[gaiagraphia]

This is great for competition! Chinese vendors offering a cheaper solution = what economics told me the free market was all about.

I also learnt that Anthropic should get better at what they do if they want to compete. If not, somebody else will win.

Or does this not apply to huge US corporations any more?

[petterroea]

China aren't offering a cheaper solution. They are subsidizing an existing one (which is already subsidized) in order to gain foothold. The difference is that in the US subsidies come from VC, while OP implies subsidies come from the AI labs that buy the training data (which may as well also be VC backed, so just one extra hop).

This isn't "the market working as intended", this is an exhaustion fight to the bottom where the one with most money gets to stay in the market. As with most venture capital startups. I believe this VC tactic is a well documented "cheat code" to bypass market forces and build a monopoly. I find it hard to compare that with a free market.

However, I don't really mind China "stealing" from Anthropic. For us consumers we are getting the cake and eating it too. I.e we are getting rapid improvement to the tune of over a hundred billion dollars in funding, yet the market remains big enough that there's a chance of it not ending up as a monopoly in 20 years. And venture capital are footing the bill. A part of their investment is practically being redirected to fund Chinese AI development. It lets us live out our lives as happy CAC farmers[1].

So I would argue its not as much of a "cheaper solution" as it is intentionally and maliciously abusing another company's product to extract more value than the billing plans intend (given an average user), and further subsidizing the product by selling this data to competitors. But I don't necessarily think its a bad thing for us end-users. Nor for the market. But it is bad for Anthropic and its investors.

[1]: https://phrack.org/issues/71/17

[overfeed]

> China aren't offering a cheaper solution. They are subsidizing an existing one

Chinese labs are also pursuing legit frontier-advancing R&D into efficiency and publishing papers in the open, a culture that's in retreat at top American AI labs

[SubiculumCode]

Their is plenty of innovation happening on both sides of the Pacific. Again, China publishes open source because they don't have another game they can play. They distill because they don't have the compute to compete. They are great lab, for sure, but the fundamentals are driving their behavior.

[epolanski]

The fact that are people that genuinely believe you can train an LLM by using random QAs obtained from another LLM is astonishing. Let alone the fact that it makes absolutely zero financial sense.

At this point this is being repeated so often that completely uninformed users are taking this at face value.

[overfeed]

To be fair, Anthropic is participating in the misinformation by dishonestly characterizing what Alibaba is doing with the data as "Distillation" rather than the more probable adding a small fraction to the "fine-tuning" and/or benchmarking data sets.

I understand why - the distillation narrative casts Qwen as a poor copy of a superior model, and cultivates ground for political lobbying for bans. That doesn't make it less dishonest, but I suppose profits trump ethics.

[petterroea]

Oh yeah. Strategic disruption technique or not its a breath of fresh air.

[user_7832]

> China aren't offering a cheaper solution. They are subsidizing an existing one (which is already subsidized) in order to gain foothold.

In my economics classes, we were told that (in a "free market" argument) the best thing to do if a subsidy is making something you want cheaper is to use it. You're getting your thing, and at a reduced cost.

(I'm not really replying to you per se, I'm curious how "free market" folks in these comments would respond to this.)

[dosisking]

Most everything they teach in economics class is wrong. You would be better off ignoring everything they teach you.

[dgellow]

Could you elaborate?

[nutjob2]

This is why I don't understand why people complain about impractically cheap Chinese solar panels. The rest of the world should buy enormous quantities and bankrupt the mofos and hugely benefit along the way. Then later they can set up their own solar panel industries.

[westpfelia]

Because they arent selling at a loss. The business pipeline is subsidized by the state. But end to end from mining the minerals to shipping you the solar panel everything is "in house". Its all in China. Thats why why can sell so cheap. Its even cheaper to make.

This narative that the CCP is just subsidizing all business to "beat america" is just dumb. Its the build process being made cheaper by the government. Not the final product.

[mcmcmc]

Let’s not act like the US government isn’t subsidizing AI either with massive contracts. Anthropic is selling subscriptions at a loss; reselling tokens is just arbitrage.

[WarmWash]

The US government subsidizes US AI labs via incentives.

The CCP is the Chinese AI labs.

I am not aware of any US government AI labs (besides perhaps a small spattering of national lab research or the like)

There is very large difference that your either need to be poorly informed or purposely driving an agenda to miss.

[eru]

As far as I can tell, the Chinese government itself is complaining about 'oversupply' in the solar panel market. Ie it doesn't sound like they are subsidising it anymore.

[benjiro29]

The Chinese government has stopped direct subsidizing solar panels years ago. I think it was around 2019? This resulted in a lot of companies going under at the time.

It did not stop solar panels getting cheaper and cheaper because of the whole integration and mass production (with healthy free market competition).

The last subsidies like export value-added tax rebates for solar panels and lower rebates for batteries are ending in 2027.

China their main power is, the ability to have everything inhouse. Yea, they subsidize a lot of stuff until it hits critical mass, and then you have often a healthy industry with lots of competition.

