alt Hacker NewsThere's absolutely no way these companies can justify their insane valuations unless they can legislate a barrier to entry and create an oligopoly.
There's no moat. I can literally sit here in Zed or Pi or any other third party harness and switch models in the middle of a task and it's typically fine. Sometimes a model will get stuck and that's just what I'll do.
Combined with competition and open weights models, that means the price is going to go to fall until AI tokens cost a small premium over the cost of the hardware and electricity.
That's assuming improvements in algorithms and specialized silicon doesn't eventually lead to an efficient accelerator that can run a frontier model locally. It'll be a while but I don't see any fundamental barrier. High bandwidth flash storage is coming, and that'll radically cut the RAM side of that cost. Pair that with a pipelined TPU accelerator and you're cooking.
Now look at Anthropic's proposed IPO valuation. It's insane unless they can own the market or share it with a cartel of maybe 1-2 other behemoths, and this is the only way they can do that.
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That is certainly part of the motivation for the big US AI brands to engage in calling their inept developer mistakes "AI breaking loose".
But that doesn't take away from the real issues and dangers AI poses?
To me it seems the opposite. There's a few companies in the world that have enough compute to train and serve frontier models.
As the frontier gets smarter and more useful prices will only go up, as they are set to replace jobs being paid six or seven figures a year - the demand for as much inference on these models for as long as possible will be astronomical, but compute starting in 2030 will not be keeping up.
Eventually prices will fall for assistants but the frontier will be the most profitable thing in the world, and the top companies basically already have oligopolies due to their ridiculously expensive compute investments.