Comment by MarcusE1W
2 hours ago
Keep in mind that the prices of the big AI companies are currently mostly loss makers. Their plan is to get sufficient market saturation and dependency of their clients and if they achieve that, they will hike up the prices quite a bit.
(Of course this all depends on if their plans work out, but if not then the smaller local models will probably play a big role in the failure of their plan)
People keep repeating this, but it is only remotely close to true for the literal free plans and the small subset of consumers maxing out the pro plans.
At API pricing (i.e. what all enterprise customers are paying), inference is profitable, even if they're paying usurious rates on cost of capital for capex. Where the frontier labs are getting screwed is that they're in a Red Queen's race with each other, spending tens of billions of dollars per year training the next frontier model, and not being able to recoup the investment on that model before it's obsolete.
That's why you see the CEOs calling for government intervention to "pace the frontier": it lets them reduce investment on training without risking that their competitors keep going and make them obsolete. Unfortunately for them, the Chinese labs exist, and would love nothing more than to take the frontier, so they're in a bit of a pickle.
The people I personally know who signed the "pacing the frontier" petition (including me), or who called for it in other ways, are sincere in their concerns that things are moving too fast for safety.
Put the liability on the AI companies, and they'll slow down.
However, that also means AI will be even more lobotomized since the cloud providers will panic over being liable
> inference is profitable
People keep repeating this, but it is only remotely close to true if you evaluate inference in a vacuum without any of the other supporting costs to facilitate that capability.
Just a few years ago people were saying the same thing about WeWork: "leasing is profitable, the unit economics of individual locations is net positive", and yet...