Google, Nvidia, and OpenAI

> OpenAI’s refusal to launch and iterate an ads product for ChatGPT — now three years old — is a dereliction of business duty, particularly as the company signs deals for over a trillion dollars of compute.

I think this is intentional by Altman. He’s a salesman, after all. When there is infinite possibility, he can sell any type of vision of future revenue and margins. When there are no concrete numbers, It’s your word against his.

Once they try to monetize, however, he’s boxed in. And the problem with OpenAI vs. Google in the earlier days is that he needs money and chips now. He needs hundreds of billions of dollars. Trillions of dollars.

Ad revenue numbers get in the way. It will take time to optimize; you’ll get public pushback and bad press (despite what Ben writes, ads will definitely not be a better product experience.)

It might be the case that real revenue is worse than hypothetical revenue.

"advertising would make ChatGPT a better product."

And with that, I will never read anything this guy writes again :)

I do all of my “AI” development on top of AWS Bedrock that hosts every available model except for OpenAIs closed source models that are exclusive to Microsoft.

It’s extremely easy to write a library that makes switching between models trivial. I could add OpenAI support. It would be just slightly more complicated because I would have to have a separate set of API keys while now I can just use my AWS credentials.

Also of course latency would be theoretically worse since with hosting on AWS and using AWS for inference you stay within the internal network (yes I know to use VPC endpoints).

There is no moat around switching models unlike Ben says.

Idk if I'm just holding it wrong, but calling Gemini 3 "the best model in the world" doesn't line up with my experience at all.

It seems to just be worse at actually doing what you ask.

The analysis fails to mention that if TPUs take market share from Nvidia GPUs, JAX's software ecosystem likely would also take market share from the PyTorch+Triton+CUDA software ecosystem.

Most analysts seem to forget what actual consumers do. Normal people use ChatGPT. They accidentally use Gemini when they Google something. But I don’t know anyone non-technical who has ditched ChatGPT as their default LLM. For 99% of questions these days, it’s plenty good enough—there’s just no real reason to switch.

OpenAI's strategy is to eventually overtake search. I'd be curious for a chart of their progress over time. Without Google trying to distort the picture with Gemini benchmark results and usage stats which are tainted by sheer numbers from traditional search and their apps.

2018 me: ‘Aggregation Theory is basically unbeatable’ 2025 me, watching OpenAI voluntarily stay in the top-right quadrant while Google happily camps bottom-left with infinite ammo: ‘…maybe there’s an asterisk’ Great update to the Moat Map

I agree with his take on Googles enormous strategic advantages.

I think he’s wrong that OpenAI can win this by upping the revenue engine through ads or through building a consumer behavior moat.

At the end of the day these are chat bots. Nobody really cares about the url and the interface is simple. Google won search by having deeply superior search algorithms and capitalizing on user traffic data to improve and refine those algorithms. It didn’t win because of AdWords … it just got rich that way.

The AI market is an undifferentiated oligopoly (IMO) and the only way to win is by having better algos trained on more data that give better results. Google can win here. It is already winning on video and image generation.

I actually think OpenAI is (wrongly) following Ben’s exact advice — going to the edge and consumer interface through things like the acquisition of things like Jony Ives device company. This is a failing move and an area where Google can also easily win with Android. I agree with Ben that upping the revenue makes sense but they can’t do it at the cost of user experience. Too much at stake.

An often overlooked extra advantage to Google is their massive existing ad inventory. If LLMs do end up being ad supported and both products are roughly the same, Google wins. The large supply of ads direct from a diverse set of advertisers means they can fill more ad slots with higher quality ads, for a higher price, and at a lower cost. They’re also already staffed with an enormous amount of talent for ad optimization. Just thus advantage would translate into higher sustained margins (even assuming similar costs), but given TPU it might be even greater. This plus the gobs of cash they already spin off, and their massive war chest means they can spend an ungodly amount on user acquisition. It’s their search playbook all over again.

An often overlooked extra advantage to Google is their massive existing ad inventory. If LLMs do end up being ad supported and both products are roughly the same, Google wins. The large supply of ads direct from a diverse set of advertisers means they can fill more ad slots with higher quality ads, for a higher price, and at a lower cost. They’re also already staffed with an enormous amount of talent for ad optimization. Just this advantage would translate into higher sustained margins (even assuming similar costs), but given TPU it might be even greater. This plus the gobs of cash they already spin off, and their massive war chest means they can spend an ungodly amount on user acquisition. It’s their search playbook all over again.

At this point it's not even OpenAI vs Google. It's OpenAI vs themselves. They're burning through more money making the models than they can realistically hope to make. When their investors decide they've burned through enough money it's basically over.

Google's revenue stream and structural advantages mean they can continue this forever and if another AI winter comes, they can chill because LLM-based AI isn't even their main product.

"the naive approach to moats focuses on the cost of switching; in fact, however, the more important correlation to the strength of a moat is the number of unique purchasers/users."

Its a long article and one of the first points "google strikes back." Is completely wrong ime. Not only is Gemini much worse than all the other models. The latest release is now so bad it is almost useless half the time or more. Hard to read more with such a bad take what I've seen myself. I don't care what benchmarks it beats if it just churns out comically bad results to me.