It already is. In terms of competition, I don't think we've seen any groundbreaking new research or architecture since the introduction of inference time compute ("thinking") in late 2024/early 2025 circa GPT-o4.

The majority of the cost/innovation now is training this 1-2 year old technology on increasingly large amounts of content, and developing more hardware capable of running these larger models at more scale. I think it's fair to say the majority of capital is now being dumped into hardware, whether that's HBM and research related to that, or increasingly powerful GPUs and TPUs.

But these components are applicable to a lot of other places other than AI, and I think we'll probably stumble across some manufacturing techniques or physics discoveries that will have a positive impact on other industries.

> that ends up in a race to the bottom competing on cost and efficiency of delivering

One could say that the introduction of the personal computer became a "race to the bottom." But it was only the start of the dot-com bubble era, a bubble that brought about a lot of beneficial market expansion.

> models that have all reached the same asymptotic performance in the sense of intelligence, reasoning, etc.

I definitely agree with the asymptotic performance. But I think the more exciting fact is that we can probably expect LLMs to get a LOT cheaper in the next few years as the current investments in hardware begin to pay off, and I think it's safe to assume that in 5-10 years, most entry-level laptops will be able to manage a local 30B sized model while still being capable of multitasking. As it gets cheaper, more applications for it become more practical.

---

Regarding OpenAI, I think it definitely stands in a somewhat precarious spot, since basically the majority of its valuation is justified by nothing less than expectations of future profit. Unlike Google, which was profitable before the introduction of Gemini, AI startups need to establish profitability still. I think although initial expectations were for B2C models for these AI companies, most of the ones that survive will do so by pivoting to a B2B structure. I think it's fair to say that most businesses are more inclined to spend money chasing AI than individuals, and that'll lead to an increase in AI consulting type firms.

I suspect most of the excitement and value will be on edge devices. Models sized 1.7B to 30B have improved incredibly in capability in just the last few months and are unrecognizably better than a year ago. With improved science, new efficiency hacks, and new ideas, I can’t even imagine what a 30B model with effective tooling available could do in a personal device in two years time.

How Flash in SSDs works is you have tens to hundreds of dies stacked on top of each other in the same package, and their outputs are multiplexed so that only one of them can talk at the same time.

We do it like this because we still can get 1-2 GB/s out of a chip this way, and having the ability to read hundreds of times faster is not justified for storage use.

But if we connected these chips to high speed transcievers, we could get out all the 100s of GBs of bandwidth at the same time.

I'm probably oversimplifying things, and it's not that simple IRL, but I'm sure people are already working on this (I didn't come up with the idea), and it might end up working out and turn into a commercial product.

I think the comparison is only half valid since personal computers were really just a continuation of the innovation that was general purpose computing.

I don't think LLMs have quite as much mileage to offer, so to continue growing, "AI" will need at least a couple step changes in architecture and compute.

Citation needed!

It was model improvements, followed by inference time improvements, and now it's RLVR dataset generation driving the wheel.

Reread the earlier comment and see if you can understand what you are missing.

Reminds me of Reddit's cracking down on API access after realizing that their data was useful. But I'd expect both youtube to be quicker on the gun knowing about AI data collection, and have more time because of the orders of magnitude greater bandwidth required to scrape video.

https://academictorrents.com/details/2d056b22743718ac81915f2...

Mozilla's business model isn't really something to emulate, even if the stock market doesn't really see it that way.

Your interpretation of casual as stuff like r/relationships is itself "techie talk".

Google, though, has been doing it for literal decades. That could mean that they have something nobody else (except archive.org) has - a history on how the internet/knowledge has evolved.

I did that when I was retraining Stable Audio for fun and it really turned out to be trivial enough to pull of as a little evening side project.

Also integration with other services. I just had Gemini summarize the contents of a Google Drive folder and it was effortless & effective

The NSA and GHCQ and basically every TLA with the ability to tap a fibre cable had figured out the gap in Google’s armour: Google’s datacenter backhaul links were unencrypted. Tap into them, and you get _everything_.

I’ve no idea whether Snowdon’s leaks were a revelation or a confirmation for google themselves; either way, it’s arguably a total breach.

https://oag.ca.gov/privacy/databreach/reporting

That page says it was only 2 accounts and none of the messages within the mail was accessed. I wouldn't call that very significant.

While their competitors have to deal with actively hostile attempts to stop scraping training data, in Google's case almost everyone bends over backwards to give them easy access.

I agree with the rest though

Tesla does not have live video feed from (every) Tesla car.

Google suffers from classic Innovator's Dilemma and need competition to refocus on what ought to be basic survival instincts. What is worse is the search users are not the customers. The customers of Google Search are the advertisers and they will always prioritise the needs of the customers and squander their moats as soon as the threat is gone.

It's like that old concept of saying something wrong in a forum on purpose to have everyone flame you for being wrong and needing to prove themselves better by each writing more elaborate answers.

You catch more fish with bait.

This will be hard for them to integrate in a way that won't annoy users / will be better implemented than any other competitor in the same space.

Or perhaps we just deal with all AI across the board serving us ads.... this makes more sense unfortunately.

And yet they’re there, in the form of prominent product placement in all of their original series along with strategic placement in the frame to make sure they appear in cropped clips posted to social media and made into gifs.

Stranger Things alone has had 100-200 brands show up under the warm guise of nostalgia, with Coke alone putting up millions for all the less-than-subtle screen time their products get.

I’m certain AI providers will figure out how to slyly put the highest bidder into a certain proportion of output without necessarily acting out that scene in Wayne’s World.

Sergey Brin interview: https://x.com/slow_developer/status/1999876970562166968?s=20

This attitude also partially explains the black vikings incident.

For me, I think that, the possible winners will be close to fully funded up front and the losers will be trying to turn debt into profit and fail.

The rest of us self hoster types are hoping for a massive glut of GPUs and RAM to be dumped in a global fire sale. We are patient and have all those free offerings to play with for now to keep us going and even the subs are so far somewhat reasonable but we will flee in droves as soon as you try to ratchet up the price.

It's a bit unfortunate but we are waiting for a lot of large meme companies to die. Soz!

They don't, the only thing that can justify it is if they get themselves into every business workflow. That's what the investors are counting on.

AI answers is good enough and there is a long history of companies who couldn’t monetize traffic via ads. The canonical example is Yahoo. Yahoo was one of the most traffic sites for 20 years and couldn’t monetize.

