> OpenAI's losses might actually be attractive to certain investors from a tax perspective.

OpenAI is anyways seeking Govt Bailout for "National Security" reasons. Wow, I earlier scoffed at "Privatize Profits, Socialize Losses", but this appears to now 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 dollars reserve currency status, increasing U.S. debt is effectively shared by the world.

>> For the right investor base, $10B in annual losses at OpenAI could be worth $2-3B in tax shields

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

> For the right investor base, $10B in annual losses at OpenAI could be worth $2-3B in tax shields (depending on their bracket and how the structure works). That completely changes the return calculation

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.

Amazon already has not been paying any sort of income tax to the EU. There was a lawsuit in Belgium but Amazon has won that in late-2024 since they had a separate agreement in/with Luxembourg.

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".

Can you explain it in another way? What you are saying is that instead of loosing 100% they loose 70% and loosing 70% is somehow good? Or are you saying the risk adjusted returns are then 30% better on the downside than previously thought? Because if you are, I think people here are saying the risk is so high that it is a given they will fail.

It’s hardly a free option, by your numbers it’d be a 20-30% discount.

Google has several enviable, if not moats, at least redoubts. TPUs, mass infrastructure and own their own cloud services, they own delivery mechanisms on mobile (Android) and every device (Chrome). And Google and Youtube are still #1 and #2 most visited websites in the world.

I have yet to be convinced the broader population has an appetite for AI produced cinematography or videos. Independence from Nvidia is no more of a liability than dependence on electricity rates; it's not as if it's in Nvidia's interest to see one of its large customers fail. And pretty much any of the other Mag7 companies are capable of developing in-house TPUs + are already independently profitable, so Google isn't alone here.

Agreed. Even xAI's (Grok's) access to live data on x.com and millions of live video inputs from Tesla is a moat not enjoyed by OpenAI.

And yes, all their competitors are making custom chips. Google is on TPU v7. absolutely nobody is going to get this right on the first try among their competitors - Google didn't.

In this case the difference between its and it’s does alter the meaning of the sentence.

On paper, Google should never have allowed the ChatGPT moment to happen ; how did a then non-profit create what was basically a better search engine than Google?

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.

The TAM for video generation isn't as big as the other use cases.

Hasn't it all been scraped by other ai companies already?

>Anthropic is building moat around theirs models with claude code, Agent SDK, containers, programmatic tool use, tool search, skills and more.

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.

Railroads enabled people and goods to move from one place to another much easier and faster.

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

If the “moat” is not AI technology itself but merely sufficient other lines of business to deploy it well, then that’s further evidence that venture investments in AI startups will yield very poor returns.

Try “@gmail” in Gemini

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.

That kind of makes it sound like AI is a feature and not a product, which supports avalys' point.

I tried it, but nothing happened. It said that it sent an email but didn't. What is supposed to happen?

Also, Google doesn't have to finance Gemini using venture capital or debt, it can use its own money.

> in 5-10 years, most entry-level laptops will be able to manage a local 30B sized model

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.

> 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.

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.

> 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

Citation needed!

We don’t need anecdotes. We have data. Google has been announcing quarter after quarter of record revenues and profits and hasn’t seen any decrease in search traffic. Apple also hinted at the fact that it also didn’t see any decreased revenues from the Google Search deal.

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.

I personally know people that used ChatGPT a lot but have recently moved to using Gemini.

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.

I'm genuinely curious. Why do you do this instead of Google Searches which also have an AI Overview / answer at the top, that's basically exactly the same as putting your search query into a chat bot, but it ALSO has all the links from a regular Google search so you can quickly corroborate the info even using sources not from the original AI result (so you also see discordant sources from what the AI answer had)?

Yeah except that models don't propel communities towards new heights. They drive towards the averages. They take from the best to give to the worst, so that as much value is destroyed as created. There's no virtuous cycle there...

I‘m aware this means leaving the original topic of this thread, but would you mind giving us a rundown of this whole Japan 1989 thing? I would love to read a first-person account.

You're absolutely correct! ( ;) )

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.

I was really hoping, and with a different administration I think there was a real shot, for a huge influx of cash into clean energy infrastructure.

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.

But some people do believe that AI is all hype and it will all go away. It’s hard to find two people who actually mean the same thing when they talk about a “bubble” right now.

Pretty much every major historical trend of Western societies in the second half of the eighteenth century, from the development of the modern corporation to the advent of total war, was intimately tied to railroad transportation.

Transportation of people, yeah, but it still carries a majority of inter-city freight in North America.

Umm yes? The metro even if not a big deal in the states is like a small but quiet way it has changed public transport, plus moving freight, plus people over large distances, plus the bullet train that mixed luxury, speed and efficiency onto trains, all of these are quietly disruptive transformations, that I think we all take for granted.