China alone has like a few 100 car manufactures because of the subsidies, and over time there will be consolidation / buyouts etc but the end result is a healthy new industry that exports. With again, everything internally being produced.

This is why our subsidies fail. We do one sector, often a few companies at best. This results in few competitors, expensive prices, and often reliance on externals that can bankrupt those companies. And que how we wasted again dozens of billions in propping up a industry with no competitive edge.

People can cry about China but they are actually doing work, despite the mass amount of corruption. That is the big difference with here... Mass corruption got in the way of national security, plop, people go to jail. Industry quickly gets their ** together. Here ... give billions, and the money vanishes, with no real consequences.

[nutjob2]

Selling at a loss isn't required.

Local governments are over-funding numerous producers (though cheap loans and other subsidies and incentives) creating excess competition. This is an ongoing problem and is a huge misallocation of capital. Increasing demand just drives this process harder and puts downward pressure on margins. As soon as they try raising prices, or just through satisfying total demand, demand collapses and they (almost) all go out of business.

The Chinese model has weaknesses, we should be exploiting them.

[diegolas]

the fact that you think an organization that pulled 300 million people out of poverty in 20 years with strategic planning and a controlled economy has this not covered is mind blowing. they killed the made in USA slogan in less than 40 years. they'll be fine.

[throwaway7356]

> China aren't offering a cheaper solution. They are subsidizing an existing one

So basically like US companies subsidizing offerings with selling user data, ads for crypto scams, manipulation for elections, making people addicted to gambling and so on?

Seems fair and an improvement as you can choose between that and not. Unlike say offerings from Meta where the data selling and efforts to further gambling addiction is always included.

[haritha-j]

Which part are we supposed to have an issue with? The selling data to offer cheaper compute? Products taking over markets with below cost pricing because they have money and ruining the free market?

Because all of that is considered totally okay when every single US big tech company does it.

[gmerc]

All I can say is lol. DeepSeek showing 3 order of magnitude efficiency gains over the performative capital furnace that was training and inference absolutely moved the bar here.

[Grimblewald]

Chinese models are years ahead of american models on multimodal comprehension, better yet,they publish on what makes the models tick and release weights openly.

Chinese research outout, publically released, has also contributed in big ways to features present in every single US model. Yours is a bit of an unfair take I'd say.

Besides, claude will think its chatgpt sometimes, so clearly this isn't a problem restricted to china, turns out unethical companies will do unethical things /shrug

[eru]

> This isn't "the market working as intended", this is an exhaustion fight to the bottom where the one with most money gets to stay in the market. As with most venture capital startups. I believe this VC tactic is a well documented "cheat code" to bypass market forces and build a monopoly. I find it hard to compare that with a free market.

Why? Lots of people try this tactic, but hardly anyone ever succeeds. Meanwhile, the customer benefits.

[woctordho]

Lots of people have succeeded. Neither Anthropic nor OpenAI has any technical advantage in the field of subscription engineering.

[eru]

Please give me a few examples of people succeeding with the technique.

Specifically, examples of people later exploiting their monopoly to charge people more than they otherwise would have paid.

[largbae]

Ubers have become pretty expensive these days.

[eru]

Well, is Uber a monopoly and collecting monopoly rents?

[haritha-j]

Amazon and diapers.

[eru]

Could you elaborate a bit? I'm not aware Amazon has a monopoly on retail, nor even online-shopping? Could you explain what you mean with the diapers?

[dv_dt]

A trillion dollar ipo jist occurred for a company whose main line of business is almost entirely subsidized by government contracts

[dd8601fn]

Is buying launch services really a subsidy, or did I misunderstand?

[Joker_vD]

> This isn't "the market working as intended", this is an exhaustion fight to the bottom where the one with most money gets to stay in the market.

That's, uh, pretty much exactly how oligopolistic markets function.

> I find it hard to compare that with a free market.

Well, to have free market you need to remove as much barriers to enter the market as possible. Huge capital investments required for entry and intellectual property laws are two examples of such barriers. Subsidies kinda supposed to help alleviate the first one.

[whateverboat]

I mean, for what it's worth, we have subsidized Anthropic by allowing them to train on copyrighted stuff. (I know it is still legal, and I support the legality, but the economics are what they are with people's content paying a big one time subsidized cost (to the level of at least 500B).

So, the least Anthropic can do is pay it forward.

[civet_java]

I am mostly economics illiterate but I understand a subsidy to be an economic concession given by the state to an entity which gives said entity a relative advantage compared to its peers.

In that sense (which could very well be bogus), letting a company violate individual IP of basically every human is less of an economic concession and more of unconsented to IP open season.

Even if one were to drop "economic" from "economic concession" and instead view a subsidy through the lens of a more general concession, one could say that the US Govt gave US AI companies a legal concession to sidestep the copyright protections of other US entities. But the US Govt should only get to undermine the copyright protection of other US entities - who gave American companies the right to violate the copyright of non-Americans?

