Four AI trends small businesses should watch in 2024 and beyond 

Until recently, the applications of artificial intelligence have remained in the hands of scientists, engineers and big business

Four AI trends small businesses should watch

But for the first time in history, anyone with an internet connection and keyboard can harness this technology. AI-powered tools – like OpenAI’s ChatGPT – have well and truly captured the public’s attention. 

Small businesses are waking up to the increased accessibility of AI; its implication on their processes – and the economy at large – cannot be understated. Xero’s research revealed that nearly two-thirds of small businesses (64%) believe emerging technologies such as AI will have an impact on their business in the next five years. 

In 2024 and beyond,four factors will underpin the development of AI and its impact on small businesses: cost, consolidation, control and creation. 

AI costs will need to be managed   

Cost will be a heated point of debate looking forward. Using AI may feel like a seamless process, but each command requires significant computer power, energy and ongoing development costs. The likes of Microsoft and Google are heavily subsidising the generative tools we play around with, without them making any money from AI – yet.  

On top of this, 2023 set a record for investment in generative AI startups, with equity funding exceeding $14 billion across 86 deals as of the second quarter of the year, much of which startups are spending on building the infrastructure needed to build, train and run their AI models. AI must now become a self-funding endeavour, as its economics are currently higher than the cost of labour. 

But what does all this mean for small businesses? A distillation process will begin for many companies to make large language models more efficient, without significantly compromising performance. If these more efficient AI tools are delivered at a lower cost, they have the potential to be far more applicable towards a wider user base. 

Consolidation could impact accessibility   

At the same time, consolidation of AI also raises questions around ownership and accessibility. Branches of machine learning can be used to build some models from the ground up using their own data. However, for large language models, a capital-intensive endeavour requiring the funding of billion-dollar companies and access to large data centres, this is not the case. 

Publicly accessible generative AI tools mean nearly anyone can use them, but few can own them. This is a trend that is no economic anomaly; anyone can use a mobile phone, but few can build one. This year, a wave of market consolidation in the AI landscape could impact its development and accessibility for all. 

Small businesses could face challenges when entering the AI industry, as the need for capital to run AI systems grows. Fewer and larger players could increase barriers to entry and effectively price smaller competitors out of the market. 
Control will lead to questions on accountability   

In 2023, we saw hot debate around how Governments can best control and regulate AI. This is likely to only gather momentum.

The UK, unlike other nations, has not yet legislated on AI regulation. But evidently, risks and accountability remain high on the government agenda. At last year’s landmark Global AI Safety Summit, UK Prime Minister Rishi Sunak assessed AI as ‘frontier safety,’ meaning the ‘risks posed by the very largest, most powerful AI systems.’ For now, UK small businesses can freely experiment with AI tools, but this could soon change. 

These conversations may occur in courtrooms or parliaments, but small businesses will look toward them for guidance. According to Xero’s research, 77% of UK small business owners are concerned that AI development and adoption is outpacing regulation. Accountability will either sit in the usage or the development of AI, with the outcome impacting small business’ use of AI tools. The debate over control will continue throughout 2024, as many companies campaign to have AI regulated at the level of the consumer. Whether they succeed, remains to be seen.  

Copyright, creativity and commercially safe AI 

Small businesses hoping to harness AI will need to be aware of discussions pertaining to the copyright implications surrounding AI. Do we own the copyright of our ChatGPT outputs? Are you infringing on other authors’ copyright? 

Lawmakers are still working through these issues on the outputs and inputs, and we can expect more AI providers to differentiate themselves on beta lineage. Companies like Adobe and Getty Images have launched “commercially safe” AI tools, with full indemnification for commercial use. Issues of authorship and eligibility of AI-generated content for pattern protection could lead to piecemeal adoption across industries, depending on their intellectual property sensitivities. 

Unless there is a scientific breakthrough, large language models will continue to require human supervision and intervention over the next 12 months. To stay ahead of the curve, small businesses will need to understand and adapt to these industry dynamics, to stay competitive, innovate and grow. 

Alex von Schirmeister
Alex von Schirmeister

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