This article explores the parallels between the evolution of the internet and AI, highlighting how AI is set to drive massive disruption, much like the internet did over the past two decades. Companies that fail to adapt quickly risk extinction.

History has a way of repeating itself. To glimpse the future, we can often turn to the past. By mapping the internet’s evolution alongside AI’s journey, we uncover valuable insights. Let’s delve into this compelling comparison to explore AI’s potential for disruptive economic impact.

The Beginnings: Laying the Foundations

Both AI and the internet trace their origins to the 1950s. Alan Turing’s 1950 question, “Can machines think?”, and the development of the Turing Test marked the first milestone in artificial intelligence. Meanwhile, the Advanced Research Projects Agency (ARPA), established in 1958, laid the groundwork for ARPANET, the precursor to the modern internet, which debuted in 1969.

For the next two decades, both technologies were in the research phase, with little public-facing impact.

The Internet’s Rapid Evolution

The internet’s development gained momentum in the 1990s. The launch of the Mosaic web browser in 1993 brought the internet to the masses. Three years later, Hotmail became the first “killer app,” driving widespread adoption. This era birthed the desktop internet economy and companies like Amazon, Google, and eBay.

The 2000s saw massive investments in broadband infrastructure, paving the way for the streaming economy. Platforms such as YouTube, Facebook, and Skype emerged. Though the broadband boom led to some bankruptcies, such as Global Crossing, it set the stage for transformative innovation.

In 2007, the iPhone revolutionized the internet again, enabling mobile access and ushering in the era of the mobile internet. This gave rise to the shared economy, spawning disruptive companies like Uber and Airbnb. By the 2010s, advancements in sensors and connectivity fueled the Internet of Things, with companies like Fitbit and Nest leading the charge.

The evolution of the internet has driven massive disruptions and transformed the economy in profound ways. According to a 2021 IAB study, the internet economy grew seven times faster than the overall U.S. economy and accounted for 12% of the nation’s GDP. Between 2008 and 2021, its contribution to the U.S. economy surged from $300 billion to $2.45 trillion—an eightfold increase. However, companies that were slow to adapt either declined or disappeared. Notable examples include Blockbuster, Kodak, Yahoo, Toys “R” Us, RadioShack, Borders, and BlackBerry. Entire product categories also became obsolete, such as Walkman, DVD players, navigation systems, fax machines, and pagers.

AI’s Evolution: Following a Similar Path

AI’s trajectory mirrors the internet’s in many ways. The launch of AWS and NVIDIA’s CUDA platform in 2006 was akin to the debut of web browsers. Cloud computing democratized access to large-scale computing, while CUDA enabled GPUs to handle parallel processing. This ushered in the era of machine learning, with companies like Amazon and Netflix leveraging predictive analytics to enhance product recommendations. By 2011, AI researchers discovered that NVIDIA GPUs could meet the immense processing demands of deep learning. This breakthrough marked the beginning of the deep learning era (2010–2020), enabling applications such as image recognition and natural language processing, which powered innovations like Siri and Tesla’s autonomous driving capabilities.

Until recently, AI largely operated behind the scenes, enhancing existing products. That changed in 2020 with the launch of ChatGPT, a “killer app” comparable to Hotmail. ChatGPT reached 100 million users in just two months, becoming the fastest-growing consumer app in history and heralding the era of generative AI.

The Current Wave: Generative AI and Its Disruption

We are witnessing a surge in data center investments, reminiscent of the broadband infrastructure boom of the early 2000s. Just as those investments fueled innovation and gave rise to transformative businesses, today’s data center expansion is paving the way for a new era of disruption. Venture capital funding for generative AI increased by 200% between 2022 and 2023. While much of this funding is focused on foundational models driven by major tech companies, traditional VCs are channeling investments into startups developing innovative applications, signaling a broadening scope of AI’s potential impact.

A significant shift in AI implementation is already underway, moving from large language models to smaller, specialized models and from enterprise-focused use cases to personal AI assistants. Innovations such as Apple Intelligence, personal AI assistants like Pi, and super apps like SK Telecom’s A are early indicators of this transformation. This transition will drive demand for more powerful mobile devices and substantial investments in edge infrastructure to support localized AI-powered applications. Much like the iPhone revolutionized the mobile internet era, this shift is poised to reshape how AI integrates into everyday life.

Signs of Disruption Are Already Here

Signs of disruption in the AI landscape are already evident. AWS, having missed the initial wave of large language models, is now in catch-up mode, investing up to $8 billion in Anthropic. Google faces mounting challenges to its search dominance from OpenAI, causing sleepless nights for its leadership. Chegg, once a leader in online education, has been rendered nearly obsolete, with its stock plummeting 99% since the launch of ChatGPT. Samsung has fallen behind in the next-generation chip race, losing approximately $126 billion in market value. Finally, Intel, once a superstar of the chip industry that even considered acquiring NVIDIA, has struggled to adapt to the AI chip revolution. It recently laid off 15,000 employees, and its market value now stands at just 8% of NVIDIA’s, making it a potential acquisition target.

Adapt or Vanish: The Relentless Race in the Age of AI

The evolution of AI may have taken longer to gain momentum compared to the internet, but it is now advancing at an unprecedented pace. Companies slow to adapt risk being disrupted or even disappearing altogether. As new players emerge and established ones face existential challenges, the landscape is set for rapid transformation.

As Christopher McDougall once said: “Every morning in Africa, a gazelle wakes up knowing it must outrun the fastest lion to survive. A lion wakes up knowing it must run faster than the slowest gazelle to survive. It doesn’t matter whether you’re the lion or the gazelle—when dawn breaks, you’d better be running.”

The dawn of AI has broken. It’s time to start running.

Sangit Rawlley is a Senior Partner and AI Practice Lead at JLA Advisors (www.jlaadvisors.io), a boutique consulting firm dedicated to empowering businesses with transformative strategies and customized solutions for success. JLA’s AI consulting practice helps clients leverage the power of AI to enhance existing products, unlock new opportunities, and deliver innovative solutions.

Contact us at info@jlaadvisors.io to explore how we can assist with your AI needs.

References:

A Look Back: The Birth of Artificial Intelligence (AI) Research

10 Businesses That Got Killed by the Internet

Obsolete Products that were Groundbreaking

Study finds internet economy grew seven times faster

How Samsung fell behind in the ai boom behind rival

Intel shares freefall as American chipmaking giant careens toward worst day ever

Chegg vs ChatGPT: How an edtech giant lost its business to AI