2nd issue: defaults matter. Google is the default search engine for Android devices, iOS devices and Macs whether users are using Safari or Chrome. It’s hard to get people to switch

3rd issue: any money that OpenAI makes off search ads, I’m sure Microsoft is going to want there cut. ChatGPT uses Bing

4th issue: OpenAIs costs are a lot higher than Google and they probably won’t be able to command a premium in ads. Google has its own search engine, its own servers, its own “GPUs” [sic],

5th: see #4. It costs OpenAI a lot more per ChatGPT request to serve a result than it costs Google. LLM search has a higher marginal cost.

this kind of things may take some time to spread across population

There’s a couple of things going on but put simply - when there is no real lock in, humans enjoy variety. Until one firm creates a superior product with lock in, only those who are generating cash flows will survive.

OAI does not fit that description as of today.

"Some messages are tough to write, let's thinky-think it through together."

"Golly, your codey-code could use some help. Ask me what I thinky-think!"

"I'm here to help you thinky-think while you worky-work!"

It is not a railroad and the railroads did not explode in a bubble (OK a few early engines did explode but that is engineering). I think LLM driven investments in massive DCs is ill advised.

AI feels like a solution looking for a problem. Especially with 90% of consumer facing products. Were people asking for better chatbots, or to quickly deepfake some video scene? I think the bubble popping will re-reveal some incredible backend tools in tech, medical, and (eventually) robotics. But I don't think this is otherwise solving the problems they marketed on.

The problem is increasing profits by replacing paid labor with something "good enough".

  > There's no evidence of a technological moat or a competitive advantage in any of these companies.

I don't use my Google Pro subscription much. Gemini 3.0 Pro spends 1/10th of the time thinking compared to GPT 5.2 Thinking and outputs a worse answer or ignores my prompt. Similar story with Deepseek.

The public benchmarks tell a different story which is where I believe the sentiment online comes from, but I am going to trust my experience, because my experience can't be benchmaxxed.

I find codex & 5.2 Pro next to useless and nothing holds a candle to Opus 4.5 in terms of utility or quality.

There's probably something in how varied human brains and thought processes are. You and I likely think through problems in some fundamentally different way that leads to us favouring different models that more closely align with ourselves.

No one seems to ever talk about that though and instead we get these black and white statements about how our personally preferred model is the only obvious choice and company XYZ is clearly superior to all the competition.

Personally I find GPT 5.2 to be nearly useless for my use case (which is not coding).

But Gemini will put me in my place. Sometimes I ask my question to Gemini because I don’t trust ChatGPT’s affirmations.

Truthfully I just use both.

1. Glazes me 2. Lists a variety of assumptions (some can be useful / interesting)

Answers the question

At least this way I don't spend a day pursuing an idea the wrong way because ChatGPT never pointed out something obvious.

The cost of entry is far beyond extraordinary. You're acting like anybody can gain entry, when the exact opposite is the case. The door is closing right now. Just try to compete with OpenAI, let's see you calculate the price of attempting it. Scale it to 300, 500, 800 million users.

Why aren't there a dozen more Anthropics, given the valuation in question (and potential IPO)? Because it'll cost you tens of billions of dollars just to try to keep up. Nobody will give you that money. You can't get the GPUs, you can't get the engineers, you can't get the dollars, you can't build the datacenters. Hell, you can't even get the RAM these days, nor can you afford it.

Google & Co are capturing the market and will monetize it with advertising. They will generate trillions of dollars in revenue over the coming 10-15 years by doing so.

The barrier to entry is the same one that exists in search: it'll cost you well over one hundred billion dollars to try to be in the game at the level that Gemini will be at circa 2026-2027, for just five years.

Please, inform me of where you plan to get that one hundred billion dollars just to try to keep up. Even Anthropic is going to struggle to stay in the competition when the music (funding bubble) stops.

There are maybe a dozen or so companies in existence that can realistically try to compete with the likes of Gemini or GPT.

Apparently the DeepSeek folks managed that feat. Even with the high initial barriers to entry you're talking about, there will always be ways to compete by specializing in some underserved niche and growing from there. Competition seems to be alive and well.

I don't know why people always imply that "the bubble will burst" means that "literally all Ai will die out and nothing will remain that is of use". The Dotcom bubble didn't kill the internet. But it was a bubble and it burst nonetheless, with ramifications that spanned decades.

All it really means when you believe a bubble will pop is "this asset is over-valued and it will soon, rapidly deflate in value to something more sustainable" . And that's a good thing long term, despite the rampant destruction such a crash will cause for the next few years.

The real problem is the massive over-promises of transforming every industry, replacing most human labor, and eventually reaching super-intelligence based on current models.

I hope we can agree that these are all wholly unattainable, even from a purely technological perspective. However, we are investing as if there were no tomorrow without these outcomes, building massive data-centers filled with "GPUs" that, contrary to investor copium, will quickly become obsolete and are increasingly useless for general-purpose datacenter applications (Blackwell Ultra has NO FP64 hardware, for crying out loud...).

We can agree that the bubble deflating, one way or another, is the best outcome long term. That said, the longer we fuel these delusions, the worse the fallout will be when it does. And what I fear is that one day, a bubble (perhaps this one, perhaps another) will grow so large that it wipes out globalized free-market trade as we know it.

But can it run Crysis?

However, if you actually need the much higher precision of FP64 for scientific computing (like most non-AI data center users do) and extremely slow emulation is not an option, consider yourself fucked.

That's what I am trying to say: every big technology player, every industry, every government is all in on AI. That means you and I are along for the ride, whether we like it or not.

> Consider that you'll be wiping your ass with DIMMs once this one bursts; I can always put more memory to good use.

Except you can't, because DRAM makers have almost entirely pivoted from making (G)DDR chips to making HBM instead. HBM must be co-integrated at the interposer level and 3D-stacked, resulting in terrible yield. This makes it extremely pricy and impossible to package separately (no DIMMs).

So when I say the world is all in on this, I mean it. With every passing minute, there is less and less we can salvage once this is over; for consumer DRAM, it's already too late.

Eventually the curves cross. Eventually the computer you can get for, say, $2000, becomes able to run the best models in existence.

The only way this doesn’t happen is if models do not asymptote or if computers stop getting cheaper per unit compute and storage.

