The risks are different, but there's no getting around that the value of any investment is based on future cash flows and that's speculating about the future.

To the extent that Google and Anthropic are competing for AI business, Google is somewhat hedged against Anthropic winning market share. They still get data center revenue and they own equity, so that’s a consolation prize.

On the other hand, it’s increasing Google’s investment in AI, in general.

GE Capital was a different creature, riding the line of fraud in some ways. They misapplied accounting rules and had to write down or capitalize over $20B for long term care insurance.

GE Capital was not just vendor financing and its serious problems were not due to vendor financing. I don’t think it is a great example in any way.

Funny how Gemini generally takes into account all the words you type whereas Google search tends to ignore most words you type or otherwise direct you to results for thematically (or grammatically or semantically) similar words to what you searched but otherwise wholly irrelevant.

Google crippling search to bolster AI is a dangerous game. But without people going to competitors, what's the recourse?

Sure, since Google is both a supplier and a competitor, it’s both vendor finance and hedging. Also, it increases their investment in AI, in general.

Arguably, too much of this kind of hedging is anti-competitive. But that doesn’t seem to be much of a problem yet?

How can there be a "winner takes it all" situation with AI?

OpenAI lead the game while they were best. Antrophic followed and got better. Now openAI is catching up again and also google with gemini(?) ... and the open weight models are 2 years behind.

Any win here seems only temporary. Even if a new breakthrough to a strong AI happen somehow.

I wonder if Google is that much a competitor. Sure, they tried to make an AI of their own.

But they also have access to an unimaginably large data set plus reach into people’s daily lives.

Seems more like partners for world domination.

$40B is not anywhere near half of Anthropic at this point. You do get the same access as nvidia, aws, and other investors, which has value.

I look at this as Google needs a competitor. While Anthropic seems to be the flavor of the quarter OAI looks like such a dumpster fire right now that it's in Google's best interest to help keep Anthropic moving towards winning the #2 spot. I say the #2 spot because it doesn't matter how good this week's LLM is. Until someone else owns the infra and has an actually profitable business model they're all just lighting money and the world around us on fire.

I actually mentioned to a Google friend the other week that I wouldn't be surprised to see Google tipping the hat towards Anthropic soon so as to put a little more heat on OAI.

I think everyone is incentivized to keep the music playing and the party going with AI. Because the alternative is a massive correction like we have rarely seen.

What if AI is never good or cheap enough to reach significant profitability?

Lots and lots of vendor financing during the dotcom era, and it ended up being a material part of those vendors' own difficulties. Especially when service providers were concerned (e.g. the huge crash in optical in particular).

Obviously it's not a perfect comparison, but you have to wonder how much of NVIDIA's income (for instance) is ultimately funded by its own money.