[ordinaryradical]

It feels like the market is full Wiley Coyote on frontier model makers, and I like Anthropic's B2B business model.

But all progress points to a commodification of foundation models--Google first named it as "we have no moat, neither does anyone else." So there must be some secondary play driving this, right? Hardware sales? Hedging for search ad revenue?

Still feels mispriced. I think asset inflation leaves too much money desperate for the Next Big Thing.

[zaphar]

Google does have a sort of temporary moat. They have a much better hardware supply line story than anyone else and the revenue to maintain that edge indefinitely.

[htx80nerd]

This is the thing - Google is a real company with well established business, money of their own, hardware, server farms, etc. ChatGPT and Anthropic have none of that in the same way google does. They have an incentive to lie and 'fake it till you make it' so they can get out of the 'risk zone' of collapsing back in on themselves. Google can throw money at Gemini all day.

[flockonus]

That may be true for OpenAI, less so for Antropic - which has much better margins. Both of these companies CEOs have come in public saying the same.

No doubt as of currently Google has a better business. But the same argument could have been said about Instagram or Whatsapp before Facebook (now Meta) acquired them.

[JumpCrisscross]

If AI is commoditising, who is Bahrain and who are the Saudis?

[nostromo]

The company with the access to cheap and plentiful energy and the real estate to build data centers will be Saudi Arabia in your analogy.

This is why SpaceX could be a dark horse in this race. Putting compute in space is expensive but so is building a data center in the US.

[bpye]

> Putting compute in space is expensive but so is building a data center in the US.

You know what's also really hard in a vacuum? Dissipating heat.

[JumpCrisscross]

> You know what's also really hard in a vacuum? Dissipating heat

Correct. The economics of space-based DCs comes down to permitting delays versus radiator mass.

At ISS-weight radiators (12 to 15 W/kg (EDIT: kg/kW)), you need almost decade-long delays on the ground (or 10+ percent interest rates) to make lifting worthwhile. Get down to current state-of-the-art in the 5 to 10 W/kg (EDIT: kg/kW) range, however, and you only need permiting delays of 2 to 3 years.

If there is a game-changing start-up waiting to be built, it's in someone commercialising a better vacuum-rated radiator.

[ambicapter]

Would you want more wattage per kg for a better radiator?

[redanddead]

Putting it centrally globally makes a lot of sense, just like connecting airports

Saudi will host the biggest data centers in the world

[mikelitoris]

What does that mean?

[JumpCrisscross]

> What does that mean?

I really couldn't have been more obscure, could I? :P

In 1932, "the first oil field in the Persian Gulf outside of Iran" was discovered in Bahrain [1]. (The same year Saudi Arabia announced unification [2].)

In the end, Saudi Arabia had larger reserves and wound up geopolitically dominating its first-moving rival. In commodities, the game tends to be scale in part through land grabbing. Less who got where first.

To close the analogy, if AI does wind up commoditised, the layers at which that commodity is held are probably between power and compute [3]. So if AI commoditises (commodifies?), Google selling computer (and indirectly power) to Anthropic and OpenAI is the smarter play than trying to advantage Gemini. (If AI doesn't commoditise, the opposite may be true–Google is supercharging a competitor.)

[1] https://en.wikipedia.org/wiki/Bahrain_Petroleum_Company

[2] https://en.wikipedia.org/wiki/Proclamation_of_the_Kingdom_of...

[3] The alternate hypothesis is it's at distribution.

[dmix]

Plus the whole thing of first mover advantage being a myth, especially in the tech industry

[JumpCrisscross]

> Plus the whole thing of first mover advantage being a myth, especially in the tech industry

Source? That would be surprising!

[mh-]

I believe they were drawing a parallel to oil commoditization, but that's as far as I got.

[Urahandystar]

The app layer is Bahrain.

[nostromo]

Running AI at a loss long enough to kill the competition would run afoul of antitrust laws. Even more so since they’re bundling their AI products with their search monopoly.

Although I doubt this will stop them if they think it’s advantageous…

[akozak]

Lower real operating costs isn't the same thing as below cost pricing.

US law here is nuanced. Good quick primer https://www.ftc.gov/advice-guidance/competition-guidance/gui...

[Bewelge]

I thought that these type of antitrust laws are in no way enforced anymore in the tech industry. And that it's been that way for decades. I mean the sheer existence of Google shows that right? What about Maps, Mail, Books... basically everything apart from Search? Why would an AI Mode as one category of Search results be any different? They're not actively promoting Gemini in those search results. They're simply augmenting it with this new tool that exists now.

[er2d]

Yes anti-trust is very much theatre nowadays.

As long it further's American interests globally - monopoly is fine. Other countries need to take notice and start picking winners nationally in order to compete with the large American big tech firms.

[Bewelge]

Eh, I think this is actually not a specifically American thing. More of a neo-liberal mindset. Competition may be good in the long term. But a monopoly now may mean more money in your pocket now. The tech giants definitely give the US some geo-political power in some cases but in general the US would be better off with more competition.

ed: @er2d, can't reply to your comment for some reason, so doing it here: I don't agree. In theory a monopoly decreases the necessity for R&D. Of course this becomes more complex if the R&D is funded or steered by the state. But look at the current state of LLMs. There is fierce competition between 3 US companies. But geopolitically it's the same as if there would be one monopoly. The US being the clear technological leader in an industry is not dependent on that industry being a domestic monopoly.

