Investors may not like it but AI spending was the Rightmove to make
Given how utterly obsessed the world is with AI, Rightmove’s share price reaction to the reveal that it was upping spending on the technology seemed bizarre. The property portal’s value plummeted by £1.4 billion, 27 per cent, on Friday morning when it announced that it would spend £18 million more on the tech, at the expense of revenue targets. At the time of writing yesterday afternoon, it was still down 14 per cent from Thursday’s close.
Why? When it comes to AI, there is such overt and widespread FOMO (fear of missing out) that this severe negative reaction felt counterintuitive. The company’s plan should come as no surprise to anyone who knows Johan Svanstrom, Rightmove’s techfocused boss. However, shareholders clearly did not immediately buy his vision of jam tomorrow.
‘Rightmove’s plans are hardly wacky: adding AI to improve efficiency, speed and value’
Rightmove’s plans are hardly wacky: using its own information, which is one of the UK’s largest housing datasets, to build AI models, upgrading its internal systems and adding AI tools to improve “efficiency, speed and value”.
As well as the prospect of a smaller margin, it may have been the vagaries of these banal buzzwords in the trading statement and the lack of concrete numbers attached to the potential AI returns which so upset the market.
It is very early days for generative AI. But already there are some examples of its boost to productivity. In fact, hopes are so high for AI in business, that one in six employers think they’ll be able to cut their staff numbers in the next year, according to the Chartered Institute of Personnel and Development. It reported yesterday that a quarter of employers who predict such cuts think it will mean losing more than 10 per cent of their workforce. Not great for jobs, granted, but businesses cannot wait.
Klarna, for example, has said it expects to grow over the coming years without employing any more people. Sebastian Siemiatkowski, the CEO, reports his inbox is bursting with messages from other bosses wanting to know his secret.
Prosus, one of the world’s biggest tech investors, claims to have 18,000 AI agents doing the work of more than 1,000 full time employees.
BT said, back in May 2023, that it would replace 10,000 jobs with AI by the end of the decade, such as call handling. This weekend, The Times reported that the telco is now going even further, which indicates the change is working. BT would not comment on the story.
Implementing AI is not like sprinkling a handful of magic beans; it comes with an inevitable cost and effort. There are too many examples of AI projects missing the mark and cash being wasted. A recent, oftquoted, study by MIT found that 95 per cent of generative AI projects generated zero returns.
This, though, has nothing to do with the power of the technology.
Such projects fail because investment is “misdirected”, systems are too fragile to cope with the change or roll-out plans don’t match how people work, the report found.
I have personal experience of “AI efficiencies” in my work. Writing a book, The Curious Case of Mike Lynch, I was faced with rooms-full of information. Accusations of fraud by HP, over its acquisition of Lynch’s company Autonomy, sparked two criminal trials, one civil trial and a UK accounting watchdog investigation. And I’m still waiting for the FBI to send me all of their documents … Thanks to AI, I was able to create models using the documents, interrogate them and source the results. I needed to read the material and be familiar with the characters in the story, but AI made handling it very simple.
With its own rich seam of data, that key AI ingredient, in the long run it is likely that Rightmove has made the right call with its new investment. It is the shareholders who risk looking short-sighted and short-termist.
Katie Prescott is Technology Business Editor of The Times
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