[littlestymaar]

I'd be a little bit more nuanced:

I think there's something off with their plans right now: it's pretty clear at this point that they can't own the technological frontier, Google is just too close already and from a purely technological PoV they are much better suited to have the best tech in the medium term. (There's no moat and Google has way more data and compute available, and also tons of cash to burn without depending on external funding).

But ChatGPT is an insane brand and for most (free) customers I don't think model capabilities (aka “intelligence”) are that important. So if they stopped training frontier models right now and focus on driving their costs low by optimizing their inference compute budget while serving ads, they can make a lot of money from their user base.

But that would probably mean losing most of its paying customers over the long run (companies won't be buying mediocre token at a premium for long) and more importantly it would require abandoning the AGI bullshit narrative, which I'm not sure Altman is willing to do. (And even if he was, how to do that without collapsing from lack of liquidity due to investors feeling betrayed is an open question).

[array_key_first]

Being an insane brand means literally nothing if people can trivially switch to competitors, which they can.

There isn't even a tenth of enough money if you group together all of advertising. Like, the entire industry. Ads is a bad, bad plan that wont work. Advertising is also extremely overvalued. And even at it's overvalued price tag, it's nowhere near enough.

[sophia01]

It's Coca Cola vs Pepsi. Yes some might even say Pepsi has been shown to taste better, but people still buy loads of Coke.

Of course the tech savvy enterprises will use the best models. But the plumber down the road doesn't care whether she asks Gemini or ChatGPT about the sizing of some fittings.

[adgjlsfhk1]

right, but casual users aren't paying (and won't ever)

[littlestymaar]

Users aren't paying for Google or Facebook either. Advertisers do.

[array_key_first]

Right, again, even if you take every advertiser in the world and shove them in a dungeon and then point a cannon at them and say "give me all the money you have", you won't even have 1/10th the money you need.

Everyone is vastly, vastly overestimating advertising. Advertising is a side hustle, because the product is the main hustle.

[littlestymaar]

Yet Google built an empire on advertising money alone, and Facebook became one of the biggest company in the world on that business as well.

I think your are the one vastly underestimate advertising.

[whalee]

People could trivially switch their search engine to Bing or Yahoo, but they don't.

If ads are so overpriced, how big is your short position on google? Also ads are extremely inefficient in terms of conversion. Ads rendered by an intelligent, personalized system will be OOM more efficient, negating most of the "overvalue".

I'm not saying they should serve ads. It's a terrible strategy for other reasons.

[I-M-S]

Funny that you mention Yahoo, as in my mind they're the perfect example of what the poster above you noted: people quickly switched to Google once a better alternative to Yahoo appeared.

[timr]

You know that Google literally spends billions to ensure that people don’t switch, right?

That’s possible because they’re immensely profitable.

[bitpush]

Isn't the billions just setting the default? The ability to switch is the same as far as I understand it.

[timr]

The default is what matters.

[array_key_first]

> People could trivially switch their search engine to Bing or Yahoo, but they don't.

Well those are obviously worse products.

> If ads are so overpriced, how big is your short position on google?

I hate hearing this stupid, stupid line.

Most companies are run by neanderthals with more money than brains. Companies burn money on advertising because why not? Making your product better is hard and takes time, advertising is the easiest thing you can do. Does it work? Not really, no, but you get extra business for as close to zero effort you can possibly get. Hit a wall? Just advertise more!

> Ads rendered by an intelligent, personalized system will be OOM more efficient, negating most of the "overvalue".

This is exactly what people said about personalized ads. "No you don't understand! It's not like a billboard!"

And that's true, but consumers are not fucking braindead, and there's also the laws of economics. If I have 50 bucks, I'm not spending 20 fucking dollars on your dumbass paint, no matter how much you advertise it. And that's not a me thing, that's a consumer thing. You can spend 1 quadrillion dollars advertising ferraris and guess what - you will STILL quickly saturate that market and hit a hard ceiling. Because consumer's can't afford it.

And that's not even touching on the fact that most of the metrics around advertisements are just obviously bullshit. How many human eyeballs are actually on ads? Much, much less than everyone thinks.

Yes, sure, we can build highly personalized ads. Whatever. But at the end of the day, consumers still have the exact same amount of disposable income as before. We have created Z E R O value, what we have done is consolidated it.

Hmm, what happens when markets consolidate too much? Well, I guess that would mean advertising becomes completely worthless, wouldn't it? What a conundrum! It's a good thing our markets haven't been consolidating for the past 70 years...

