>How will the Google/Anthropic/OpenAI's of the world make money on AI if open models are competitive with their models?

According to Google (or someone at Google) no organization has moat on AI/LLM [1]. But that does not mean that it is not hugely profitable providing it as SaaS even you don't own the model or Model as a Service (MaaS). The extreme example is Amazon providing MongoDB API and services. Sure they have their own proprietary DynamoDB but for the most people scale up MongoDB is more than suffice. Regardless brand or type of databases being used, you paid tons of money to Amazon anyway to be at scale.

Not everyone has the resource to host a SOTA AI model. On top of tangible data-intensive resources, they are other intangible considerations. Just think how many company or people host their own email server now although the resources needed are far less than hosting an AI/LLM model?

Google came up with the game changing transformer at its backyard and OpenAI temporarily stole the show with the well executed RLHF based system of ChatGPT. Now the paid users are swinging back to Google with its arguably more superior offering. Even Google now put AI summary as its top most search return results for free to all, higher than its paid advertisement clients.

[1]Google “We have no moat, and neither does OpenAI”:

https://news.ycombinator.com/item?id=35813322

This is exactly why the CEO of Anthropic has been talking up "risks" from AI models and asking for legislation to regulate the industry.

> How will the Google/Anthropic/OpenAI's of the world make money on AI if open models are competitive with their models?

hopefully they won't

and their titanic off-balance sheet investments will bankrupt them as they won't be able to produce any revenue

I don't see what OpenAI's niche is supposed to be, other than role playing? Google seems like they'll be the AI utility company, and Anthropic seems like the go-to for the AI developer platform of the future.

People and companies trust OpenAI and Anthropic, rightly or wrongly, with hosting the models and keeping their company data secure. Don't underestimate the value of a scapegoat to point a finger at when things go wrong.

Either...

Better (UX / ease of use)

Lock in (walled garden type thing)

Trust (If an AI is gonna have the level of insight into your personal data and control over your life, a lot of people will prefer to use a household name)

> Infrastructure owners with access to the cheapest energy will be the long run winners in AI.

For a sufficiently low cost to orbit that may well be found in space, giving Musk a rather large lead. By his posts he's currently obsessed with building AI satellite factories on the moon, the better to climb the Kardashev scale.

Pure models clearly aren’t the monetizing strategy, use of them on existing monetized surfaces are the core value.

Google would love a cheap hq model on its surfaces. That just helps Google.

I call this the "Karl Marx Fallacy." It assumes a static basket of human wants and needs over time, leading to the conclusion price competition will inevitably lead to market collapse.

It ignores the reality of humans having emotions, habits, affinities, differentiated use cases, social signaling needs, and the desire to always want to do more...constantly adding more layers of abstraction in fractal ways that evolve into bigger or more niche things.

5 years ago humans didn't know they would ever desire any AI products. Now it's the fastest growing market.

Ask yourself: how did Google Search continue to make money after Bing's search results started benchmarking just as good?

Or: how did Apple continue to make money after Android opened up the market to commoditize mobile computing?

Etc. Etc.

[dead]

> How will the Google/Anthropic/OpenAI's of the world make money on AI if open models are competitive with their models?

They won't. Actually, even if open models aren't competitive, they still won't. Hasn't this been clear since a while already?

There's no moat in models, investments in pure models has only been to chase AGI, all other investment (the majority, from Google, Amazon, etc.) has been on products using LLMs, not models themselves.

This is not like the gold rush where the ones who made good money were the ones selling shovels, it's another kind of gold rush where you make money selling shovels but the gold itself is actually worthless.