> Just try to compete with OpenAI, let's see you calculate the price of attempting it. Scale it to 300, 500, 800 million users.

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.

What exactly is "second" place? No-one really knows what first place looks like. Everyone is certain that it will cost an arm, a leg and most of your organs.

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!

A penny saved is a penny earned

Did you try asking chatgpt to explain?

You weren’t around pre Google were you? The only thing Google learned from other search engines is what not to do - like rank based on the number of times a keyword appeared and not to use expensive bespoked servers

Isn't it really the other way around? Not to say OpenAI and Anthropic haven't done important work, but the genesis of this entire market was paper on attention that came out of Google. We have the private messages inside OpenAI saying they needed to get to market ASAP or Google would kill them.

Yes they did, at least twice in the 19th century. It was the largest financial crisis before 1929

Your view is ahistorical.

I still find it so fascinating how experiences with these models are so varied.

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.

There is always a comment like this in these threads. It’s just 50-50 whether it’s Claude or OpenAI.

I’m not saying that no company will ever have an advantage. But with the pace of advances slowing, even if others are 6-12 months behind OpenAI, the conclusion is the same.

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

For me OpenAI is the worst of all. Claude code and Gemini deep research is much much more better in terms of quality while ChatGPT hallucinating and saying “sorry you’re right”.

I use both and ChatGPT will absolutely glaze me. I will intentionally say some BS and ChatGPT will say “you’re so right.” It will hilariously try to make me feel good.

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.

codex is sooo slow but it is good at planning, opus is good at coding but not at good at seeing the big picture

It's a good take. I think both trajectories are occurring simultaneously.

OpenAI challenging Google search is a winner takes all situation, not to mention the vast amounts of user data.

On the other hand, us lesser mortals can leverage AI like a commoditized service to build applications with it.

Not really though. The cloud has some stickiness. It’s pretty hard to move once you’ve settled in. For a lot of AI integrations though it’s just swapping some API endpoints and maybe tweaking the prompting a bit. For probably 95% of AI use cases there almost no barrier to switching.

> your competitors will be able to replicate in few months.

Will they really be able to replicate the quality while spending significantly less in compute investment? If not then the moat is still how much capital you can acquire for burning on training?

> copyright provides such a moat.

Been saying this since the 2016 Alice case. Apple jumped into content production in 2017. They saw the long term value of copyright interests.

https://arstechnica.com/information-technology/2017/08/apple...

Alice changed things such that code monkeys algorithms were not patentable (except in some narrow cases where true runtime novelty can be established.) Since the transformers paper, the potential of self authoring content was obvious to those who can afford to think about things rather than hustle all day.

Apple wants to sell AI in an aluminum box while VCs need to prop up data center agrarianism; they need people to believe their server farms are essential.

Not an Apple fanboy but in this case, am rooting for their "your hardware, your model" aspirations.

Altman, Thiel, the VC model of make the serfs tend their server fields, their control of foundation models, is a gross feeling. It comes with the most religious like sense of fealty to political hierarchy and social structure that only exists as hallucination in the dying generations. The 50+ year old crowd cannot generationally churn fast enough.

It's also why they bought 40% of the world's RAM supply, too

Striking deals without a proper vision is a waste of resources. And that’s the path OAI is on.

Going viral is great when you're a small team or even a million dollar company. That can make or break your business.

Going viral as a billion dollar company spending upward of 1T is still not sustainable. You can't pay off a trillion dollars on "engagement". The entire advertising industry is "only" worth 1T as is: https://www.investors.com/news/advertising-industry-to-hit-1...

Selling a bunch of $20 a month subscriptions isn’t going to make a dent in OpenAI losses. Going viral for a day or two doesn’t help.

Normal people are already getting tired of AI Slop

That’s an unusual way of saying uh…adult entertainment

Are the posters of effing kitten videos a customer base with a significant LTV?

(The obvious well-paying market would be erotic / furry / porn, but it's too toxic to publicly touch, at least in the US.)

If only 99% of the Internet was kitten videos and memes

> Who wants to copy&paste prompts between ai agents?

An AI!

The specialist vs generalist debate is still open. And for complex problems, sure, having a model that runs on a small galaxy may be worth it. But for most tasks, a fleet of tailor-made smaller models being called on by an agent seems like a solidly-precedented (albeit not singularity-triggering) bet.

>Also if you want to have more semantics, you add image, video and audio to your model. It gets smarter because of it.

I think you are confusing generation with analysis. As far I am aware your model does not need to be good at generating images to be able to decode an image.