[rprend]

Do you think consumer brands lose money when they pay Google to do advertising? Do you think digital ads have a negative ROI for the brands that buy them? If so, why do they keep buying more? Wouldn’t they lose to more efficient companies?

I think you underestimate how valuable being the top slot on google is. Just the other day i googled “bluetooth speaker” and bought the first result (an ad). One hour of that can net you millions of dollars. That’s why consumer brands bid more and more every year on digital advertising.

[array_key_first]

> Do you think consumer brands lose money when they pay Google to do advertising?

For many brands, yes, and they don't know it.

> I think you underestimate how valuable being the top slot on google is.

The more you advertise, the less valuable each ad space becomes. Consumers have a lot of money they have to dole out. Giving them more ads won't increase that pot of money - it will make your cut smaller and smaller as it's split across more brands.

[rprend]

Which brands lose money on ads? Why are they still in business?

> consumers have a lot of money that they dole out. More ads wont increase the cut of money

Consumer spending is not a fixed pie chart or a zero sum game. US consumer spending has grown from $14 to $19 trillion since 2020. $5 trillion in new pie!!

Your model of ads is: “I, a consumer, have decided to buy a bluetooth speaker, and the ads push and pull me towards particular brands”. But that’s not how ads work! Ads don’t just compete for fixed spending, they induce NEW spending. An ad can give a customer the idea of buying, and grow the market.

[pjaoko]

> Being an insane brand means literally nothing if people can trivially switch to competitors, which they can.

Logically speaking, yes it is easy to switch between OAI and Gemini, or Coke and Pepsi. But brand loyalty is more about emotions (comfort, familiarity,..) rather logical reasoning.

[bloppe]

The best way to drive inference cost down right now is to use TPUs. Either that or invest tons of additional money and manpower into silicon design like Google did, but they already have a 10 year lead there.

[littlestymaar]

> The best way to drive inference cost down right now is to use TPUs

TPUs are cool, but the best leverage remains to reduce your (active) parameters count.

[TheOtherHobbes]

Altman's main interest is Altman. ChatGPT will be acquihired, most people will be let go, the brand will become a shadow of its former self, and Altman will emerge with a major payday and no obvious dent in his self-made reputation as a leading AGIthinkfluenceretc.

I don't think ads are that easy, because the hard part of ads isn't taking money and serving up ad slop, it's providing convincing tracking and analytics.

As soon as ad slop appears a lot of customers will run - not all, but enough to make monetisation problematic.

[a_victorp]

This! Most people that don't work on adtech have no idea how hard it is to: 1. Build a platform that offers new advertising inventory that advertisers can buy 2. Convince advertisers to advertise on your platform 3. Show advertisers that their advertising campaigns in your platform are more successful than in the several other places they can advertise

[AbstractH24]

And Blockbuster will acquire Netflix

[po]

as long as the business model is:

- users want the best/smartest LLM

- the best performance for inference is found by spending more and more tokens (deep thinking)

- pricing is based on cost per token

Then the inference providers/hyperscalers will take all of the margin available to app makers (and then give it to Nvidia apparently). It is a bad business to be in, and not viable for OpenAI at their valuation.

[littlestymaar]

What I'm saying ils that I'm not sure the first point is true.

I think they all have become sufficiently good for most people to stick to what they are used to (especially in terms of tone/“personality” + the memory shared between conversations).

[riffraff]

> But ChatGPT is an insane brand

I mean, so was netscape.

[cmiles8]

This. Netscape was THE browser in the early phases of the Internet. Then Microsoft just packaged IE into Windows and it was game over. The brand means nothing long term. If Google broadly incorporates Gemini into all the Google-owned things everyone already has then it’s game over for OpenAI.

The mass commoditization of the tech is rapidly driving AI to be a feature, not a product. And Google is very strongly positioned to take advantage of that. Microsoft too, and of course they have a relationship with OpenAI but that’s fraying.

[cruffle_duffle]

To be completely fair the later versions of Netscape were increasingly giant bloated piles of crap while IE slowly caught up and surpassed in terms of speed and features. The first versions IE were only good for downloading Netscape.

Netscape, to a large degree, killed itself.

Not to say IE turned into anything good though. But it did have its hayday.

[littlestymaar]

Maybe, I was too young to remember that.

[littlestymaar]

What's up with the flock of downvotes? I'd never got a comment with so many as this one… Is being younger than 45 not allowed in here?