Authored by Charles Hugh Smith via OfTwoMinds blog,
Let's pull all this into an undeniable conclusion: AI is based on massively subsidizing users' costs.
What's already abundantly clear but verboten to say as it would pop the bubble of AI valuations and triumphalism is that AI is unaffordable once the direct and indirect subsidies are withdrawn. Nothing that consumes this much electricity and requires such an immense scale of costly processing and memory capacity can be low-cost, never mind free.
The major AI platforms and vendors are subsidizing corporate and individual users in the hopes that they can achieve AI sector dominance --and the pricing power that comes with it--via the network effect, the dominance generated by having the majority of users bound by habit or dependence to your platform or tools.
This battle for network effect dominance is playing out in full view:
AI Giants Are Handing Out Tons of Free Computing Power to Grab Startup Share: (wsj.com) Pitched battle for business users comes as AI companies seek lasting streams of revenue.
Hans Ibarra, a founder building an AI-voice startup, has found himself on the receiving end of a big opportunity: Top artificial-intelligence companies such as OpenAI, Anthropic and others desperate to win his business are ramping up discounts.
Across Silicon Valley, startup founders like Ibarra are enjoying a wave of computing credits and fielding competing offers from AI-model makers raci