This wouldn’t mean everyone would actually do this. Only sophisticated or privacy conscious people would. But what it would mean is that AI is cheap and commodity and there is no moat in just making or running models or in owning the best infrastructure for them.

Google was built on the shoulders of a lot of infrastructure tech developed by former search engine giants. Unfortunately the equity markets decided to devalue those giants instead of applaud them for their contributions to society.

Ranking was Google's 5% contribution to it. They stood on the shoulders of people who invented physical server and datacenter infrastructure, Unix/Linux, file systems, databases, error correction, distributed computing, the entire internet infrastructure, modern Ethernet, all kinds of stuff.

Everyone stood on the shoulders of file systems and databases, ethernet (and firewalls and netscreens, ...) Well, maybe a few stood on the shoulder of PHP.

Google did in fact pretty much figure out how to scale large number of servers (their racking, datacenters, clustering, global file systems etc) before most others did. I believe it was their ability to run the search engine cheap enough that enabled them to grow while largely retaining profitability early on.

Try “@gmail” in Gemini

Google’s surface area to apply AI is larger than any other company’s. And they have arguably the best multimodal model and indisputably the best flash model?

Is it better for society for promising startups to die on the open market, or get acquired by a monopoly? The third option -- taking down the established players -- appears increasingly unlikely.

Is there any evidence that this is the case ? For very big merger (like nvdia and Arm tried) sure, but I can't think of a single time regulator stop a big player from buying a start up.

What I know is that a lot of deals aren't even being considered that once were, and antitrust is a huge factor in that consideration.

If anything the current system is beyond redemption and should probably be nationalized for the betterment of society. Government investment in technology brought us the transistor and internet, the two things that enabled any of this to exist and it was massively subsidized for the betterment of the public.

Maybe we should follow that model again.

I think this is a problem for Google. Most users aren't going to do that unless they're told it's possible. 99% of users are working to a mental model of AI that they learned when they first encountered ChatGPT - the idea that AI is a separate app, that they can talk to and prompt to get outputs, and that's it. They're probably starting to learn that they can select models, and use different modes, but the idea of connecting to other apps isn't something they've grokked yet (and they won't until it's very obvious).

What people see as the featureset of AI is what OpenAI is delivering, not Google. Google are going to struggle to leverage their position as custodians of everyone's data if they can't get users to break out of that way of thinking. And honestly, right now, Google are delivering lots of disparate AI interfaces (Gemini, Opal, Nano Banana, etc) which isn't really teaching users that it's all just facets of the same system.

Google is telling this in about a hundred different popups and inline hints when you use any of its products

As a loan officer in Japan who remembers the 1989 bubble, I see the same pattern. In the traditional "Shinise" world I work with, Cash is Oxygen. You hoard it to survive the inevitable crash. For OpenAI, Cash is Rocket Fuel. They are burning it all to reach "escape velocity" (AGI) before gravity kicks in.

In 1989, we also bet that land prices would outrun gravity forever. But usually, Physics (and Debt) wins in the end. When the railway bubble bursts, only those with "Oxygen" will survive.

To be honest, in 1989, I was just a child. I didn't drink the champagne. But as a banker today, I am the one cleaning up the broken glass. So I can tell you about 1989 from the perspective of a "Survivor's Loan Officer."

I see two realities every day.

One is the "Zombie" companies. Many SMEs here still list Golf Club Memberships on their books at 1989 prices. Today, they are worth maybe 1/20th of that value. Technically, these companies are insolvent, but they keep the "Ghost of 1989" on the books, hoping to one day write it off as a tax loss. It is a lie that has lasted 30 years.

But the real estate is even worse. I often visit apartment buildings built during the bubble. They are decaying, and tenants have fled to newer, modern buildings. The owner cannot sell the land because demolition costs hundreds of thousands of dollars—more than the land is worth.

The owner is now 70 years old. His family has drifted apart. He lives alone in one of the empty units, acting as the caretaker of his own ruin.

The bubble isn't just a graph in a history book. It is an old man trapped in a concrete box he built with "easy money." That is why I fear the "Cash Burn" of AI. When the fuel runs out, the wreckage doesn't just disappear. Someone has to live in it.

But in my experience as a banker, the ones left in the wreckage are rarely the ones who drank the champagne. It is usually the ones who were hired to clean the glasses.

I hope history proves me wrong this time.

I've always had a morbid fascination with financial bubbles and the Japanese one of the late 1980s might be the most epic in history (definitely in modern times at least).

But I appreciate your perspective. It is refreshing to know that someone finds a poetic texture in what I simply call "bad loans."

Mh, not sure what you mean: „Manuel“ and „Kießling“ are literally my first and last name.

For OpenAI, cash is oxygen too; they're burning it all to reach escape velocity. They could use it to weather the upcoming storm, but I don't think they will.

It is a magnificent gamble. If they reach escape velocity (AGI), they own the future. But if they run out of fuel mid-air, gravity is unforgiving.

As a loan officer, I prefer businesses that don't need to leave the atmosphere to survive.

I don't expect AGI or Super intelligence to take that long but I do think it'll happen in private labs now. There's an AI business model (pay per token) that folks can use also.

I appreciate the optimism for what would be the biggest achievement (and possibly disaster) in human history. I wish other technologies like curing cancer, Alzheimer's, solving world hunger and peace would have similar timelines.

- take your data

- make a model

- sell it back to you

Eventually all of the available data will have been squeezed for all it's worth the only way to differentiate oneself as an AI company will be to propel your users to new heights so that there's new stuff to learn. That growth will be slower, but I think it'll bear more meaningful fruit.

I'm not sure if today's investors are patient enough to see us through to that phase in any kind of a controlled manner, so I expect a bumpy ride in the interim.

When you look at models that were built for a specific purpose, closely intertwined with experts who care about that purpose, they absolutely propel communities to new heights. Consider the impact of alphafold, it won a Nobel prize, proteomics is forever changed.

The issue is that that's not currently the business model that's aimed at most of us. We have to have a race to the bottom first. We can have nice things later, if we're lucky, once a certain sort of investor goes broke and a different sort takes the helm. It's stupid, but its a stupidity that predates AI by a long shot.

We know that the model training on the model training on the model leads to model collapse...

Value is determined by what we value, it's a choice. If a bunch of scientists value good approximations for how a protein will fold, and then a model generates more such things in a year than those scientists could make in a century, that's a lot of value. Not extracted from anyone, created.

