DeepMind Keeps On Losing Money

DeepMind, the famous London-based artificial intelligence startup which was bought by Alphabet inc., has seen a recent rise in losses. The company, founded in 2010, has research centres in various countries including London, France, Canada and the United States.

Since last year, the losses have risen by 55% to £470.2 million Great British pound sterling, leading to a debt that has accumulated to become over £1.04 billion. DeepMind has claimed that it will not become bankrupt and Google, another subsidiary of Alphabet inc., has guaranteed the debt even if DeepMind does not manage to pay it back. DeepMind's income exclusively comes from Alphabet Inc., which uses the expertise and AI solutions to embed in its products such as Youtube or Waymo, the self-driving car project.

The cost of running a research oriented business is absolutely massive because you need as many skilled staff as you can get your hands on.

The cost of running a research oriented business is absolutely massive because you need as many skilled staff as you can get your hands on.

The increase in losses comes from staff and "other" expenses rising £234 million from £334 million to £568 million. This is a massive increase in spending for just 1 year, but additionally, in 2017 the cost of staff also doubled. The spending increase reflects the growth of the company and also the increasing cost of the expertise that is talented in AI, both young and old. According to the Financial Times, professors are offered up to 10 times their current salary to work in big technology firms such as Microsoft, Amazon and Facebook. In order to keep up, DeepMind must offer these salaries at competitive prices, essentially making the AI job industry one big bidding war for talent.

If DeepMind was not a subsidiary of Alphabet, it would not have its debts waived off by Google, this means that it might not be able to keep competing with the larger companies mentioned above (Microsoft, Amazon and Facebook) but also Google itself, which is a big player in the AI industry. It is highly unlikely that it would be able to keep up with investors in the stock market alone which means that the AI industries are unfriendly to startups as a whole. If a relatively large startup, like DeepMind, is struggling, then you can forget about a company that someone starts in their garage, like the old American dreams like Facebook and Google.

EnterpriseParth Mahendra