AI Startups Target Niches Amid Big Tech Dominance

The era when a single well-made AI app for summarizing documents and generating images could attract a flood of users has passed. The competitive formula in the AI service market is now shifting toward an era where only companies with unique technologies or specialized expertise can survive. This change is driven by the fact that big tech firms like Google and existing software companies such as Canva and Notion are integrating AI features into their core services, reducing the need for consumers to install separate apps. New AI startups are now seeking business opportunities in areas that large platforms have not sufficiently targeted, such as adult content, security, and professional fields.

◇Startups face difficulties rising in rankings

According to the tech industry, in a recent report titled “Top 100 Generative AI Consumer Apps” by U.S. venture capital firm Andreessen Horowitz (a16z), only 11 services appeared in the rankings for the first time. This is the lowest number since the survey began in September 2023. a16z noted, “After tracking consumer AI for three years, the rankings have stabilized.” This does not mean fewer AI apps are being launched, but rather that established services with existing user bases are maintaining their top positions, making it harder for new startups to break into the rankings.

The rise of existing software companies is particularly notable. Design platform Canva and task management service Notion ranked in the top 10 for web traffic, while design collaboration tool Figma entered the top 15. These companies, which had already secured user bases before the rise of AI, are now adding AI features to their document creation, design, and organization tools. For users, this means there is less need to switch to separate AI apps outside their usual programs.

Google also placed five services—Gemini Notebook (NotebookLM), AI Studio, Labs, AntiGravity, and Gemini—in the top 50 for web traffic. As big tech companies directly provide AI services spanning search, document creation, and development tools, the scope of competition for startups is expanding.

Major AI companies are expanding their service areas by targeting different customer segments. According to a16z, OpenAI, Google, and Anthropic launched a combined 127 new products and features over the past six months. Anthropic strengthened features for professional knowledge work like coding and research, Google expanded into creative fields such as music and image generation, and OpenAI broadened its reach into enterprise tools as well as consumer services like health, finance, and job searches.

◇Niche markets that are hard to replace must be targeted

Startups are focusing on specialized markets that large AI companies struggle to address. OpenEvidence, which provides medical information to healthcare professionals, newly entered the rankings at 47th place. Venice, an AI service emphasizing personal data protection, ranked 43rd.

Adult AI content is also forming a separate market. a16z excluded NSFW (Not Safe For Work) AI services from this survey, but noted that such services would have occupied over 20% of the top 50 web traffic rankings if included. While major AI companies restrict adult content due to policy constraints, independent services targeting this demand are gaining users.

Industry observers predict that as AI becomes a standard feature of existing software, startups will face greater pressure to differentiate themselves. Rather than simply adding features to chatbots, unique models, specialized data, or services optimized for specific professions will become critical. A source from the tech industry said, “As the entry barrier for AI apps rises, a structure is forming where big tech’s general-purpose services and startups’ specialized services compete in separate domains.”