Weekly Reads
Weekly Reads - April 2, 2024

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AI is not coming for your job (yet).

“Machines will steal our jobs” is a common expression during times of rapid technological change. Such anxiety has re-emerged with the creation of large language models like ChatGPT. But a new study from MIT’s Computer Science and Artificial Intelligence Laboratory suggests that AI is unlikely to replace human jobs as quickly as many believe. While there is already evidence that AI is changing labor demand, most predictions about the extent and timeline of automation are vague. According to the study, this is because most reports do not directly consider the economic viability of implementing AI systems. In fact, the study mentions that only ~8% in U.S. non-farm jobs have at least one task that is economically attractive for automation. The reality is that building custom systems is still far too expensive compared to human labor costs for most jobs. Take the example of a small bakery considering automating the quality inspection of ingredients. According to an analysis conducted by the Bureau of Labor Statistics, checking food quality constitutes only around 6% of a baker’s responsibilities. In such a case, automating this process could be quantified as potential labor savings of $14,000 (assuming the baker makes $48,000 in annual salary). Whereas the development of an AI system can cost up to $1,000,000- evidently it would be economically unviable to pursue this venture. Until AI solutions are offered through AI-as-a-service business models and firms can outsource these initiatives, the scale of labor displacement will be in line with what we have historically experienced. Yet even that would require both industry collaboration and policy initiatives for data sharing across companies that for now seem unattainable. In the meantime, if the amount of automation continues to carry on slowly, then labor might be able to adapt as it did during other economic transformations (e.g. moving from agriculture to manufacturing) and the impacts would be leveled.

DOJ vs. maybe I just like my iPhone.

The Department of Justice (DOJ) is suing Apple in an antitrust case, stating that the iPhone maker has a monopoly over the smartphone market in the United States. The DOJ argues that Apple's market dominance allows it to control prices or exclude competition in the market. One of the points the DOJ has surfaced to justify this claim is how nearly 90% of iPhone users in the United States replace their phone with another iPhone. Significantly high retention rates- which according to the DOJ are linked to increased switching costs. But what the DOJ is failing to consider is that maybe iPhone users don’t want to switch. It can be argued that consumers willingly choose iPhones for their integration and quality. When compared to Android users, a study revealed that iPhone users tend to be both more active with their smartphones as well as more confident in their smartphones’ security features. Ironically, there is also sufficient evidence to support that consumers are in fact willing to switch smartphone providers: they switch from Android-based smartphones to iPhone. In 2023 alone, roughly 13% of new iPhone owners were previous Android owners, mostly citing the main reason to switch was user experience. To no surprise- considering Apple has spent a staggering $255 billion in R&D efforts since 2018 to continue delivering leading-edge innovation and superior quality. So maybe the DOJ needs to consider that Apple's success is predicated on remarkable products rather than anticompetitive behavior.