And for the Europe comment: Also don't agree. Look at Boeing & Airbus. Both are companies where the US & EU have decided that they need to ensure the existence of a domestic airplane manufacturer. So in these cases they support these companies (often in violation of international trade laws). But it has nothing to do with monopolies. If a state decides to support a company to ensure its existence, a monopoly is the logical consequence and not the aim. Because if that industry would be profitable it wouldn't need to be supported in the first place.

But all these tech companies are not in industries that would move off-shore or stop existing because they're not profitable enough, so it's an entirely different setting.

[er2d]

Nope the reason for a monopoly is incentives for R&D and innovation.

The US understands that and allows it to happen as the former yields a compounding effect of power.

European states certainly don't get this.

[eueew]

You’re wrong actually I suggest you read a book on industrial organisation and why monopoly is a more efficient market structure in relation to incentives for R&D.

Why do people comment on stuff they barely have an understanding of? Comical. People like you create noise.

[SJC_Hacker]

TSMC ?

Airbus ?

[er2d]

Are you claiming they are tech firms in the manner of a Apple, Google etc?

lol

[klabb3]

> run afoul of antitrust laws

Now, that’s a name I haven’t heard in a long time.

[randito]

> antitrust laws. Even more so since they’re bundling their AI products with their search monopoly.

couldn't this just be framed / spun as just using search data as training? i don't seem being bundled enough to run afoul with anti-trust.

[Sohcahtoa82]

> Running AI at a loss long enough to kill the competition would run afoul of antitrust laws.

Running at a loss long enough to kill the competition is basically the name of the game these days.

When Uber started, they were basically setting VC money on fire by selling rides at a loss to destroy the taxi market.

[nyc_data_geek1]

Who's going to enforce antitrust laws in this environment, pray tell?

[pixl97]

>would run afoul of antitrust laws

Buwahahahahahahahhahah

They drop a little cash on some shitcoin the president controls and those problems go away.

[mhitza]

I haven't thought about any secondary play, but if these companies converge on Google's TPUs, they would probably eagerly slice from NVIDIA's current market.

> In September 2025, Google is in talks with several "neoclouds," including Crusoe and CoreWeave, about deploying TPU in their datacenter. In November 2025, Meta is in talks with Google to deploy TPUs in its AI datacenters.

https://en.wikipedia.org/wiki/Tensor_Processing_Unit

[dzhiurgis]

I keep getting notification from my tooling that gemini models are overloaded so we switched you to openai. So I feel google is not ready to sell tpu’s just yet.

[fireflash38]

I don't get why people are so gung-ho about these companies having a moat.

As a user and a consumer, I don't want them to have a moat. Moat means pseudo-monopoly. That is the exact opposite of what we want.

Only the investors and owners want a moat, to keep others out.

So what they're doing? They're competing. Good.

[zahlman]

> I don't get why people are so gung-ho about these companies having a moat.

Because they are investors, VCs, or startup founders who hope to establish their own moats.

Users and consumers can get a lot of useful information from HN, but it's important to keep the local demographics in mind.

[soVeryTired]

Us consumers don't want moats. But to understand the investment you need to understand the moat: no sensible investor will throw this much money around without one. If you don't understand what is keeping new players from entering the market, then either you've missed something or we're in bubble territory.

That's why it's interesting to try to pick apart where the moat is.

[iamdelirium]

"we have no moat, neither does anyone else." is just an employee's personal work blog

[kranke155]

We have no moat could be a bad assessment. First, the models have personalities, and that matters. I like talking Claude better. OpenAI is really different from Grok. The ai models are an extension of the main concern of the company they’re in.

Also those personalities, quirks and choices accumulate. A lot of people talk about using Claude Code and Codex for different things. This is 100% my experience. Some people make better models, but on the top 3, there are often differences that are fixed only by switching between them. If I feel the need to switch between them, then there are significant enough differences and those differences will accumulate.

[vickychijwani]

The “no moat” comment is from May 2023, very early in the LLM era. Agents were not a thing yet, it was all just text generation.

The integration of LLMs with tools and data via agent harnesses has created the opportunity for a real moat. As these products start differentiating, the moats will develop to be significant.

[onlyrealcuzzo]

You don't need a moat if you're selling shovels and everyone's digging holes.

[UltraSane]

YouTube is a kind of moat for Google.

[WarmWash]

YouTube is not the moat, ad block is.

No YouTube competitor can rise because ad blocking is so pervasive and celebrated. People think (selfishly) that ad blocking is some niche thing, the but the reality is that it's around 30% on average, and up to 70% if you have a tech literate audience.

So we have paid competitors, like nebula and curiosity stream, but those are essentially dead because they have to compete with "free" YouTube.

The internet is, pretty predictablely, totally unwilling to look in the mirror.

[gverrilla]

Interesting. Wanna expand?

[UltraSane]

It is the biggest collection of video to train LLMs on.