alt Hacker NewsI'm glad this analogy is at the top. I think that some large companies like AWS really should not try to blow money on AI in ways that only make a lot more sense for companies like Meta, Google, and Apple. AWS can't trap you in their AI systems with network effects that the other competitors can.
Companies like OpenAI and Anthropic are still incredibly risky investments especially because of the wild capital investments and complete lack of moat.
At least when Facebook was making OpenAI's revenue numbers off of 2 billion active users it was trapping people in a social network where there were real negative consequences to leaving. In the world of open source chatbots and VSClone forks there's zero friction to moving on to some other solution.
OpenAI is making $12 billion a year off of 700 million users [1], or around $17 per user annually. What other products that have no ad support perform that badly? And that's a company that is signing enterprise contracts with companies like Apple, not just some Spotify-like consumer service.
[1] This is almost the exact same user count that Facebook had when it turned its first profit.
> OpenAI is making $12 billion a year off of 700 million users [1], or around $17 per user annually. What other products that have no ad support perform that badly?
That's a bit of a strange spin. Their ARPU is low because they are choosing not to monetize 95% of their users at all, and for now are just providing practically limitless free service.
But monetising those free users via ads will pretty obviously be both practical and lucrative.
And even if there is no technical moat, they seem to have a very solid mind share moat for consumer apps. It isn't enough for competitors to just catch up. They need to be significantly better to shift consumer habits.
(For APIs, I agree there is no moat. Switching is just so easy.)