Yahoo Finance’s Dan Howley joins the Live show to break down ChatGPT, where it came from, its functions, and its risks.

Video Transcript

BRAD SMITH: Rise of the robots. Microsoft is betting big on AI with its multibillion dollar investment in ChatGPT. But what is it? Yahoo Finance's Dan Howley joins us now for a breakdown. All right, hit us with the vibes of ChatGPT, Dan.

DAN HOWLEY: The vibes, indeed. So ChatGPT is an AI-powered chatbot. Basically, it provides you with human-sounding answers to different queries. And you can actually ask it a number of different types of queries. I asked it yesterday how to make a meatloaf. It's not going to be as good as my mom's, but it was a decent recipe. Or you can ask it to do things like come up with random stories. I asked it to make up a story about a maniac barber who eats human hair, and he did-- it did just that. It can also answer follow-up questions. So if you ask, what is the Bible, how long is it, it can provide you with some of those answers.

It's actually developed by a company called OpenAI, and it's only one of a number of artificial intelligence initiatives that they have going. It was founded in 2015 by a number of researchers that includes former Stripe CTO Greg Brockman. He currently serves as president. And the current CEO is Sam Altman. He's the former president of Y Combinator. Part of getting that off the ground, though, included a number of investors, including the likes of Elon Musk, Peter Thiel, and AWS. They all committed an initial $1 billion to get this research going.

In 2019, though, Microsoft came in and provided another billion dollar investment. So they had already been in there. They also, at that point, became the exclusive computing partner for OpenAI. So they have that edge in there already, in addition to this new $10 billion investment. Musk, who I mentioned was one of those initial investors, actually stepped away from the company in 2018. He was also a co-chair for the company because he had been critical of the company and the way it had been operating. He doesn't think that it's being open enough, despite their name, OpenAI, and the fact that they're a nonprofit.

So then what are the risks for something like ChatGPT? Well, the software can be inaccurate, and it can provide answers that are wholeheartedly incorrect. You can ask it certain answers, and it will provide them. And they'll just be flat out wrong. And that's just because of the way it's trained. There are people who go in and look at some of these queries to determine whether they're correct or not. And they try to correct it, but there's only so much so many people can do on such a large platform.

The other issue is that ChatGPT was only trained on data from 2021 and before. So if you ask it events that have happened in 2022 or 2023, it's just not going to know that. It's not connected to the web. The information from 2021 and prior was pulled down, and then it was trained on that. So it's not like you can ask it what the weather is going to be or who won the games on Saturday and Sunday in football.

And the other thing is that there's fears that it could start to push people out of jobs that otherwise they would be able to perform without issues. So think things like writing, for instance, or some kinds of secretarial work. There's fears that ChatGPT, if it continues to develop, could simply take over those roles.

And the other issue-- and this is something that Musk had brought up-- was this is initially a nonprofit company. Now it's a profit capped company where they're only allowed to reach a certain level of revenue. And then the rest of that goes into nonprofits. So there's this kind of change in how the company has been run over time that's kind of raising some concerns. But obviously not a big issue for Microsoft with that $10 billion investment.

BRIAN SOZZI: And Dan, you have to think that this ChatGPT will also disrupt Microsoft's own products, right?

DAN HOWLEY: Yeah, so the big thing for Microsoft here is that this could give it an edge over the likes of Google and Amazon, too, as well as Salesforce, frankly. Microsoft competes with Salesforce in the enterprise. If they add capabilities like what ChatGPT is capable of, then it could provide a better overall experience for enterprise customers. As far as Google, it could add the capabilities that you would want in a search engine like Bing. Now, as I said, this is not built for search engines, but the capability to respond to people in a human-like manner, that's something that we could see added to Bing.

Look, Google makes up 90 something of search engine marketplace in the world. I don't know if Bing is going to eclipse that with just one edition, but, you know, it could give them a leg up. And then as far as Amazon goes, if they add these capabilities to Azure, it could make that platform all the more appealing to customers.

Amazon is the number one cloud provider in the world. Microsoft's Azure is number two. If Microsoft can really get the edge here, then it could start to muscle out Amazon. So there are huge benefits to Microsoft with this $10 billion investment. And as I spoke to some analysts yesterday, they basically said, look, they made this $10 billion investment after laying off thousands of people. It shows how important this investment is to them then.

BRIAN SOZZI: Yahoo Finance's Dan Howley with the analysis, appreciate it.