alt Hacker NewsI always grew up hearing “competition is good for the consumer.” But I never really internalized how good fierce battles for market share are. The amount of competition in a space is directly proportional to how good the results are for consumers.
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Remember when GPT-2 was “too dangerous to release” in 2019? That could have still been the state in 2026 if they didn’t YOLO it and ship ChatGPT to kick off this whole race.
Unfortunately, people naively assume all markets behave like this, even when the market, in reality, is not set up for full competition (due to monopolies, monopsonies, informational asymmetry, etc).
The real interesting part is how often you see people on HN deny this. People have been saying the token cost will 10x, or AI companies are intentionally making their models worse to trick you to consume more tokens. As if making a better model isn't not the most cutting-throat competition (probably the most competitive market in the human history) right now.
I grew up with every service enshitified in the end. Whoever has more money wins the race and gets richer, that's free market for ya.
This is a bit of a tangent, but it highlights exactly what people miss when talking about China taking over our industries. Right now, China has about 140 different car brands, roughly 100 of which are domestic. Compare that to Europe, where we have about 50 brands competing, or the US, which is essentially a walled garden with fewer than 40.
That level of internal fierce competition is a massive reason why they are beating us so badly on cost-effectiveness and innovation.
Competition is great, but it's so much better when it is all about shaving costs. I am afraid that what we are seeing here is an arms race with no moat: Something that will behave a lot like a Vickrey auction. The competitors all lose money in the investment, and since a winner takes all, and it never makes sense to stop the marginal investment when you think you have a chance to win, ultimately more resources are spent than the value ever created.
This might not be what we are facing here, but seeing how little moat anyone on AI has, I just can't discount the risk. And then instead of the consumers of today getting a great deal, we zoom out and see that 5x was spent developing the tech than it needed to, and that's not all that great economically as a whole. It's not as if, say, the weights from a 3 year old model are just useful capital to be reused later, like, say, when in the dot com boom we ended up with way too much fiber that was needed, but that could be bought and turned on profitably later.