Would a gen AI-powered Alexa return real profits for Amazon?

“Introducing Amazon Echo,” it read. “Always ready, connected, and fast. Just ask.”

Buried within the subsequent announcement was the introduction of Alexa, too, which quickly captured the minds of consumers young and old on its way to becoming a cultural phenomenon. Coming on the heels of Amazon’s Fire phone flop, the release felt even more astonishing. 

For a period of time in my household, Alexa felt like magic. Sure, we queried it for weather updates and asked it to serve as a timer during cooking. But it was the ability for our young kids to start a post-meal dance party by uttering just a few words that, looking back, my wife and I remember the most fondly. No, the speaker didn’t have the greatest sound. But it was more than passable and the moments it helped create for our family were delightful.

The problem for Amazon, eventually, was that our usage of Alexa never translated into real incremental revenue or profit for the company once the Echo was in our house. We didn’t shop from the company any more than we did before and slowly stopped engaging overall as much as we once did. Over time, Alexa started to sound more desperate, too, offering us suggestions we had no interest in after an answer to our actual query was given. Along the way, Amazon was still spending billions with no real return in sight.

Then, ChatGPT and the generative AI boom happened, and Alexa was caught flat-footed as my colleague Sharon Goldman reported in depth. Now, a gen AI-powered version of Alexa could be announced as early as this month, but it is expected to come with a monthly fee. Yes, Amazon has half a billion Alexa-powered devices out in the world, but it may be an uphill battle to convert enough existing users to a paid version years after the popularity of the original Alexa peaked. 

If unsuccessful, it’s fair to wonder how Amazon CEO Andy Jassy would react. He hasn’t been afraid to course-correct and cost-cut aggressively in his three years as chief executive. He could decide that Amazon’s AWS cloud business, with its multiple positions in the AI land grab, is enough.

Then again, a 500-million device footprint is massive and Amazon has pleasantly surprised the masses and the media before, as the early years of Alexa proved. Can they do it again?

More news below.

Jason Del Rey

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The rest of today’s Data Sheet was written by David Meyer.

NEWSWORTHY

Qualcomm circles Intel. Qualcomm is reportedly interested in buying Intel’s PC design business. Reuters says Qualcomm is looking at all of Intel’s design units, but its server processors are of less interest. Intel is trying to pull itself out of a downward spiral and is reportedly considering selling off parts of its business, but its PC chipset design business is core, making this an extraordinary potential turn of events.

Google antitrust. The U.K.’s antitrust regulator has provisionally found that Google has abused its position in ad-tech, in a way that “disadvantages competitors and prevents them competing on a level playing field to provide publishers and advertisers with a better, more competitive service that supports growth in their business.” In a nutshell, the watchdog says Google has been using its dominant position on both the buy and sell sides of online advertising to systematically preference itself. The European Commission already wants Google to sell part of its ad-tech business to deal with the issue, and the U.S. Justice Department and a coalition of states are aiming for the same result.

Telegram’s sin. The spark for the French criminal investigation that has ensnared Telegram CEO Pavel Durov was the platform’s unwillingness to identify a user who told an undercover agent that he had raped a young girl and convinced others to send him “self-produced child pornography,” Politico reports. Meanwhile, TechCrunch reports that following Durov’s arrest, Telegram quietly made it possible for users to tell moderators about criminal activity in the service’s encrypted chats. And Durov himself has issued his first post-arrest statement, claiming that “no innovator will ever build new tools if they know they can be personally held responsible for potential abuse of those tools.”

ON OUR FEED

“It’s been an incredible journey.”

—Nick Pickles announces his resignation as X/Twitter global affairs chief, after more than a decade at the company. The Brit was a key lieutenant to CEO Linda Yaccarino, and he leaves at a time when X is embroiled in policy nightmares from the U.K. to Brazil.

IN CASE YOU MISSED IT

Exclusive: Marc Benioff has declared a ‘hard pivot’ to autonomous AI agents. Will it be enough for Salesforce to thrive in the generative AI era?, by Sharon Goldman

Defense tech startup Anduril has hired more than 1,000 employees in 9 months as it prepares to build unmanned jet fighters for the Air Force, by Jessica Mathews

Elon Musk repeatedly interacted on X with right-wing influencers allegedly backed by a Russia-funded company, by Marco Quiroz-Gutierrez

The U.S. will impose new export controls on quantum computing to stop China getting access to cutting-edge tech, by Bloomberg

The CrowdStrike outage had an outsized impact on Delta, analysts say—and its rivals are soaring because of it, by Sasha Rogelberg

Nvidia’s CEO would rather ‘torture employees to greatness’ than fire them, by Chloe Berger

Anthropic joins OpenAI in going after business customers, by Sage Lazzaro

BEFORE YOU GO

AI treaty. The U.S., U.K., and EU have signed the world’s first legally binding AI treaty, the Financial Times reports. The treaty requires AI systems to comply with principles around things like data protection and safety, and obliges states to help citizens assert their rights against AI companies.