I think you're partially right, but I don't think being an AI leader is the main motivation -- that's a side effect.

I think it's important to OpenAI to support as many use-cases as possible. Right now, the experience that most people have with ChatGPT is through small revenue individual accounts. Individual subscriptions with individual needs, but modest budgets.

The bigger money is in enterprise and corporate accounts. To land these accounts, OpenAI will need to provide coverage across as many use-cases as they can so that they can operate as a one-stop AI provider. If a company needs to use OpenAI for chat, Anthropic for coding, and Google for video, what's the point? If Google's chat and coding is "good enough" and you need to have video generation, then that company is going to go with Google for everything. For the end-game I think OpenAI is playing for, they will need to be competitive in all modalities of AI.

> Because OpenAI stands for AI leader.

It'll just end up spreading itself too thin and be second or third best at everything.

The 500lb gorilla in the room is Google. They have endless money and maybe even more importantly they have endless hardware. OpenAI are going to have an increasingly hard time competing with them.

That Gemini 3 is crushing it right now isn't the problem. It's Gemini 4 or 5 that will likely leave them in the dust for the general use case, meanwhile specialist models will eat what remains of their lunch.

You don't expect AGI to be multi-modal?

Can Claude not do that? I've sent it pictures for simpler things and got answers, usually Id of bugs and plants.

Outside of this: https://openai.com/index/disney-sora-agreement/ I don't think there has been much of a win for them even in advertising for image/video slop.

>Gemini is catching up to chatpt from a MAU perspective

It is far behind, and GPT hasn't exactly stopped growing either. Weekly Active Users, Monthly visits...Gemini is nowhere near. They're comfortably second, but second is still well below first.

>ai overviews in search are super popular and staggeringly more used than any other ai-based product out there

Is it ? How would you even know ? It's a forced feature you can not opt out of or not use. I ignore AI overviews, but would still count as a 'user' to you.

Is Gemini, as a chatbot, a product that sustains current valuations and investment?

> ai overviews in search are super popular and staggeringly more used than any other ai-based product out there

This really is the critical bit. A year ago, the spin was "ChatGPT AI results are better than search, why would you use Google?", now it's "Search result AI is just as good as ChatGPT, why bother?".

When they were disruptive, it was enough to be different to believe that they'd win. Now they need to actually be better. And... they kinda aren't, really? I mean, lots of people like them! But for Regular Janes at the keyboard, who cares? Just type your search and see what it says.

Bart was a flop. Google search is losing market share to other LLM providers. Gemini adoption is low, people around me prefer OpenAI because it is good enough and known.

But on the contrary, Nano Banana is very good, so I don't know. And in the end, I'm pretty confident Google will be the AI race winner, because they got the engineers, they tech background and the money. Unless Google Adsense die, they can continue the race forever.

Anti Gravity is a flop. I mean it uses Gemini under the hood.

But you cannot use it with an API key.

If you're on a workspace account, you can't have normal individual plan.

You have to have the team plan with $100/month or nothing.

Google's product management tier is beyond me.

And they have hardware as well, and their own cloud platform.

In my view Google is uniquely well positioned because, contrary to the others, it controls most of the raw materials for Ai.

Google's most significant advantage in this space is its organizational experience in providing services at this scale, as well as its mature infrastructure to support them. When the bubble pops, it's not lights-out or permanently degraded performance.

ChatGPT has already won a lot of people away from Google like my mum, who now defaults to ChatGPT when she has a question. I was just talking to one of their friends last night who is in his 90s and he loves using Perplexity to learn about cooking and gardening.

A lot of people now reach for ChatGPT by default instead of Google, even with the AI summaries. I wonder whether they just prefer the interface of the chat apps to Google that can be a bit cluttered in comparison.

Prior to 5.2 you couldn’t expect to get good answers to questions prior to March 2024. It was arguing with me that Bruno Mars did not have two hit songs in the last year. It’s clear that in 2025 OpenAI used the old 4.0 base model and tried to supercharge it using RLVR. That had very mixed results.

I wonder about what happens to people who make these hilariously bad business decisions? Like the person at Twitter who decided to kill Vine. Do they spin it and get promotoed? Something else?

I'd love a blog or coffee table book of "where are they now" for the director level folks who do dumb shit like this.

they're incorrect about the routing statement but it is not a newly trained model

People would have paid it if it was actually significantly better. It was a huge cost increase for a pretty minor performance increase.

Gpt-5.2 was new pretrain run i believe

lol the typical AI boosters are down voting you.

> For all we know, they could be accumulating capital to weather an AI winter.

Right, this is nonsense. Even if investors wanted to be complicit in fraud, it's an insane investment. "Give us money so we can survive the AI winter" is a pitch you might try with the government, but a profit-motivated investor will... probably not actually laugh in your face, but tell you they'll call you and laugh about you later.