If we consider "AI" to be the current LLM and ImageGen bubble, I'm not sure we can say that.

We were all wowed that we could write a brief prompt and get 5,000 lines of React code or an anatomically questionable deepfake of Legally Distinct Chris Hemsworth dancing in a tutu. But once we got past the initial wow, we had to look at the finished product and it's usually not that great. AI as a research tool will spit back complete garbage with a straight face. AI images/video require a lot of manual cleanup to hold up to anything but the most transient scrutiny. AI text has such distinct tones that it's become a joke. AI code isn't better than good human-developed code and is prone to its own unique fault patterns.

It can deliver a lot of mediocrity in a hurry, but how much of that do we really need? I'd hope some of the post-bubble reckoning comes in the form of "if we don't have AI to do it (vendor failures or pricing-to-actual-cost makes it unaffordable), did we really need it in the first place?" I don't need 25 chatbots summarizing things I already read or pleading to "help with my writing" when I know what I want to say.

The issue is that generation of error-prone content is indeed not very valuable. It can be useful in software engineering, but I'd put it way below the infamous 10x increase in productivity.

Summarizing stuff is probably useful, too, but its usefulness depends on you sitting between many different communication channels and being constantly swamped in input. (Is that why CEOs love it?)

Generally, LLMs are great translators with a (very) lossly compressed knowledge DB attached. I think they're great user Interfaces, and they can help streamline buerocracy (instead of getting rid of it) but they will not help getting down the cost of production of tangible items. They won't solve housing.

My best bet is in medicine. Here, all the areas that LLMs excell at meet. A slightly distopian future cuts the expensive personal doctors and replaces them with (few) nurses and many devices and medicine controlled by a medical agent.

Imagine a trillion dollars (frankly it might be more, we'll see) shoved into clean energy generation and huge upgrades to our distribution.

With a bubble burst all we'd be left with is a modern grid and so much clean energy we could accelerate our move off fossil fuels.

Plus a lot of extra compute, that's less clear of a long term value.

Alas.

They only lasted a couple of decades as the main transportation method. I'd say the internal combustion engine was a lot more transformative.

I know nothing about finances at this level, so asking like a complete newbie: doesn't that just mean that instead of risking $10B they're risking $7-8B? It is a cheaper bet for sure, but doesn't look to me like a game changer when the range of the bet's outcome goes from 0 to 1000% or more.

I may be way off, but to me it seems like the AI bubble is largely a way to siphon money from institutional investors to the tech industry (and try to get away with it by proxying the investments) based on a volatile and unpredictable promise?

The existential risk is in companies smoking the AI crackpipe that sama (begging your pardon) handed them, thinking it feels great and then projecting[1] that every investment will hit like the first, and continuing to buy the <EXPLETIVE> crack that they can't afford, and they investors can't afford, and their clients can't afford, their vendors can't afford, the grid can't afford, the planet can't afford, the American people can't afford, and sama[2] can't afford, _because it's <EXPLETIVE> crack_!

The wise will shut up and take the win on the slop com bubble.

[1]: https://en.wikipedia.org/wiki/Chasing_the_dragon

[2]: For those following along at home, sama is Sam Altman, he was a part of the Y Combinator community a while back: https://news.ycombinator.com/threads?id=sama

[1] https://www.youtube.com/watch?v=QAWtcYOVbWw

It's the dumb as rocks MBAs that will go head first into the 5% chance deal.

Sure, markets can crash, but this idea of “go to zero” never happens.

That’s the whole calculus of these investments. Many of them are expected to fail.

The fact that it’s painful to the average person means nothing to the people who run the system.

Apparently you've never lived through the crash of a 'currency' which is based on a flawed mathematical concept. You'll get to experience what that's like (for the first time in history!) when it's revealed there is some kind of subtle flaw in SHA-256 which renders it worthless as the basis of anything important, let alone a 'currency.'

How do you sell your 'coin' to anyone when the market disappears at the speed of news? Yes, it will go to ZERO, INSTANTLY.

Guess what happens when the crypto crash is combined with a) collapse of the real estate bubble, especially commercial real estate; b) the ongoing IT crash that is only just getting started; c) whatever damage the (current, red-flavored) orangutan in the White House manages to accomplish in his 3+ remaining years of hell; d) fear of looming war; e) economic fallout from COVID which is still ongoing and expanding (hint--many destroyed businesses and people out of work); f) a thousand other icebergs, minefields, and financial hazards confronting us in the near future? Buckle up!

Even if every cryptocurrency becomes worthless overnight, that doesn’t represent the market going to zero.

I see you’ve edited your comment with more doom and gloom. It’s easy to view everything as a bubble when you’re in a negative mental space.

> a) collapse of the real estate bubble, especially commercial real estate;

Any proof of this bubble? Housing construction continues to lag demand. Offices are largely RTO and Covid-era remote jobs are basically legacy and grandfathered. Every remote employee I know who was laid off in the past couple years had to get a hybrid/in-person job. You can’t just assume 2008 is going to happen again without some real data that shows real estate instability. Where are the poorly qualified borrowers?

> b) the ongoing IT crash that is only just getting started;

That’s one industry of many. One specific industry struggling doesn’t mean much.

> c) whatever damage the (current, red-flavored) orangutan in the White House manages to accomplish in his 3+ remaining years of hell;

Lame duck presidency, he can’t crash shit. Congress will be unfriendly next year and already isn’t even very supportive within his own party.

> d) fear of looming war;

In what universe is any impending war impacting the American economy? You mean the one where defense contractors are hiring and the US is selling weapons to the nations who are doing the fighting?

> e) economic fallout from COVID which is still ongoing and expanding (hint--many destroyed businesses and people out of work);

You are gonna need to explain this one and back this up with some numbers that make sense.

> f) a thousand other icebergs, minefields, and financial hazards confronting us in the near future?

Sounds like internal anxiety demons that are not tangible.

Look, I’m in full agreement that AI will face some kind of correction or crash, but predicting once in a century catastrophe is a losing game.

This is only true if the probability distributions for the values of the individual deals are rather uncorrelated (or even better: stochastically mostly independent).

Opportunity costs are a thing.

This is especially true when your investors/owners expect you to generate better returns than the risk-free rate.

