Eye on AI - October 25th, 2019
Welcome to Aigora's "Eye on AI" series, where we round up exciting news at the intersection of consumer science and artificial intelligence!
This week, we follow our previous discussions about how food companies continue to push into tech, only this time with an added twist: tech companies, Amazon in particular, are also transitioning into the CPG space.
Food Leaders McDonald’s and Domino’s Push to Become Tech Giants:
We begin with news out of the New York Times. In the article, “Would You Like Fries With That? McDonalds Already Knows the Answer,” reporter David Yaffe-Bellany describes how McDonald’s is beginning to act more and more like big tech.
“Over the last seven months, McDonald’s has spent hundreds of millions of dollars to acquire technology companies that specialize in artificial intelligence and machine learning,” writes Yaffe-Bellany. “And the fast-food chain has even established a new tech hub in the heart of Silicon Valley — the McD Tech Labs — where a team of engineers and data scientists is working on voice-recognition software.”
The goal, according to McDonald’s Chief Information Officer Daniel Henry, is to turn McDonald’s into the fast-food version of Amazon, with more data-tracking tools that tailor displays, menu presentations, and the entire ordering experience to the customers being served.
“You just grow to expect [data tracking and personalization] in other parts of your life,” says Henry. “Why should it be different when you’re ordering at McDonald’s? We don’t think food should be any different than what you buy on Amazon.”
Much of the data previously captured by food companies were owned by the third-party AI companies they employed. By building their own AI divisions and growing AI teams internally, McDonald’s and others are essentially cutting out the middleman while retaining the most valuable commodity their AI partners were capturing: data.
Domino’s has similarly been transitioning into tech in recent years with streamlined phone and online ordering systems (you’ve probably seen the commercials), data-capturing systems, and even self-driving vehicles. This past August, they opened their ‘Innovation Garage’ to test new tech and AI, with much of their focus on GPS tracking for delivery drivers and driverless cars.
“[Domino’s] also said at the event that it has finished its testing of autonomous delivery in Houston, TX, and is ready to officially roll the program out in that city,” writes Jennifer Marston, in her article out of The Spoon titled ‘Domino’s Innovation Garage Doubles Down on GPS Tracking, Driverless Cars.’ “Domino’s piloted driverless delivery this past summer, teaming up with a company called Nuro, who makes a fully automated, low-speed vehicle about half the size of a regular car.”
Where once it could be said that McDonald’s and Domino’s were squarely in the fast-food industry, it might soon be said that they’re primarily tech companies dabbling in fast food. All this begs the question: what will the restaurant of the future look like?
Amazon Moves into CPG Space with Premium Gin
Conversely, Amazon is beginning to move from the tech space into the CPG space by growing its number of Amazon-label products. The most recent example comes with their release of the Amazon-labeled Tovess Gin last month, sold exclusively on Amazon within the U.K. Lucy Handley, CNBC reporter, describes the move in her article, “Amazon launches its own premium gin brand in the UK”:
“Tovess gin is the only alcohol product listed as an Amazon brand on the U.K. site, while other groceries include Amazon Brand Solimo coffee capsules, Presto! kitchen rolls and Happy Belly dried fruit and nuts,” writes Handley. “Products from Whole Foods, the grocery store Amazon bought in a deal worth $13.7 billion in 2017, are also listed under Our Brands…. which are created by Amazon or its partners and sold exclusively on the site. These benefit Amazon by offering better margins and can be used to help persuade big brands to cut prices.”
With Amazon managing the largest retail distributor in the world and producing retail products of their own, there’s a growing concern among regulators that Amazon will prioritize positioning for their own products, according to Handley. In July, the European Union announced an antitrust investigation as to whether such a move would be in breach of competition rules, which is a relevant concern among all tech companies managing large data and product distribution platforms. I’m very curious to see how this all plays out.
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