[vintermann]

That's some "download a car", $100000 per infringement pricing logic. No one is paying anyone 500 billion dollars. I'm sure rights owners wanted that, and more too, but it's nonsense to call it a subsidy that they didn't get it.

[rubyn00bie]

If we as individuals were sued it surely would be at least an order of magnitude difference between what is required from us vs Anthropic or OpenAI. That’s even completely ignoring the marginal utility of money. It is absolutely a subsidy. It’s just less fair because that power, to pay pennies on the dollar, is only given to corporations.

[joelanman]

doesnt VC money subsidise stuff all the time? Isnt that how Uber and AirBNB undercut competition?

[slake]

The VCs footing the bill is really your pension funds and 401Ks and banks passing through the VCs. If VCs lose money the contagion spreads through the economy.

[roenxi]

I get the vague impression that this was written in a sarcastic way, but it has a straightforwardly true literal read because yes, this is what the free market is about and Anthropic will have to compete with the Chinese if they want a big share of the market. Chinese models are cheap and good; even without reselling Anthropic's services they're competitive. Which reading did you intend?

And, gotta say, the idea that the Chinese are better at selling US models than the Americans is hilarious. There might be an economic study here somewhere about just how anti-consumer and anti-progress their IP laws turned out to be. We've got an entire postindustrial revolution centred around who can ignore the most stupid laws.

[andsoitis]

> the idea that the Chinese are better at selling US models than the Americans is hilarious

This is not the right deduction.

China blocks foreign AI from operating there.

[phs318u]

> China blocks foreign AI from operating there.

Given the current US government's tightening of export control restrictions and the introduction of a bipartisan bill to block use of Chinese AI in federal agencies, I'd say the two countries' positions are not far apart.

https://apnews.com/article/ai-china-united-states-competitio...

[AuthAuth]

Yes neither are free markets

[LtWorf]

I think you will find that it's the USA government imposing such restrictions.

[andsoitis]

That is ALSO happening, but that's beside the point.

Chinese AI apps like DeepSeek are freely available for ordinary Americans to download and use. There's no federal law banning private citizens from using them.

So to claim that Chinese companies are better at selling American companies' work than the American companies can do themselves when they are prohibited from operating in that market, is the wrong deduction to make.

[8note]

there will be soon enough. TikTok is the example for the US clamping down on companies that dont toe the regime line on israel

[gruez]

>This is great for competition! Chinese vendors offering a cheaper solution = what economics told me the free market was all about.

Yeah, like all those Chinese bootleggers selling DVDs for a few dollars rather than $20. Free market!

https://news.ycombinator.com/item?id=48664814

[dualvariable]

"Information wants to be free"

Anthropic profited from training its models on all kinds of copyrighted information, live by the sword, die by the sword...

Their model weights, training data, training methods, etc are all going to leak to China over time.

Nobody on a site named _Hacker_ news should be all that upset about this.

[XorNot]

Seriously AI companies complaining about fair use is the biggest case of crocodile tears I can think of. Irony has been dead for a while, but they dug up the corpse and set it on fire anyway.

[digitaltrees]

Totally agree.

[tedd4u]

Don't forget insider threat vector, too.

[dualvariable]

I deliberately didn't mention any threat vector.

I would assume China is working on liberating Anthropic weights through the battle-tested strategy of finding someone in a privileged position and getting them laid, etc.

[Perepiska]

Los ricos también lloran (1979)

[toobulkeh]

You’re mistaking the original term hacker, a tinkerer of systems, for the black hat variety.

[dualvariable]

Hackers didn't use to spend a lot of time defending trillion-dollar corporations and their intellectual property rights.

[tancop]

black and white hat is relative. someone breaking into a state run database in a dictatorship and stealing documents that prove some opposition leader was murdered would be a black hat criminal if you ask their government. a hacker jailbreaking a phone to let people fix it without expensive official service is a black hat to the company. we should really switch to saying offensive and defensive or something else that doesnt come with moral implications. maybe lawful and chaotic.

[vasco]

What true hackers really did was discuss the definition of the word and how to use it

[eimrine]

I suppose his point was that the both parties are black hats.

[drekipus]

There is no real difference

[usefulcat]

It’s true that the meanings of words can change over time. Whether or not that’s a good thing is another question entirely.

[collingreen]

Yes there is.

Care to elaborate on your side or should we just leave it there?

[zem]

there is, the original hackers built thinks, they didn't attempt to destroy or coopt them

[anigbrowl]

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

[adjejmxbdjdn]

Bootlegging is copyright theft.

Is Claude output copyrighted?

If anything, a tremendous amount of Claude’s input is copyrighted.

If there’s any bootlegging going on it’s Anthropic that’s doing the bootlegging but having mirrored the video etc sufficiently to beat copyright law.

[gruez]

>Bootlegging is copyright theft.