Also, classifying business expenses as "cost to the tax payer" seems less than useful, unless you are a proponent of simply taxing gross receipts. Which has its merits, but then the discussion is about taxing gross receipts versus income with at least some deductible expenses, not anything to do with OpenAI.

However, this discussion will be a perfect introduction to "finances at this level", where about 60% of the action is injecting more variables until you can fit a veneer of quantification onto any narrative.

So MSFT is effectively getting 2x the equity by putting money into OpenAI, it also conveys some financial engineering capability as they can choose to invest more when profits are high to smooth out cash flow growth.

isn't that what buybacks are for?

Är the same time, MS revenues are looking real good, causing the stock price to go up. It's a win win win maybe win huge situation.

So just a loss for governments, or in other words, socializing the losses.

Pension funds buy shares in businesses such as Microsoft. The money going into the pension fund is not typically a function of the tax paid by companies such as Microsoft, but rather from a combination of actuaries’ recommendations, payroll tax receipts, and politicians’ priorities.

Therefore a pension funds’ equity holdings, such as Microsoft, doing well means taxes can be lower.

Even in the USA, Social Security defined benefit pensions are cash from workers today going to non workers today, same as Germany's national scheme (gesetzliche Rentenversicherung?).

How's that different than any other sort of R&D incentive? Would you rather that companies return as much money as possible to shareholders, future growth be damned? What about other sorts of tax incentives, which by definition also "just a loss for governments"? Are tax breaks for people with kids also "socializing the losses", given that most households don't have kids?

OpenAI is anyways seeking Govt Bailout for "National Security" reasons. Wow, I earlier scoffed at "Privatize Profits, Socialize Losses", but this appears to now be Standard Operating Procedure in the U.S.

https://www.citizen.org/news/openais-request-for-massive-gov...

So the U.S. Taxpayer will effectively pay for it. And not just the U.S. Taxpayer - due to USD reserve currency status, increasing U.S. debt is effectively shared by the world. Make billionaires richer, make the middle class poor. Make the poor destitute. Make the destitute dead. (All USAID cuts)

It shouldn't be the job of the US taxpayer to feed someone that doesn't want to work, study, or pass a drug test, and it absolutely shouldn't be the job of the US taxpayer to feed another country's citizens half a world away.

That's pretty close to the story other Brits give themselves for why losing the empire was actually a good thing for the UK.

This would make sense if every person was given similar opportunities, like providing quality education to all of our youngest and making higher education a mission rather than a business as a starter.

As a society we move at the speed of the weakest among us, we only move forward when we start lifting and helping the weakest and most vulnerable.

You also need to realize that not doing that work is also cause for other taxpayer money to be spent elsewhere, such as spending an average of 37k $ per incarcerated person, and that ignores all the damage that criminal might've caused, all the additional police staffing and personal security that is needed to be spent outside prisons, etc.

Those are complex systems, are you sure it wouldn't be better to spend the same gargantuan amount of money that's spent on millions of inmates and fighting crime into fighting the causes that make many fall into that?

Again, those are complex, but closed systems and the argument of "we shouldn't spend on X" often ignores the cost of not spending on X.

You’re right that these are complex systems, and just pouring more tax dollars and more debt into them isn’t working. Portions of our society need to value education, value contributing to society instead of taking, and reject criminality - but those changes require more than blind spending.

In another way, the top talent gets Ferraris for their tuition, the rest gets a bike. In a lot of European countries everyone can get the Toyota Camry of education, decent but not world class. That does scale though.

Spending isn't everything, it's how you apply that spending.

A lot.

As an European I can assure you even public second tier universities have excellent education.

Where they lag the rankings is where money matters: politics to be highly ranked and money for high impact research.

But when it comes to testing proficiency in e.g. science and math, the second university of Rome ranks higher than most ivy leagues in US ;)

For science/math would you rather go to Rome or MIT? I know which one I would pick if they cost the same. A lot of it is also the people you're surrounded by.

Much of the problem comes from a poor grasp of what education is and is for, and because of that, money and effort are not allocated properly. One source of the problem are various educational fads. I personally remember when computers were artificially jammed into school curricula for no good reason. There was absolutely no merit to what was being done. But how much do you think the companies selling that garbage made out?

Or consider the publishing industry that fleeces schools and students with 12978th editions of the same poorly-presented material packaged in overpriced books. Financially, education is quite cheap, but there are sectors of the economy devoted to convincing pedagogues and politicians that it isn't, and that what you need to do is buy in order to "change with the times". Sorry, but basic education isn't fast fashion. Materially, basic education is stable and cheap.

Another problem is that American culture is pragmatic to a fault. Americans have a long history of viewing education, particularly the university, with distaste, as some kind of "European", un-American, and aristocratic thing. This explains the appeal of the pragmatic turn of the university: you now go to university to "get a job". Of course, that isn't the core mission of the university, and most professions don't require anything the university might provide, especially not at these absurd costs (hence why GenZ is seeing something like a 1500% increase in pursuing trades).

We have a cultural momentum that must fizzle out or must be reshaped. Where the modern university specifically is concerned, its days may very well be numbered. It may very well be forced to undergo very painful changes, or crumble, with a new crop of smaller colleges taking their place. Where primary education is concerned, parents are increasingly taking their children out of the savage factory known as public education. This, too, may force public education to finally deal with its dysfunction, or collapse.

A morbid thought that would probably address the bulk of this: male birth control.

The backlash would be profound, it’ll never happen. But if there were a way to make a “perfect pill/shot/procedure” boys had maybe at birth to prevent unplanned pregnancies… just think about it.

I’m not even sure I’m advocating for it. Everyone says “education will fix all the things!” I think raising kids where the parents wanted to be parents would fix a whole lot, at least on the incarnation side.

What about someone who works and still can’t afford enough housing/food?

> shouldn't be the job of the US taxpayer to feed another country's citizens half a world away.

I mean where’s the profit in that, am i right?

Food stamps? The original comment is addressing those not working or studying, or staying off drugs.

>I mean where’s the profit in that, am i right?

We’re $38 trillion dollars in debt. Digging a deeper whole isn’t a sound decision.

Compare that to when we still had revolutions, where it was very hard for government to know what is going on, and to find individuals without a huge effort.

I think revolutions have become next to impossible, unless it is lead by significant parts of the elite that controls at least part of the apparatus.

