alt Hacker NewsThe cost to hire a human is highly predictable. The cost of AI isn't. I, as a human, need food and shelter, which puts a ceiling to my bargaining power. I can't withdraw my labour indefinitely.
The power dynamics are also vastly against me. I represent a fraction of my employer's labour, but my employer represents 100% of my income.
That dynamic is totally inverted with AI. You are a rounding error on their revenue sheet, they have a monopoly on your work throughput. How do you budget an workforce that could turn 20% more expensive overnight?
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> The cost of AI isn't.
This is why there are a ton of corps running the open source models in house... Known costs, known performance, upgrade as you see fit. The consumer backlash against 4o was noted by a few orgs, and they saw the writing on the wall... they didnt want to develop against a platform built on quicksand (see openweb, apps on Facebook and a host of other examples).
There are people out there making smart AI business decisions, to have control over performance and costs.
By continuously testing competitors and local LLMs? The reason for rising prices is that they (Anthropic) probably realized that they have reached a ceiling of what LLMs are capable of, and while it's a lot, it is still not a big moat and it's definitely not intelligence.