Microsoft Losing Over $20 on Each Subscription to GitHub Copilot AI Assistant

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Microsoft is experiencing losses offering its AI service, GitHub Copilot, at a subscription price of only $10 per month, with actual costs exceeding $20 per user. This case is just the tip of the iceberg in the complex economics of AI, where expenses for hardware, energy, and software development are unreasonably high. The company is already exploring optimization methods, including revising pricing policies and implementing more cost-effective solutions.

In early 2023, The Wall Street Journal reported on the profitability issue of AI for tech giants, including Microsoft, Alphabet, Adobe, and AWS (Amazon Web Services). The situation with Microsoft and their service, GitHub Copilot, available through a $10 monthly subscription, is particularly noteworthy. Despite a partnership with OpenAI and more than 1.5 million users, the service remains unprofitable.

Actual operating expenses for some users can reach as high as $80 per month. The service, designed to assist programmers in coding and refactoring, is highly popular, but Microsoft’s high operational costs cast doubt on its long-term profitability. Prospects for changing this situation largely depend on potential reductions in the cost of computing resources.

AI is a resource-intensive technology that requires significant capital investment not only in hardware but also in software development and energy consumption. As practice has shown, these expenses do not always pay off, especially in the early stages of product or service development.

To achieve profitability, the company is considering various strategies. One proposed approach is raising prices for software and services developed using AI. Both Microsoft and Google are reportedly planning to charge an additional $30 for access to AI functionality within their corporate software packages.

Companies are also exploring the possibility of using less powerful but more cost-effective AI solutions. For instance, they could opt for models like ChatGPT 3.5 instead of the latest GPT-4 if it meets the requirements of specific tasks. This allows them to reduce costs without significant loss of quality.

Author Profile

Vasyl Kolomiiets
Vasyl Kolomiiets
I'm Vasyl Kolomiiets, a seasoned tech journalist regularly contributing to global publications. Having a profound background in information technologies, I seamlessly blended my technical expertise with my passion for writing, venturing into technology journalism. I've covered a wide range of topics including cutting-edge developments and their impacts on society, contributing to leading tech platforms.

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