That's not even counting the far more sophisticated propaganda methods, so that many of the affected people won't even begin to target the actual culprits but are lead to chase shadows, or one another.

> You can’t kill/arrest 25% of your population.

Unnecessary.

> That is why Russia/China/etc are so scared to let any protests begin

Especially Russia's issue is that lots of the elites want change too. But you also underestimate that what the population also does not want is a repeat of 1990s chaos, and Russian weakness.

Our first obligations are toward our immediate families. As the human race is essentially a large extended family, the obligations dissipate the further out we go. We do have a general obligation to help those in need, but this obligation is prioritized. In classical texts, this is called the ordo amoris or "order of love" (in the older, more technically accurate terminology, order of charity, where "charity" - from caritas - means willing the good of the other).

Now, to address your comment specifically...

> There's already a lot that the US taxpayer is on the hook for that's a lot less valuable than a best on the next big thing in software, productivity, and warfare.

For example? Whatever the benefits of LLMs, I find this relative exuberance unreasonable.

> It shouldn't be the job of the US taxpayer to feed someone that doesn't want to work,

In someone able-bodied and of sound mind refuses to work, then we don't have an obligation to support someone like that. This is true. In fact, it would be uncharitable to enable their laziness, because it harms the character and virtue of that person. Of course, in practice, if someone you have determined is able to work is found starving and in danger of death, for example, then it is unlikely they are merely lazy. Would a man of sound mind allow himself to starve?

The manner in which we deal with such cases is a prudential matter, not a matter or principle. We need to determine how best to satisfy the principle in the given circumstances, and there is room for debate here.

> it absolutely shouldn't be the job of the US taxpayer to feed another country's citizens half a world away.

If there is a humanitarian crisis somewhere in the world, for example, then there is a general obligation of the entire world to help those affected. How that happens, how that is coordinate, is a matter of prudence and implementation detail, as it were. Naturally, several factors enter the equation (proximity, wealth, etc).

How do you square this thought with the actual rate of poverty being on a steady downward trend while billionaires do their things?

This does not show your "steady downward trend", but has considerably fluctuated over the last few years. It is an increase to 12.9% in 2024, compared to 7.1% in 2020-21. Will need to wait till end of 2026 for the 2025 computation.

https://thedocs.worldbank.org/en/doc/ec3d46c25a822d6d248e86d...

Please note that if you exclude China, the trend of poverty reduction is laughable.

"Slowed to a near standstill" means it's still moving in the right direction.

There may have been some global event in the 2020s that maybe had a bit of an impact on the global economy.

> Please note that if you exclude China, the trend of poverty reduction is laughable.

If you exclude the area of the world that used to be extremely poor but has benefitted massively from the wealth generated by creating products for the billionaires abroad, why would you exclude that?

Speaking for EU, all big tech already not paying taxes one way or another, either using Dublin/Ireland (Google, Amazon, Microsoft, Meta, ...) and Luxembourg (Amazon & Microsoft as far as I can tell) to avoid such corporate/income taxes. Simply possible because all the earnings go back to the U.S. entity in terms of "IP rights".

That should be expected, because

https://european-union.europa.eu/priorities-and-actions/acti...

> The EU does not have a direct role in collecting taxes or setting tax rates.

> There was a lawsuit in Belgium but Amazon has won that in late-2024 since they had a separate agreement in/with Luxembourg.

Dec 2023.

> Speaking for EU, all big tech already not paying taxes one way or another, either using Dublin/Ireland (Google, Amazon, Microsoft, Meta, ...) and Luxembourg (Amazon & Microsoft as far as I can tell) to avoid such corporate/income taxes. Simply possible because all the earnings go back to the U.S. entity in terms of "IP rights".

Ireland (due to pressure from EU) closed this in 2020. The amount of tax collected by Ireland quadrupled. See Figure 5 and 6 in link below.

https://budgetmodel.wharton.upenn.edu/issues/2024/10/14/the-...

Its clear that OP means "in the EU".

> Ireland (due to pressure from EU) closed this in 2020. The amount of tax collected by Ireland quadrupled. See Figure 5 and 6 in link below.

And Ireland fought against this tooth and nail. Yes, a country was fighting to have less income. All out of fear that the companies will leave the little tax heaven. Did they leave? No ...

> See Figure 5 and 6 in link below.

Figure 7 is also interesting if we look at the tax income increase and the outbound.

1. Amazon reports 250bn$+ revenue for entire EU in 2025. (of course, revenue != profit) while all 250bn$+ evaporates to somewhere. Their own page [1] reports 225k employees across EU, meaning that each employee returns whopping 1 million plus dollars! While being compensated less than 10% of their value!

2. In their own article [1], they boast how they invested (translated; smuggled money out) and enabled SMEs 20bn$+ revenue. (Like seriously, less than 10%?! actually goes back into the economy...)

3. Amazon says that they have invested 250bn$ in EU since 2010. It is completely unknown what or where that was invested. I do not see my street lightning being improved by the Amazon's investment or garbage being collected better.

4. Luxembourg's GDP is ~95bn$ in 2025. Amazon has contributed to that with the 0$ corporate tax. Obviously they employed about 4.5k people which they've decided to let go about 10% of them. Where the median/average yearly gross salary stands somewhere around 80k eur, it is hardly anywhere near 1mm+$ total income. I am guessing that they heat up the offices with burning the remaining cash...

[1]: https://www.aboutamazon.eu/news/job-creation-and-investment/...

For the date of the verdict for Amazon vs EU, apologies. The article date was November 2024 in the source [2].

[2]: https://www.techtimes.com/articles/308509/20241129/amazons-2...

For the Ireland, I only knew similarities between Luxembourg and specific laws allowing such loopholes pre-brexit period. The source is certainly interesting and I need to dive deeper to understand better.

An employee's "value" is not revenue / number of employees. There are many businesses where employees are reduced, but revenue does not decrease in direct proportion.

An employee's compensation is only related to what the employer thinks they can pay someone else and what the employee thinks another employer will pay them. Just like how the price of an apple is related to what the grocery store thinks a customer will pay for it and what the customer thinks a different grocery store will sell it for. (Obviously bounded on both sides by the minimum cost to produce and transport the apple, and by the maximum price a customer is able and willing to pay).

These big corps use holdings in low tax jurisdisctions like Ireland and Luxemburg, funnel all their EU subsidiaries’ revenues there and end up paying 0 tax in the individual EU countries.

