Isn't there a pretty big cost in training these LLMs?
One that prevents you from competing, but not most larger tech companies.
If you think if it like any other product, the picture is clearer.
A startup invents a widget whose production costs are somewhat high, but there's no patents/etc. So all major players could invent their own. Where's the value? Just in the sale to a major player.
I hear you. What do you think of the time/expertise/tooling it takes to train these models (and that's it's an iterative process and openai has a significant head start). This strikes me as more than a 'first to the gate' advantage (but perhaps less than a traditional moat).
They've created a product which uses ideas and data that are largely available to everyone. It's not a pharmaceutical-drug type invention.
If they hadnt been bought my MS, their revenues were going to be in the $20/mo subscriptions. And you'd quickly find a lot of people offering $5/mo for 80% of the quality which would be "just fine" for many cases. (Eg., consider copilot).
The valuation of OpenAI is because it was clear a player like MS would buy it, since the marginal economic value of that technology is to a large incumbent who can quickly deploy it "in the places it's needed". It's that ability to deliver "when needed" which enables MS to draw value from it: ie., MS is just capitalising on it's current position with customers.
The AI bit is actually providing a trivial amount of profit over-and-above MS's existing position with customers.