Ok, but what about those shady sites that resell Windows education keys? They're certainly a "better experience" than buying legit keys, by virtue of being significantly cheaper. You aren't even really committing copyright infringement in the process, because Microsoft gives out windows isos for free, and the seller is really selling a random 25 character string, which can hardly be copyrighted.

>If there’s any bootlegging going on it’s Anthropic that’s doing the bootlegging but having mirrored the video etc sufficiently to beat copyright law.

US courts have consistently ruled it's fair use.

[smegger001]

>>If there’s any bootlegging going on it’s Anthropic that’s doing the bootlegging but having mirrored the video etc sufficiently to beat copyright law.

>US courts have consistently ruled it's fair use.

And they also have ruled that the that output of an AI isn't copyrightable.

As such copying claudes output isnt even fair use as that is an exemption to copyright but the same as copying public domain work which any and all are allowed to do.

[jrflowers]

> US courts have consistently ruled its fair use.

Like Adam Smith wrote in The Wealth of Nations “‘Free market’ is when a company receives a favorable ruling about copyright in the United States”

[chrismorgan]

> because Microsoft gives out windows isos for free,

… with a license that only allows you to use it for certain purposes, subject to certain restrictions.

> and the seller is really selling a random 25 character string, which can hardly be copyrighted.

1. Copyright is about creative works. It is possible to have a meaningful creative work no more than 25 characters long (or equivalent). Music is particularly good at this.

2. The key itself is not copyrighted (it’s not a creative work), but is reasonably interpreted as a copyright circumvention device. See also https://en.wikipedia.org/wiki/Illegal_number.

[throwaway7356]

> Ok, but what about those shady sites that resell Windows education keys?

Yes, they are fine? They might no longer include full first party support by Microsoft for not being "new". Same as buying a used car (also comes with the "shady sites" for a far longer time).

Though this not making any difference by Microsoft not doing any support either way to make more money is a business decision by Microsoft.

[jrflowers]

What about those store brand cereals? “Chocolate puffed balls” for a fraction of the price of Cocoa Puffs™?! You all may laugh until your waterways are under siege and you find Cap’n Crunch™ keelhauled by thrifty shoppers

[gowld]

and Chinese courts are ruling that using Claude is fair use.

[8note]

american courts have ruled that theres no copyright at all on LLM outputs

[bandrami]

The current case law in the US is that the raw output of an LLM cannot be copyrighted without further meaningful arrangement or alteration by a human author.

[numpad0]

I think renting out ID to let others in without telling the admin is generally unlawful in many places

[xdennis]

> Yeah, like all those Chinese bootleggers selling DVDs for a few dollars rather than $20. Free market!

It's supremely ironic analogize distillation to copyright infringement when it's literally what Anthropic was found guilty of. It's not illegal to distill. It is illegal to pirate. And it's what Anthropic was found guilty of, not Alibaba.

https://apnews.com/article/anthropic-authors-copyright-judge...

[gaiagraphia]

It's quite curious how multi billion dollar enterprises can't compete with a Chinese bootlegger with a big jacket, tbh.

Imagine having such a warchest and being so bad at business, lol.

[14]

My biggest concern with pirating has always been malicious programs. But companies still need to show value in their products or people will pirate.

What added value can Anthropic give users not available to pirating users? That is what they should ask themselves.

[kay_o]

ZDR but that is meaningless if the person wants to do nothing more than cheat on homework (or has enough hardware to run a local model)

[tancop]

any third party provider can offer zdr. if its a reputable company in a place like switzerland or germany i would trust them more than anthropic to hold up that promise.

[dd8601fn]

Bad at business? One of them has to make the thing.

[MarsIronPI]

Maybe the making of the thing should be paid for before it's made, rather than hoping that selling copies will recoup the investment. I.e., go back to patronage while abolishing copyright.

[dd8601fn]

This doesn’t support your previous theory.

[windexh8er]

This type of "resource curse" paints a perfect picture of why US based frontier providers are set up to fail. They want, and have, few restrictions and along with that unlimited warchest. The Chinese on the other hand aren't burning billions like millions. Anthropic, OAI, Google, Meta... They're all phenomenal examples of waste, corporate greed, inefficiency and are the reasons people hate tech bros at this point. Whining and crying from their super yacht, Parkinson's law is alive and well!

[bandrami]

The output of Claude is not eligible for copyright protection. I'm not sure how the analogy of bootlegging DVDs would work, given that.

[vintermann]

I suppose you are violating the TOS by reselling a service, even if the output can't be claimed as belonging to anyone.

[bandrami]

Sure, and Anthropic is allowed to cancel the licenses of people doing that, as they do

[gf000]

You can write anything in TOS, many parts of it is non-enforceable and depends a lot on the local laws.

[fulafel]

Free market would of course allow bootleg DVD sales, state regulation that gives monopoly rights restrict it.

In the context of LLMs, monopoly rights haven't been created (yet anyway).

Fun fact: for a period the US (or american colonies) didn't have copyright but Europe did, so people could copy and sell English (and other) books for free.