This system is actually legal, EU lawmakers should pass laws to prevent this.

[1]: https://en.wikipedia.org/wiki/Dutch_Sandwich?wprov=sfla1

And the decision how to distribute these (corporate tax) should be done by the government. Essentially, companies evading [corporate] tax decides themselves where to distribute that money. Obviously, they make decisions that drives more profits and income, not the public good. Even if it improves living conditions (ie. delivery service would help elderly), it still requires that person to be user of the product. A layman/citizen cannot effectively utilize the benefits.

What should be taxed?

Amazon, as an example, has servers in country X. Country X taxes the transaction or the income from the server company.

Amazon pays delivery drivers in country X to deliver goods, and the driver is taxed through various means (vehicle, fuel, payroll, etc).

What is Amazon doing in country X that should be taxed?

its profits within that country (income minus actual expenses)

in practice expenses are fakely inflated to transfer tax payments top jurisdiction with near-zero taxes

Amazon can add up the costs to install and operate a datacenter or warehouse in country X, but most of the demand for services from that datacenter or warehouse will be due to expenses incurred in country Y.

    > What should be taxed?

    > Amazon, as an example, has servers in country X. Country X taxes the transaction or the income from the server company.

1. The user completes a transaction either on Amazon (buying a product) or in AWS (running an EC2 instance)

2. If the user is a business, there is no VAT. Because VAT is applied only to the end user. (To prevent compounding effect also). If it was the end-user, then end-user already pays for their VAT, usually around 18-20% in the case of an EC2 instance. But that has nothing to do with Amazon. User technically pays the VAT directly to the government depending on where he/she is located and where the server is.

3. Obviously Amazon does not sell the products or servers for free, they have a markup or profit margin, let's say 40% for a 100eur EC2 instance. So, 40eur lands into Amazon's bank account. While other 60eur goes to the operating expenses. (ie. Electricity, maintenance, employees' salaries, etc...)

4. In this case, Amazon should be taxed from that 40%, (ie. from the 40eur profit). Luxembourg corporate tax is about ~16-17%. Mind that US federal corporate tax is 21% itself. For the sake of simplicity, let's take 20% as the corporate tax. This would make 8eur going into the government's pocket. while 32eur stays as the profit with amazon.

5. All other companies provide the same service and has no magical entity outside pays that ~8eur to the government. Which in turn used to provide services to the citizens. (For example, Luxembourg has completely free public transportation that works 24/7, subsidized by the taxes)

6. However, Amazon having a magical entity, they declare all that 40eur profit belongs to the US entity due to the IP rights. They essentially say 100% of the things that are produced in Luxembourg, by employees in Luxembourg even owned by the US entity. Therefore, they do not pay any income tax as in fact there is no income on paper.

7. Instead, since they were able to save that 8eur, they can reduce the prices of the services up to that amount. But instead, Amazon usually reduces prices about half, reducing 4eur for customers and other 4eur going into Amazon's profit pocket.

8. It all seems nice so far, since users also benefit from reduced prices, right? Unfortunately, no. In the longer term, it hurts competition as other companies must pay taxes and losing the customers [to Amazon].

9. When there is no competition left, then Amazon can just start syphoning all the 8eur profit back to themselves. Even setting the prices as there is no longer any alternative to go.

10. Not only it hurts customers, it also hurts the random person on the street; as they receive services from government which were subsidized by the taxes. You may say that Amazon can or may invest even better products or services, but that's again not helping the layman unless he/she is an Amazon customer. And mind that a citizen does not need to be Amazon customer to get their electricity and water running.

    > Amazon pays delivery drivers in country X to deliver goods, and the driver is taxed through various means (vehicle, fuel, payroll, etc).

    > What is Amazon doing in country X that should be taxed?

The consumer pays a certain price for a product and a portion of that money goes to taxes and costs to Amazon (including things that are taxed, like driver salaries and fuel). Those taxes are collected on the way from Amazon to the end user in every country they pass through, more or less.

Amazon is creating commerce that is taxed. They aren't skating by for free.

So EU lawmakers should determine the amount member countries collect in tax?

The countries like Ireland and Luxembourg need to stop granting these loopholes.

To give an (absurd) example; You work in country X, but the parent company is in country Y. Imagine your income tax is not going to where you reside but where you work, (usually the opposite) in this case, country Y. (~20-40% of the gross salary).

One day, your basic needs (electricity, water, etc) stops working. You call the relevant government department asking what's the problem. They reply with saying they do not know and cannot afford to figure our or fix because they do not have the money to do so.

But you've been paying at least 20% (and up to 46%) of your salary as the income tax. Where the money go? Why do you work here but someone else in the other side of the world getting that slice for free?

So kinda looking at a bank level run on tech companies if they go broke.

Was that an organic "it's not A, it's B" or synthetic?

Note: other people seem to be confused because companies can write off investments in corporate subsidiaries before the subsidiary is dissolved or sold...for book purposes. This creates what is known in the accounting world as a book-tax difference. If you have a few weeks to spare, look up tax provisions...

Nobody is talking about this because it's not a thing.

People here will shit on LLMs all day for being confidently incorrect, then upvote aggressively financially illiterate comments like this.

Their investors, if publicly traded like Microsoft do have to take write-downs on their financial statements but those aren't realized losses for tax purposes. The only tax "benefit" Microsoft might get from the OpenAI investment is writing off the amount it invested if/when OpenAI goes bankrupt.

I think we will end up with market similar to cloud computing. Few big players with great margins creating cartel.

I think this is something the other big players could replicate rapidly, even simulating the exact UI, interactions, importing/exporting existing items, etc. that people are used to with claude products. I don't think this is that big of a moat in the long run. Other big players just seem to be carving up the landscape and see where they can can fit in for now, but once resource rich eyes focus on them, Anthropic's "moat" will disappear.

OpenCode has LSPs out of the box (coming to Claude Code, but not there yet), has a more extensive UI (e.g. sidebar showing pending todos), allows me to switch models mid-chat, has a desktop app (Electron-type wrapper, sure, but nevertheless, desktop; and it syncs with the TUI/web versions so you can use both at the same time), and so on.

So far I like it better, so for me that moat isn't that. The technical moat is still the superiority of the model, and others are bound to catch up there. Gemini 3 Preview is already doing better at some tasks (but frequently goes insane, sadly).

