This isn't the government subsidizing a private venture, it's a private venture offering a discount to the government. What does profitability have to do with whether or not the government should purchase their services?

Not a discount at all. Every dollar for a rented service is being flushed down the toilet. Industry is moving to local llms, the government should have been ahead of them.

If the service provider goes under, the govt wasted their money.

...no? Whatever value they got from inference they already did is still there? Of course the government still needs to worry about vendor lock-in, but they'd have to do that no matter what, and also general-purpose LLMs are relatively replaceable for most use cases.

If the company has a sustainable business model it will be profitable and hang around without jacking up prices. If not, you wasted time and money setting up the anthropic tool chain.

Given the statements in their SEC filing, it's not outlandish to consider the possibility of a long-term plan to make Anthropic models a nationalized, public utility before they go bankrupt.

If GSA is already considering vendor lock-in as they establish new public services across multiple agencies, the natural move is to build them to eventually transition to a federally-owned and operated provider. Especially with how involved the U.S. government is in limiting capabilities Anthropic provides to consumers today.

Except that work would be cheaper to set up and the cost would drop over time if they were using local llms. Every dollar paid to a 3rd party rental service is a dollar that is burned in the fireplace. We are paying more for the right to be stuck paying more forever, it's ridiculous.

Why would the government use local LLMs? Compute is a central example of the kind of thing that makes sense to outsource.

Claude gov is AWS Bedrock hosted on GovCloud which is managed via GSA schedule and FEDRAMP. So… that’s how GSA does exactly that these days.

I'm of the mindset that "GovCloud" and related products that make government dependent on private companies for vast government services is a bad idea.

If it's critical infrastructure, it should be publicly owned, funded, and protected by the federal government directly. Not rented from someone else under contracts that can be violated.

GovCloud is not, Google (https://cloud.google.com/gov) and Azure (https://azure.microsoft.com/en-in/solutions/government) also provide said services

Notably, all three of those providers have an incentive to increase costs for taxpayers in order to serve their investors. And all of those providers have federal politicians invested in their stock price.

Turns out anyone with a 401K is also invested.

But we’re also taxpayers. So maybe there’s an equilibrium.

Also ideally some competition between those providers that will keep prices in line. (Spoiler: it absolutely does)

GSA also requires that the government is the lowest cost customer so nobody on earth is allowed any better deal. This also applies pressure. You have to rely on incentives in the end.

If you assume nobody has any integrity and incentives are all fake and nobody will hold to their agreements then there isn’t really a “public” good anymore anyway so what’s the point in trying to make a public cloud? It would just lead to grift at larger scale that wouldn’t even benefit our stock portfolios.

> Turns out anyone with a 401K is also invested.

The problem with that thinking is not everyone is invested equally or in proportion to how much they pay in taxes. It's a transfer to people who can afford to invest more of their income, paid by everyone else.

It’s a good sentiment, but that’s not how it currently works outside of agencies like the NSA that have some special needs and maybe the technical capacity. (Granted it’s been a minute for me so maybe this has changed) Either way it’s all contractors for the most part. In-house roles are not as flexible and don’t pay market.

I don’t actually think you want the federal government doing their own cloud work tbh. It’s a hugely expensive endeavor and the incentives are not there to do it right across government.

These agreements are pretty iron clad and the data centers are often separate and have their own setups.

Once a cross-cutting services agency like DISA or GSA own the stuff they quickly become a bottleneck for government agencies because they can, and then each agency goes out and fights for their own budgets to avoid the bottleneck, and then we’re back to renting.

It’s often better for service to have separate agreements with agreed upon commercial providers for this reason.

The interstate highway system is also a hugely expensive endeavor, but boy am I grateful for it. Maybe we should privatize that too?