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gabriel666smith • today at 2:30 PM • 0 replies • view on HN

If you want a direct example of the US subsidising a major AI lab, we can use Microsoft's investment in OpenAI. Microsoft has the largest ownership stake - 27%.

Microsoft did not pay with money - it paid (mostly) with Azure cloud computing credits. MSOFT is then able to write this off as a loss against tax.

It is generally far more tax-efficient in the US to write a loss in this way than it is to write a loss for a cash investment.

In this case, I believe the difference was ultimately highly significant. When including MSOFT eventually writing-off the deprecating Azure hardware it had used to buy the OpenAI equity, the result was MSOFT's tax reduction being either close-to or exceeding the actual cash value of MSOFT's investment in OpenAI - IIRC.

These examples represent taxes that the US chooses not to collect - the US could choose to make investments like these less tax-efficient. Instead, by making them extremely tax-efficient, the US subsidises the transaction hugely.