[SiempreViernes]

BigAI are all in the bootlegging market themselves, so it's always funny to see them complaining about others copying their "product".

[chews]

I bet you've downloaded a car.

[nmfisher]

More like one bootlegger complaining that another bootlegger is copying their bootleg DVDs.

[InvertedRhodium]

And those darned printing presses distributing works that were written prior to their existence.

[thot_experiment]

This is also a good thing fwiw.

[windexh8er]

Except Anthropic didn't produce the movie.

So it's more like one bootlegger sold the DVD for $20 and their competitors are undercutting them for $1. Who's the bigger thief here now?

Capitalism as intended!

[Mistletoe]

AI was always going to be a race to the bottom and low margins. It’s why I’m extremely bearish on AI as an investment. It’s framed as some high margin business when it’s really going to end up like your toilet paper at Costco. You will use whatever is cheapest and gets the job done.

[4ffsss]

Correct.

And the value-add experiences that utilise LLMs require immense imagination et al that folks at Anthropic will not be able to conceive of - given that they have made immense sunk investments in existing assets. This clouds ones thinking immensely.

Both OAI and Anthropic have tremendous failure risk and this is of course not reflected in the fake private market valuations.

I see a world where lots of stuff is mass produced in china (tokens) but the acutal goods that deliver the experiences are designed, marketed and sold in the west at much higher prices. of course this a nightmare scenario for anthropic et al.

[StopTencent]

You seem to not get how pervasive and evil the Chinese State is at making everything thing shit for citizen world wide. This is one of the reasons.

[XenophileJKO]

I used to think this.. but I think my opinion is changing. The reason is that the leaders likely will be able to accelerate faster.

So what you see is the market "stretching".. the bottom getting cheaper and the top end running away and getting more expensive. At some point the top end may be too valuable to even sell access to.

[majormajor]

Most white-collar/knowledge-service-industry work is a weird type of work.

It's fundamentally about enabling things and largely middleman-type stuff. I have a hard time imaging what "At some point the top end may be too valuable to even sell access to." would even look like? What are you doing with that AI power, and who is paying for the output and why?

Elon probably isn't gonna spend that much on a model that can generate him ever-better fake porn but does nothing that he can use to sell stuff to other people. Especially in a world where open models are "good enough" for many things like "tell me how to fix the plants in my garden that are dying" and the like. What remains in the narrow knowledge-work space of: can't be done by an individual or small group themselves, but is valuable enough that it would make sense for people to hoard access to these extreme frontier models? Try to recreate Hollywood-as-a-monopoly by becoming the single content producer for everyone's individualized feed and so owning all the advertising budget in the world? Seems hard, we've already seen how easy it is for cheap-and-crappy-but-addictive-or-funny content to disrupt traditional media.

(There's also pure scientific research, but historically that's not very directly connected to "massive profit" and has a habit of leaking out and getting productized most effectively by other people or just being really easy to copy once someone shows how it's done.)

Robotics could be a different story, as physical labor can be more inherently productive, but "reasoning" advantages are unlikely to be a big long-term differentiator there. At some point the brick laying robot is satisfactorily building the structure, and you're good.

A huge amount of the value of "the economy" and the power of a currency is driven by circulation of money, and one thing that all the "bullshit jobs" white-collar/service-industry work does is keep the money moving and ensure that a lot of people have some good-or-services of value to exchange. If you take away the ability to offer services worth exchange from huge chunks of the economy in these super-frontier-models-replace-everything scenarios... you're gonna have a bad time?

[canadiantim]

Glm 5.2 very much argues against that. Opus 4.8 level quality for cheap. That’s sufficient for most tasks, so if/when you do need SOTA models you can spend more for specific tasks but otherwise rely on the cheap but still plenty good models for everything else

[Mistletoe]

For me better models are like 8k TVs, my 4k TV is fine, I really don’t know if I can see or tell the difference from 8k and 4k, and to be honest I’m usually just streaming some 1080p anyway. Sometimes products reach the plateau where humans just don’t need better. I’d certainly never pay for AI, Gemini 3.5 Flash free works just fine when I need AI. I don’t even click higher models for free in the Gemini app. I mainly just care about speed. I’m not a programmer, AI doesn’t make me able to make my job better or make more money and the vast amount of people in the world are like me. These valuations are not based on that reality and the stock market correction is going to be 1930s level I fear.

https://isaiprofitable.com/

[crote]

> The reason is that the leaders likely will be able to accelerate faster

Model improvement is already hitting diminishing returns, and people aren't willing to pay substantially more for a slightly better model. There's no "accelerating away" when the new models don't open up a huge new market. If anything, the companies burning huge amounts of money on marginal improvements will be undercut by companies happy to sell current models at a significantly lower cost.

[_carbyau_]

The issue is who is going to pay for access?

The model has to be sold for cheaper than the value it adds.

Or your customers will bleed out financially.

EDIT: rethought entire premise.

[neya]

> Or does this not apply to huge US corporations any more?

