ION founder says market is ‘panicking’ about wrong thing in AI

When businesses like consulting firms begin to use AI tools to remain competitive “they feed the very system that is learning to make them unnecessary,” said Andrea Pignataro. Photo by Joel Saget/AFP via Getty Images/Postmedia files

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ION Group’s founder Andrea Pignataro said investors are punishing the wrong companies after more than US$2 trillion was wiped off the value of software firms in recent weeks.

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“The market is panicking about the wrong thing,” he wrote on his company’s website. “The correct panic is not whether AI can replace individual software tools. It is what happens when the institutions that invite AI into their language games discover they have been teaching it to play without them.”

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Anxiety about the outlook for software providers left markets in turmoil after artificial intelligence startup Anthropic PBC released a series of new tools that threaten businesses ranging from financial research to real estate services. Pignataro’s privately held fintech companies — including ION Platform — have been caught up in the selloff, with bond and loan prices tanking to near distressed territory.

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Pignataro joined other industry leaders in arguing that replacing software that helps manage complex tasks across an entire company is not like swapping tools because it’s deeply embedded in the organization.

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Instead, when businesses like consulting firms begin to use AI tools to remain competitive “they feed the very system that is learning to make them unnecessary,” he wrote in the commentary titled The Wrong Apocalypse. While “rational in isolation,” the collective result will be “catastrophic.”

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Revenue losses in the professional services sector could trickle through to other industries ranging from commercial real estate to business travel and the ecosystem surrounding venture capital, he said. That would eventually hit tax revenue and the fabric of the society.

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“The US$2 trillion destroyed in software market value is not the extent of the damage,” he added. “It is the down payment.”

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Bloomberg LP, the parent of Bloomberg News, competes with ION in providing financial data.

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—With assistance from Amy Thomson.

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