RAG? Even for a "fresh" model, there is no way to keep it up to date, so there has to be a mechanism by which to reference eg last night's football game.

They’re just feeding a little bit of slop in every so often. Fine tuning rather than training a new one.

Yes it was, op didn't read the reporting closely enough. It said something to the effect of "Didn't pretrain a new broadly released, generally available model"

Wasn't 4.5 before 4o?

> The goal is to be too big to fail and get bailed out by US taxpayers

I know this is the latest catastrophizion meme for AI companies, but what is it even supposed to mean? OpenAI failing wouldn’t mean AI disappears and all of their customers go bankrupt, too. It’s not like a bank. If OpenAI became insolvent or declared bankruptcy, their intellectual property wouldn’t disappear or become useless. Someone would purchase it and run it again under a new company. We also have multiple AI companies and switching costs are not that high for customers, although some adjustment is necessary when changing models.

I don’t even know what people think this is supposed to mean. The US government gives them money for something to prevent them from filing for bankruptcy? The analogy to bank bailouts doesn’t hold.

> It's mathematically impossible what OpenAI is promising

Citation is needed

Bailing out OAI would be entirely unnecessary (crowded field) and political suicide (how many hundreds of billions that could have gone to health care instead?)

If it happens in the next 3 years, tho, and Altman promises enough pork to the man, it could happen.

Unlikely, Elon bought the presidency and owns a competitor.

on the one hand, i understand you are making a stylized comment, on the other hand, as soon as i started writing something reasonable, i realized this is an "upvote lame catastrophizing takes about" (checking my notes) "some company" thread, which means reasonable stuff will get downvoted... for example, where is there actual scarcity in their product inputs? for example, will they really be paying retail prices to infrastructure providers forever? is that a valid forecast? many reasonable ways to look at this. even if i take your cynical stuff at 100% face value, the thing about bailouts is that they're more complicated than what you are saying, but your instinct is to say they're not complicated, "grooming" this and "cold war" that, because your goal is to concern troll, not advance this site's goal of curiosity...

> Some players have to play, like google

I don't think you have the faintest clue of what you're talking about right now. Google authored the transformer architecture, the basis of every GPT model OpenAI has shipped. They aren't obligated to play any more than OpenAI is, they do it because they get results. The same cannot be said of OpenAI.

You are already paying for several national lab HPC centers. These are used for government/university research - no idea if commercial interests can rent time on them. The big ones are running weather, astronomy simulations, nuclear explosions, biological sequencing, and so on.

if datacenters are built by the government, then i think it's fair to assume there will be some level of democratic control of what those datacenters will be used for.

Sure. Same for healthcare and education right? If you don't have a child or need medical attention, why should you pay for them?

That's like every government initiative. Same as healthcare? School? I mean if you don't have children why do you pay taxes... and roads if you don't drive? I mean the examples are so many... why do you bring this argument that if it doesn't benefit you directly right now today, it shouldn't be done?

National HPC labs have been over subscribed for decades with extensive queueing/time sharing allocation systems.

It would still likely devolve into most-money-wins, but it is not an insurmountable political obstacle to arrange some sort of sharing.

Edit: I meant to say over subscribed, not over provisioned. There are far more jobs in the queue than can be handled at once

Well, people bid for USA government resources all the time. It's why the Washington DC suburbs have some of the country's most affluent neighborhoods among their ranks.

In theory it makes the process more transparent and fair, although slower. That calculus has been changing as of late, perhaps for both good and bad. See for example the Pentagon's latest support of drone startups run by twenty-year-olds.

The question of public and private distinctions in these various schemes are very interesting and imo, underexplored. Especially when you consider how these private LLMs are trained on public data.

I'd rather live in a universe where that money is taken out of the military budget.

As we all know, throwing money at a problem solves it completely. Remember how Live Aid saved Ethiopia from starvation and it never had any problems again?

Without capital invested in the past we wouldn’t have almost anything of modern technology. That has done a lot more for everyone, including food affordability, than actually simply buying food for people to eat once.

Given where we are posting, the motive is obvious: to socialize the riskiest part of AI while the investors retain all the potential upside. These people have no sense of shame so they'll loudly advocate for endless public risk and private rewards.

Same reason they should own access lines: everyone needs rackspace/access, it should be treated like a public service to avoid rent seeing. Having a data center in every city where all of the local lines terminate into could open the doors to a lot of interesting use cases, really help with local resiliency/decentralization efforts, and provide a great alternative to cloud providers that doesn't break the bank.

Don't forget that the internet exists because of government agencies.