When it comes to favorite companies of the tech communities, it's almost always "Rules for thee, but not for me"

The standard stance is "they can do no wrong and they are absolutely perfect". I mean, look at any thread with anything about Apple in it.

[m-ee]

It never did.

In debt the first 5000 years Geaeber makes the case that pure “free market” trade has never really existed in “the west”. The closest to this ideal that’s ever happened was during the Islamic golden age enabled by religious prescriptions against usury.

[gruez]

>The closest to this ideal that’s ever happened was during the Islamic golden age enabled by religious prescriptions against usury.

How does are bans against consensual financial exchanges close to the "ideal" of the free market? It just sounds like you have an axe to grind about the financial system rather than describing free markets.

[asdf88990]

Usury and debt based economy creates a dynamic where being competitive in production is secondary to financialistion.

In short, instead of market being driven by demand and productivity, it is driven by financier curving out monopolies.

Peak Examples are Uber and AirBnB.

[gruez]

What makes this view more correct than say, "economies with marketing creates a dynamic where being competitive in production is secondary to marketing" and concluding that nothings a free market until we ban all advertising? After all, you can make a vaguely plausible argument about how marketing isn't really about the merits of the product, and therefore allowing it is antithetical to the free market or whatever

[majormajor]

> What makes this view more correct than say, "economies with marketing creates a dynamic where being competitive in production is secondary to marketing" and concluding that nothings a free market until we ban all advertising? After all, you can make a vaguely plausible argument about how marketing isn't really about the merits of the product, and therefore allowing it is antithetical to the free market or whatever

Wait, so your pitch in favor of a debt-fueled market economy is that advertising is awesome and that we wouldn't want to "lose" being smothered in ads all the time?

Cause... sign me up for the non-financialized, non-mass-media-advertising-driven economy please and thank you. I'd even be ok with just nuking billboards and mass-media forms of ads and still allowing more direct forms of marketing, if we must compromise! Likely we could find some compromises around just how much of the debt world we regulate too (this should be obvious?).

(I thought the disconnect between the efficiency of competition and the market as realized in modern economies was pretty well understood and taken for granted, but I guess we all find ways to justify the system we're profiting from... even if that means we have to claim we love the ad breaks)

[gruez]

>Wait, so your pitch in favor of a debt-fueled market economy is that advertising is awesome and that we wouldn't want to "lose" being smothered in ads all the time?

The point is that if add random caveats to what counts as free market, it won't be "free market", only "market I like".

[asdf88990]

Marketing isn’t free for starters.

Second, marketing can take you only so far compared to the subsidies possible with financialisation.

The West is in a state of psychosis with Debt and Monopolies under the illusion of free market.

The Chinese markets are more free than West, you can just look at the Auto and AI industry.

[SR2Z]

I'm flabbergasted that you look at the Chinese property crisis and say "only the West does irresponsible loans." No, 60% of China's economy is state-run companies and the remaining 40% need political officers. China is just as capable of making shortsighted decisions as the US, and they have already made several devastating ones.

[wqaatwt]

No access to capital can and does constrain supply to a very high degree.

[asdf88990]

Capital will not be hoarded and stuffed in pillows without Usury. People are happy to take bets for profit and loses, I mean, that is like the entire stock market schtick.

[wqaatwt]

I don’t exactly see how the modern stock market is superior based on the (moral not economic) criteria being discussed in this thread?

It’s even more speculative and detached from productive behaviors.

[SR2Z]

...except Uber STILL faces competition, and I went back to hotels after finding AirBnB too pricy.

It is good and proper that people aim to create monopolies, as long as they want to do that in a productive and legal way! Monopolies are inherently dangerous, but the truth is that acquiring and maintaining one is not straightforward unless you can get the government to ban your competitors.

[bigfudge]

Even if these companies monopoly falters after IPO the disruption and distraction to a focus on producing can be a problem.

[digitaltrees]

Expand. I am typically against hard money gold bug libertarian arguments but your description seems interesting and I am open to being persuaded.

[m-ee]

Debt creates debt crises. Throughout history it’s been a major function of any government to resolve these. Notably this function predates any concept of a market in the modern sense. For the most part markets were created by fiat by the government for its own purpose (usually supporting its armies) rather than springing from the ground organically only to later be regulated.

I’m not advocating for Islamic finance, it’s just a funny artifact of history that the closest thing to a “free market” unfettered by government interest, did not happen in the “western” world most of its advocates come from.

[MarsIronPI]

Usury (i.e. taking interest) sounds like free market to me. If you don't like my interest rates, borrow somewhere else.

[UltraSane]

Without interest why would anyone loan money? Even the Islamic banking alternatives all just hide the interest charges.

[gowld]

That's not true. Islamic finance forbids indefinitely growing interest. Sharia finance agreements involve fixed fees or equity shares. Late penalties can be collected but must be donated, not profit. In all cases, the borrower never owes to the lender for the lender to keep more an a fixed amount determined at the strat.

[asdf88990]

Shares and Goodwill. You loan money for good well or share of an enterprise which comes with benefits and risks.

