Copilot鈥檚 Recall feature due to privacy concerns. Apple plans to display future alerts in italics while highlighting that these beta features can result in potential errors. Those changes may not be sufficient in the face of continuing backlash.

Google has used 鈥渟ome portion鈥� of YouTube鈥檚 library to train its Gemini chatbot through individual contracts. Both companies are owned by Alphabet. Shrinking pool: AI models may soon face scaling challenges due to the dwindling pool of high-quality data available for training. That could slow down timelines for model improvement in the future.

Retailers stand to benefit from generative AI 鈥渕oving beyond the hype cycle and demonstrating concrete successes,鈥� Deloitte writes, noting that retailers that offered genAI tools like chatbots during the Black Friday weekend had a 15% higher conversion rate than other merchants.

The AP will give Google a 鈥渇eed of real-time information鈥� to improve its Gemini chatbot and keep its outputs up to date. Google didn鈥檛 specify how much the deal is worth, whether it will attribute content to the AP, or if it will provide links back to original articles.

This is likely to be driven by Gen Zers, who are more open to using genAI-based chatbots to find friendship and companionship, according to a recent survey by social network Soul. Tech giants ByteDance, Baidu, and Tencent have all launched AI chatbots to capitalize on this trend.

These bespoke advanced AI systems will offer personalized experiences that feel more like interacting with a knowledgeable brand representative than a standard chatbot. The trend could be encouraged by the 77% of consumers in the US and Europe who say they鈥檙e either very or fairly comfortable with AI being used to make chatbots more helpful, per an Adobe and Econsultancy survey.

Rather than rely on standalone genAI chatbot apps, they integrated AI in photography, messaging, search, and video messaging. Google released new Pixel smartphones featuring Gemini genAI assistant, Call Notes鈥攚hich transcribes phone calls and generates on-device conversation summaries, and an AI weather app.

The move lets Reddit lean into chatbots in a meaningful way, much like other social platforms have in the past year. Snapchat has found a modicum of success with its MyAI chatbot, and Meta AI is firmly entrenched as part of the search interface across Facebook and Instagram.

Nearly 100% of Morgan Stanley鈥檚 advisor teams use AI tools like chatbots so they can focus on more personalized interactions with clients, according to Business Insider. Goldman Sachs is also leveraging chatbots to help non-tech workers use software more effectively and streamline internal processes.

Year of the chatbot: Google鈥檚 Apprentice Bard is among many chatbots we鈥檒l see released by the tech industry this year. Investors are excited, but performance and monetization are market hurdles.

Is ChatGPT coming for Alphabet鈥檚 bottom line? OpenAI鈥檚 publicly available AI chatbot is fascinating internet users, prompting warnings about Google鈥檚 future revenue. But there are barriers to the disruption taking effect.

Chatbots are AGI stepping stones: DeepMind might release a ChatGPT competitor called Sparrow sometime in 2023. Chatbots are part of a much bolder vision to alter society with artificial general intelligence.

A chatbot-induced suicide could get regulators' attention: AI鈥檚 Eliza effect is triggering mental health issues. Companies will struggle to balance entertainment value with safety amid the AI arms race.

Last week, Arc, a web browser from startup The Browser Company, released a new AI-powered feature called pinch-to-summarize, which provides an instant summary of full web pages. That follows Arc鈥檚 release of 鈥淎rc Search,鈥� a mobile app that will search the internet based on a user鈥檚 query and deliver an AI-generated page summarizing the breadth of information it searched. It鈥檚 not the only AI tool targeting search. Perplexity is seeing increased attention for its ability to summarize data sets, including searching in Reddit posts or YouTube videos. This month also saw the rebranding of Google鈥檚 Bard chatbot to Gemini as the company doubles down on AI search.

Meta AI is a chatbot, not a search engine, but it does integrate results from Google and Bing. Although some users have expressed annoyance at the change, its prominent placement in established apps could help promote acceptance of genAI in search.

Chatbots can personalize the purchase journey. Over half (52%) of retailers were considering investing in genAI for a branded virtual shopping assistant as of September 2023, per Nvidia. How ads will factor into conversational search through chatbots is still up in the air. But eventually, chatbots could promote retail media search鈥檚 role in product discovery.

AI-powered chatbots are the next frontier. Meta AI鈥檚 prominent position across Meta鈥檚 platforms will galvanize consumer adoption of the tech, further entrenching social search and, eventually, providing another surface for ads. Social networks have expanded search beyond the lower funnel. Social search is here to stay.

Chatbots from Google and Microsoft spin tall tales about the Super Bowl: Gemini and Copilot gave users wildly inaccurate information about the high-profile event. It鈥檚 an industry pitfall. Read article. Gemini鈥檚 misfire exposes AI risks for Google: A shocking response forces the tech giant to address safety flaws amid rising genAI adoption. Read article.

OpenAI鈥檚 November 2023 launch of GPTs鈥攃ustomizable versions of ChatGPT that can be tailored for specific purposes鈥攎eans retailers without coding skills can build their own chatbot or virtual assistant. Technology firms have also begun innovating in this area:. Dynamic Yield by Mastercard has launched a plug and play, genAI-based chatbot for retailers called Shopping Muse.

As of October, 36% of business professionals worldwide were using chatbots and virtual assistants for customer service, and 47% were considering using them in the future, per The Harvard Business Review. Our take: AI鈥檚 continued evolution beyond chatbots and into critical business tools and AI agents will continue to transform the business landscape.