>inference is already being subsidized.

Inference is not being subsidized and in fact has pretty high margins.

Similar-sized open weight models on openrouter are 15x cheaper per token than the big labs. This should reflect the isolated cost of inference, since 3rd party hosts have no reason to subsidize and no training costs to amortize.

Only datacenter buildout costs are being subsidized.

The majority of revenue comes from API usage. The majority of usage comes from subscriptions. For any of the numbers to make any sense, subscriptions must be subsidized ergo the majority of usage is subsidized. A single $200 subscription can incur upwards of $10,000 in API equivalent usage (and even more when there are frequent resets).

If it were true that Anthropic and OpenAI were profitable on all inference they wouldn’t need to constantly raise so much money. Anthropic regularly announce huge investments in infrastructure but it is all smoke and mirrors, data center build out costs aren’t being paid by OpenAI and Anthropic, they’re financed externally. Google, for example, are backstopping tens of billions of datacenter build outs that are being financed based on commitments but not investment from Anthropic.

You are underestimating the insanity of subscription subsidization. Being profitable on API inference is meaningless when it is such a small proportion of usage and is only going to fall off a cliff as cheap open weight models become more capable.

https://hraness.com/writing/my-girlfriend-asked-me-why-i-hav...

The absolute majority of tokens are being subsidized and as soon as the subsidies end usage will fall off a cliff, rendering all the data center buildout a terrible waste of money.

> Inference is not being subsidized and in fact has pretty high margins.

1. Companies are trying to decrease costs, not increase it, and are looking at alternatives

2. Competitors are catching up, and even if the frontier labs are "better" at some things (like writing plans or complicated analysis), the competitors can take a lot of the inference on routine tasks like implementing a well-defined plan

3. The frontier labs don't just need to have high margins right now. They have to pay back their massive liabilities.

> Inference is not being subsidized and in fact has pretty high margins.

I was referring to the "AI labs" here. Sam Altman himself conceded that OpenAI is losing money on the $200 subscription. Using open-weight/open-source models is indeed cheaper (and no reason for inference to be subsidized).