[wahnfrieden]

Usury is so delicious to many that it’s unfathomable to consider any other incentive comparing to it

[UltraSane]

What is unfathomable is how you have a functioning economy without easy access to loans at reasonable interest rates.

[wahnfrieden]

Try reading Graeber/Wengrow

[asdf88990]

The same way Stock Market works. Really, Debt benefits a tiny fraction of people involved in the market.

[jimbokun]

So equity instead of debt.

[subsistence234]

a stranger is asking you to risk $100k on his half-baked plan in exchange for nothing, and you say "sure go ahead take my money!"? no. it doesn't work like that in the islamic world.

as a borrower who's not allowed to compensate for your lenders' risk monetarily, your access to loans is severely restricted. Essentially you have to rely on your extended family. and instead of paying for the risk with interest payments, you have to pay with loyalty and subservience.

it restricts social mobility far more than the western model. it incentivizes clan structures. which incentivize cousin marriage.

power concentrates in the patriarchs of a million little family kingdoms. which causes all kinds of economic inefficiencies.

in the US, even if you're born without any family connections, as a healthy 20 year old you can find a job (hard work) that allows you to save $70k per year and invest it. when you're 30 you have $1M and a good credit history, you can easily leverage that to get a $2M loan at low interest rates, which allows you to start any kind of productive venture you want.

and you can do all this without owing your clan's patriarch access to e.g. your most profitable clients, or your daughters hand in marriage to his retarded son, or anything else he wants in exchange for his generosity.

[asdf88990]

“a stranger is asking you to risk $100k on his half-baked plan” is more less what YC is. And no debt involved.

You can correct yourself from there.

[UltraSane]

And in exchange YC demands a large percentage of ownership of the company. Completely different than a loan for 5% interest.

[za3faran]

Loaning money as per Islamic Law is a charitable act, not one of exploitation.

[avadodin]

Nice to get a callback to previously acquired knowledge with what I assume is an arabizi (sp?) handle.

Islamic trade is certainly one of the best models out there but I think in many cases in practice it is still applied subversively.

It is not enough to ban mechanisms like usury, designed and intended to exploit.

One has to go after the very subversion of legitimate practices for illegitimate goals.

[UltraSane]

reasonable interest rates aren't exploitation. Business Loans serve a critical role in economic activity by putting free cash to more productive use.

[za3faran]

All interest is usury in Islamic Law (and the laws before it such as Christianity and Judaism). There are ways to to put free cash into productive use without exploitation.

[UltraSane]

I understand and I disagree. Interest isn't always "exploitation". A 5% loan isn't exploitation and it is very stupid to ban such things.

[gaiagraphia]

>religious prescriptions against usury.

[jujube3]

Graeber was a confabulator with a very loose grasp of the facts, though.

[vasco]

You can read Adam Smith if you're looking for definitions, there's no need to read charlatans.

[m-ee]

If I wanted moral philosophy I’d read a better moral philosopher

[thesmtsolver2]

> what economics told me the free market was all about.

Don't complain when US starts to play by the same rules China has been using for decades.

[solid_fuel]

What is the implication here? Are you warning that US corporations might start doing something shady, like scraping the internet at large scale for training data? Or mass-dowloading pirated copies of books, completely ignoring copyright?

I find it hard to imagine a future where US corporations have degraded to such a point.

[chaostheory]

No, he means that the US will close most of its domestic market to competition just like China has for decades, and the US may start subsidizing and dumping its goods everywhere

[crote]

> the US may start subsidizing and dumping its goods everywhere

Isn't that exactly what companies like Uber have already been doing? Take VC money, sell goods & services at a huge loss, wait until the competition goes bankrupt.

[rednb]

Exactly, it's funny how most Americans have no self-awareness on this topic.

And beyond VCs, which are like massive subsidies funded by printed dollars to which no other country has access, even in industries like electric vehicles, Chinese total direct subsidies to their EV companies are like $5bn per year, while the the ones provided by the US to their auto manufacturers are in the range of $50bn per year.

I don't think the US are cheaters or are doing something bad. But i do think that this propaganda about China flooding the market through "overcapacity" and subsidies is very dishonest and needs to stop.

[chaostheory]

The CCP's recent yearly subsidies for China's EV industry ranges from $30 billion - $46 billion per year compared to $10 billion - $20 billion per year for the US. A conservative estimate of total subsidies lands China at about $230 billion while the US was at $70 billion.

[deaux]

Yes. Dumping abroad is the entire model that Silicon Valley has been built on in the last 2 decades. China just copied the model. And even then it's a light version of it.

[deaux]

You know, normally when I read these Reddit comments saying "you made me snort on the bus", I always took them as exaggeration.

Turns out I was wrong, I just hadn't read something funny enough yet.

> the US may start subsidizing and dumping its goods everywhere

This deserves to win HN comment of the year 2026.

The majority of the NASDAQ market cap is a direct result of the US subsidizing and dumping its goods on the rest of the world en masse.

