[herunan]

The people pushing the “AI is heavily subsidised” narrative don’t realise it actually flatters Anthropic and OpenAI more than the alternative.

If it is subsidised, fine – the incumbents absorb the losses, or lean on hyperscalers like Google or Microsoft who can cross-subsidise across other revenue streams. But if it isn’t, that’s the worse outcome for them: inference is just cheap, competition kicks in, prices crater, end users win.

Either way, local models win. If the incumbents are forced to turn a profit, pricing goes up and as local compute gets good enough to handle most use cases, people flock to it. And if inference is just cheap, that means the compute requirements are lower than we thought, and local hardware gets there even faster.

Bullish on local either way. We’ll find out once the Anthropic S-1 drops.