A big part of the frontier labs abilities to charge 80% gross margins on inference is having the cornered resource of frontier models.

If that inference becomes popular and valuable enough that those companies make billions of dollars in profit, those companies could use that profit to fund the building of alternative products and platforms that dis-intermediate google's relationship with the customer.

Google already has an 80% gross margin business, the biggest one in the world. Everybody wants a slice of it.

By offering frontier inference closer to cost and open-sourcing everything that's sub-frontier, they're commoditizing frontier labs' models, which inhibits their ability to durably make high gross margins on inference.

It's a strategic play.

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zozbot234 5 hours ago | parent | next [-]

A 12B-sized model is a far cry from "frontier inference". That's more like DeepSeek V4 Pro territory which is a 1.6T model. Or for multi-modal models, Kimi 2.6 which is 1T.

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gen220 5 hours ago | parent | next [-]

at risk of quoting myself... :)

> By offering frontier inference closer to cost *and* open-sourcing everything that's sub-frontier

It's two prongs! One prong is that their frontier inference pricing is significantly cheaper/closer-to-at-cost as Anthropic's.

The subject of this thread is the other prong: offering compelling models that are sub-frontier and self-hostable.

Self-hosting models and at-cost frontier models are the high-end and low-end disruptions, respectively, to Ant/OAI/etc.'s business models.

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echelon 5 hours ago | parent [-]

Google needs an anti-trust breakup about 10 years ago.

They need one more than ever now.

This is ridiculously anti-competitive.

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airstrike 4 hours ago | parent [-]

This is literally competition

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echelon an hour ago | parent [-]

1. Google is dumping on the market to weaken OpenAI and Anthropic.

2. Every time you search for Claude or ChatGPT, you get presented with an AdWords bidding war.

3. Google is deploying its models in Search, Docs/Drive/Office, YouTube, Chrome, ...

	▲	airstrike an hour ago \| parent [-]
		1. This isn't dumping 2. I'm not sure what this has to do with the case, unless you're arguing Google has an ads monopoly, in which case the best argument would likely not be that adwords lead to bidding wars because that just sounds like they're selling a product people really want to pay for 3. There's nothing criminal about being a very diversified business

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boutell 5 hours ago | parent | prev [-]

You're right that it's not literally frontier. But like recent Qwen releases, it is a lot more capable than anybody thought models of this size could be a year ago, like capable enough to set a ceiling on what you can charge for AI for certain applications. Others still clearly justify a stronger model, but this trend may continue, etc.

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ActorNightly 32 minutes ago | parent | prev [-]

Don't think its that.

Basically with upcoming spark laptops, the smaller models will likely get fine tuned to interface with google services. Then, Google can essentially make Chromebook software include those models, which is the same use case as android.

And you better believe that they will be collecting user data and building advertising models.