> There’s no way to justify their valuations if they get downgraded to a pair programming tool.

Honestly I still don't see how they justify their valuations, period. If anything they're serious liabilities.

Open-weight models are improving and reaching "good enough" levels for more and more tasks. They're also known quantities; you know what you're getting with them and don't have to worry about the model silently (or not so silently) being switched out from under you (whether that's because Anthropic/OpenAI decides you're not worthy of their latest and greatest for one reason or another, or they switch you to a quantized model to save on compute, or they simply sunset the specific model you've been relying on).

And if the open-weight model doesn't run on your local hardware already, there are any number of hosting providers that will handle that for you (so you're back to just paying for colocation/cloud usage instead of nebulous tokens).

Closed models are improving as well, sure, but diminishing returns will eventually kick in (as they already have for various tasks, as I said).

So if not their models, where does their value come from? Just simple network effects/lock-in? "Normal" users will drift to other options if they start showing more and more ads, and enterprise customers will surely be looking for opportunities to avoid lock-in and reduce risk.

I think the last argument I've heard is that these valuations are basically a bet that Anthropic and/or OpenAI will achieve AGI that can fully replace human labor, so they'll essentially be able to sell that replacement labor to everyone. They haven't managed to pull that off, yet, however. Businesses that have tried to replace humans almost immediately realized either that the AI's capabilities were oversold or that they at least needed a human in the loop still, to some degree. And even if they do achieve AGI, that would surely become an issue of national security (they're already flirting with that today), so who's to say governments won't simply nationalize the best AI labs and either remove them from the economy entirely or perhaps even provide models as a public service to level the playing field?

That all sounds like a giant gamble, if anything. And it's incredibly frustrating to watch as someone that's been unemployed for a year because (a) budgets are being burned on tokens and (b) LLM-generated applications are flooding hiring teams and preventing real people from being seen. (Not to mention, as someone that spends a lot of time in gaming circles, the fact that DRAM and flash storage is quickly becoming inaccessible is just an additional frustration that means people can't even find temporary relief in entertainment.) I can only hope this bubble finally implodes before I lose my house.

>Open-weight models are ...

<banned>

Not the first one to come up with that likely outcome either. I mean, if you're being restricted from SOTA models now, how long do you expect before the FBI kicks in your door for using an 'illegal' open model?