Wasn't this released a couple of weeks ago?

[1] https://github.com/anthropics/claude-code/issues/14803#issue...

I haven't experienced this myself, but RooCode does something similar to OpenCode's approach and the maintainer has reported some bans [1].

Google on the other hand, is being very strict about keeping you locked in to their tools, unless you use API keys, of course.

[1] https://github.com/RooCodeInc/Roo-Code/pull/10077#issuecomme...

I can use Claude in Jetbrains IntelliJ and in Zed, I can use it with OpenCode, and there are lots of other agent tools. Everyone can build these tools around an LLM, and they're already being commodified.

The moat right now is the quality of the model, not the client. Opus is just so much better than the competitors, at least for now.

This comparison keeps popping up, and I think it's misleading. The pace of technology uptake is completely different from that of railroads: the user base of ChatGPT alone went from 0 to 200 million in nine months, and it's now- after just three years- around 900 million users on a weekly basis. Even if you think that railroads and AI are equally impactful (I don't, I think AI will be far more impactful) the rapidity with which investments can turn into revenue and profit makes the situation entirely different from an investor's point of view.

AI enables people to... produce even more useless slop than before?

> Digital content of low quality that is produced usually in quantity by means of artificial intelligence.

Chosen by the editors as word of the year, by the way.

The point is that AI can produce slop (as people do, too), but it's just silly to imply that everything it can produce is slop. That's just lazy, sloppy thinking.

However, I do think that the majority (or mainstream) use of GenAI today is indeed not very useful or even harmful. And I do think that something like railroads are more useful by orders of magnitude.

What are you basing this opinion on?

that is why people use slop qualifier, rather than not using qualifier

Well, I rotate about a dozen of free accounts because I don't want to send 1 cent their way, I imagine I'm not the only one. I do the same for gemini, claude and deepseek, so all in all I account for like 50 "unique" weekly users

Apparently they have about 5% of paying customers, the amount of total users is meaningless, it just tells you how much money they burn and isn't an indication of anything else.

For someone who doesn't like the product and doesn't care about it, you surely make a lot of effort to use it.

It's also literally 0 effort, click > sign out > click > sign in. It saves me $200 a month, that's not too far from half of my rent

Also, maybe I'm missing something, but no amount of free accounts on ChatGPT gives you what you get with a paid subscription, especially with a $200 one; and there's paid plans from just $8/month.

> Also, maybe I'm missing something, but no amount of free accounts on ChatGPT gives you what you get with a paid subscription, especially with a $200 one

These days I'm mostly running opus 4.5 through "antigravity" and I'd rather become a potatoe farmer than give $8 to Altman

If you have to stop torrenting it doesn't mean that you have to pay $20 per movie. There is a price >0 that you're willing to pay to do something you love. On youtube there's a lot of movies for 4 or 5 dollars.

I'm also using Claude, both through Cursor (paid by my company) and privately (paid by me, $20/ month).

> I think AI will be far more impactful

is not correct IMO. Those are two very different areas. The impact of railroads on transport and everything transport-related cannot be understated. By now roads and cars have taken over much of it, and ships and airplanes are doing much more, but you have to look at the context at the time.

The pace was slower indeed. It takes time to build the railroads. But at that time advancements also lasted longer. Now it is often cash grabs until the next thing. Not comparable indeed but for other reasons.

Doesn't have anything to do with AI itself. Consider Instagram then TikTok before this, WhatsApp before, etc. There is a clear adoption curve timeline : it's going WorldWide faster. AI is not special in that sense. It doesn't mean AI itself isn't special (arguable, in fact Narayanan precisely argue it's "normal") but rather than adoption pace is precisely on track with everything else.

I think this conflates together a lot of different types of AI investment - the application layer vs the model layer vs the cloud layer vs the chip layer.

It's entirely possible that it's hard to generate an economic profit at the model layer, but that doesn't mean that there can't be great returns from the other layers (and a lot of VC money is focused on the application layer).

One doesn't need tens of billions for them.

The... what now?

They are getting better, faster etc etc.

And I get down voted again for the truth people don't want to hear lol

They'll probably all help in the future, but the current LLM craze doesn't seem to be helped by them at this moment in time, and an economic cycle like this has a boom phase of at most 10 years. So any changes in basic computing hardware will probably help with the next LLM++ tech.

You can order one already. They are not great, but I expect in a few years, things will look very very different.

Not decades

And among them the overwhelming majority of companies in the sectors died. Out of the 2000ish car-related companies that existed in 1925 only 3 survived to today. And none of those 3 ended up a particularly good long term investment.

I may add that investors are mostly US-centric, and so will the bubble-bursting chaos that ensues.

I think this is analysis is too surface level. We are seeing Google Gemini pull away in terms of image generation, and their access to billions of organic user images gives them a huge moat. And in terms of training data, Google also has a huge advantage there.

The moat is the training data, capital investment, and simply having a better AI that others cannot recreate.

I don't see how Google doesn't win this thing.

As stated in TFA, this simply has not been demonstrated , nor are there any artifacts of proof. It's reasonable to suspect that there is no special apparatus behind the curtain in this Oz.

From TFA: "One vc [sic] says discussion of cash burn is taboo at the firm, even though leaked figures suggest it will incinerate more than $115bn by 2030."

Why "soon"? All your arguments may be correct, but none of them imply when the pending implosion will happen.

The other, highly invested, companies (if openai and anthropic) may be in for a free fall.

You never wake to be left in the wake of "the next big thing".

Have you thought that there was a massive physical infrastructure left behind by the original railroad builders, all compatible with future vehicles? Other companies were able to buy the railroads for low prices and use.

Large Language Models change their power consumption requirements monthly, the hardware required to run them is replaced at a rapid rate too. If it were to stop tomorrow, what would you be left with? Out of date hardware, massively wasted power, and a gigantic hole in your wallet.

You could argue you have the blueprints for LLM building, known solutions, and it could all be rebuilt. The thing is, would you want to rebuild, and invest so much again for arguably little actual, tangible output? There isn't anything you can reuse, like others that came after could reuse the railroads.

Practically, what I'm finding is that whenever I ask Claude to search stuff on Reddit, it can't but Gemini can. So I think the practical advantages are where certain organizations have unfair data advantages. What I found out is that LLMs work a lot better when they have quality data.