There is clearly a moat - or Claude Code wouldn't be generating over $10b in ARR every single month.

▲ piker 7 hours ago | parent | next [-]

That's not what "moat" means. Claude Code has a castle. A "moat" is meant to protect the castle from invaders. It would be things like high switching costs, proprietary formats, network effects, etc. that aren't there.

In other comments people mention the "flywheel" of data and money feeding training, but there's a view that at some point the baseline open-weight models are "good enough" that the money will dry up.

▲ aurareturn 7 hours ago | parent [-]

  baseline open-weight models are "good enough" that the money will dry up.

I take a different view. Open-weight models aren't going to be free forever. At some point, open weight model labs will also have to make money.

My guess is that the industry will consolidate. The winners will absorb the losers and focus on generating revenue.

Therefore, there will be a growing gap between open and free models and the proprietary SOTA models.

▲

vidarh 7 hours ago | parent | next [-]

What the open-weight labs have shown is that you can go from nothing to competing with SOTA models at a tiny fraction of the cost for the SOTA models.

If there is consolidation by absorption, that derisks attempting to challenge the SOTA providers, and so they will keep facing attempts.

▲

atwrk 3 hours ago | parent | prev | next [-]

But all the open-weight players make money right now. Google (Gemma), Alibaba (Qwen), z.ai (GLM), minimax.io (Minimax) - they all have hosted offers and sometimes closed-weight max versions.

And the fact that the open-weight as well as cheaper tier 2 offers exist both place a ceiling on the prices the SOTA companies can demand - and as far as we know current prices don't even fully pay for inference alone already, at least not for OpenAI.

▲

aurareturn 2 hours ago | parent [-]

Are they profitable on their LLM training?

It's not clear. Z.ai is definitely not profitable.

	▲	atwrk an hour ago \| parent [-]
		To my knowledge none of the players is even profitable on inference, though Google probably is, considering the continuous release of papers around kv cache optimizations, mtp etc.

▲

thepasch 6 hours ago | parent | prev [-]

> Open-weight models aren't going to be free forever.

The ones that are already released are, and they're already very good for most purposes and can be fine-tuned indefinitely, includin months or years down the line when processes have been optimized and things aren't as compute-heavy as they are now.

▲ aswegs8 7 hours ago | parent | prev [-]

That's definitely a moat. Being able to generate ARR every month.

	▲	atwrk 3 hours ago \| parent \| next [-]
		No, a moat would be a feature preventing the competition from competing successfully. Classically things like patents, for example, or process knowledge like ASML currently has for EUV lithography, or the network effects of a social media platform, or access to data no one else has access to. ARR is not a moat at all, because the revenue of OpenAI is not preventing Alibaba, z.ai and so on from generating revenue as well. The opposite is true, actually, because the first mover prepared the market (e.g. user education about application possibilities, creating the willingness to pay for the service in the first place) for the second movers. People here write about switching from Claude to Codex mid-workday - that is the absolute opposite of a moat. The only companies that have a chance of not losing everything in this market are those with established non-AI revenue streams, like Google or Alibaba, or those focusing on profitability in niche markets instead of participating in the SOTA death race.
	▲	rowanG077 5 hours ago \| parent \| prev [-]
		No it's not. There is a even a wikipedia page for it: https://en.wikipedia.org/wiki/Economic_moat A moat is protection so you can keep your ARR up or increase it over years. Arguably only google have a moat with their TPUs. NVidia has a moat. But the others who just train some models on NVidia hardware have no moat.