It probably is still subsidized, just not as much. We won't know if these APIs are profitable unless these companies go public, and till then it's safe to bet these APIs are underpriced to win the market share.

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zozbot234 4 hours ago | parent | next [-]

Third-party AI inference with open models is widely available and cheap. You're paying as much as proprietary mini-models or even less for something far more capable, and that without any subsidies (other than the underlying capex and expense for training the model itself).

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CuriouslyC 5 hours ago | parent | prev | next [-]

Anthropic has shared that API inference has a ~60% margin. OpenAI's margin might be slightly lower since they price aggressively but I would be surprised if it was much different.

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bigfishrunning 4 hours ago | parent [-]

Is that margin enough to cover the NRE of model development? Every pro-AI argument hinges on the models continuing to improve at a near-linear rate

	▲	tonfa 3 hours ago \| parent [-]
		Yeah but the argument people make is that when the music stops cost of inference goes through the roof. I could imagine that when the music stops, advancement of new frontier models slows or stops, but that doesn't remove any curent capabilities. (And to be fair the way we duplicate efforts on building new frontier models looks indeed wasteful. Tho maybe we reach a point later where progress is no longer started from scratch)

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throwthrowuknow 5 hours ago | parent | prev [-]

Then we’ll likely know by the end of this year.