[janalsncm]

Just a data point, but the US currently imposes a 100% tariff on Chinese vehicles.

[chaostheory]

What’s worse, tariffs or outright banning the competition from your market? China has done both despite globalism being what has lifted it from poverty. Why is everyone suddenly surprised that globalism and free markets are coming to an end? Is this a net good? Mostly no unless you count more redundant supply chains.

[tw1984]

> China has done both despite globalism being what has lifted it from poverty.

such oversimplification on steroids is totally misleading.

globalism was never invented or promoted to help any country in poverty, it was designed to extract excessive values from those poor countries in the first place. painting globalism as something noble is naive at best.

globalism was the theme of world trading for the past several decades, it was available to all nations. care to explain why other nations in poverty failed to be lifted by the exact same fancy globalism?

let me help you on this one - China was THE leading technological and economical force of the vast majority part of human civilisation. What happened between 1840 and 2010 (the China in poverty period) was an outlier of the history. Globalism didn't lift China from that poverty, the ability to lead the human civilization which was embedded into the Chinese DNA did that.

Kid, when our Chinese ancestors wrote the Art of War, your ancestors were still swinging on trees. You just missed that big picture.

[vintermann]

The "stolen IP" argument can always be made as an excuse. I'm surprised how well it works with some people.

[overfeed]

The surviving non-American farmers would be confused by the future-speculative tense as America has already been doing this for decades in agriculture, and have been complaining for decades about both the subsidies and dumping of American corn.

[chaostheory]

Sure, but not at China’s scale and no where close to number of industries where China does it. Why? The US was a net importer in order to support the dollar being the global reserve.

[8note]

as in, the main trade complaint that trump has with nafta. the Uzs wants to dump subsidized dairy on canadian markets, and canada doesnt want it.

same with US corn on Mexico and other central american countries, creating all those migrant problems in north america.

wooo, americans subsidizing and dumping poor quality goods

[DiogenesKynikos]

Most of the Chinese domestic market is open to foreign competition. The areas that are closed off are those that are politically sensitive: publishing (including social media) and banking.

As for dumping, Chinese goods generally sell at a markup abroad, which is the opposite of dumping. Chinese tokens cost more abroad. Chinese cars cost several times more in Western markets than in China.

[crote]

"Dumping" is when Chinese companies beat Western ones on the free market. If all claims of Chinese government subsidies on basic products were true, China would've gone bankrupt multiple times already.

You're being beaten by a Chinese company? Why improve your own process when you can just lobby for sanctions and tariffs instead!

[noncoml]

The US spent decades transferring manufacturing, capital, and know-how to China, while Chinese students trained, and excelled, at elite Western universities. Why are people surprised that China eventually became capable of competing with the US?

[AuthAuth]

Most of the time its just low labour costs and no environmental reg. Its really that simple

[fn-mote]

> Chinese goods generally sell at a markup abroad, which is the opposite of dumping

Dumping is selling goods below cost.

Usually because government is subsidizing part of the production. I don’t believe the word “dumping” is used for the similar process when Venture Capital is subsidizing it, but using the same term would make sense.

Price at home vs abroad does not matter.

[DiogenesKynikos]

Price at home vs. abroad is key. The term dumping comes from the idea that a company that sells profitably in its home market dumps excess production abroad at below cost.

This is not what is happening here. Chinese manufacturers are making a large profit off every car they sell in Western markets. As I said above, they're selling these cars at several times the price they charge in China. Unless you believe these cars are being sold at just 30% of cost in China, there's no way Chinese companies are selling below cost in the West.

[slaw]

> Dumping is selling goods below cost.

Chinese cars are not sold below cost in Western markets. So it is not dumping.

[deaux]

> I don’t believe the word “dumping” is used for the similar process when Venture Capital is subsidizing it,

I've been doing so for years. How about you join me today. I already see two other users doing the same, so there'll be at least 4 of us.

It's blatantly dumping, whether the source of the money is directly the government (those in power) or VC (mostly US billionaires (trillionaires?), in other words, those in power) is a trivial implementation detail.

[echelon]

> the US may start subsidizing and dumping its goods everywhere

The US is a net importer, not exporter. It needs to absorb trade at a deficit to encourage the use of the US dollar as the reserve currency.

We import goods, we settle in surplus dollars. The world runs on those dollars.

If the US starts dumping on various industries (how is it even primed to do this?), then the world reserve currency status comes into question.

[watwut]

Whole Silicon Valley is based on selling products under price, for years, killing the competition or making it impossible and extracting once monopoly position is stable enough. It is the same play book again and again and again and again. It runs unprofitable companies for absurd lengths of time.

[digitaltrees]

Or building backdoor in to the physical servers sold around the world?

[_aavaa_]

How do you think the major AI companies trained there model? Pirated books and anything that could be torrented and scraped of the web.

[supah]

they were being sarcastic

[_aavaa_]

Don’t know about that…

[thisisit]

America industries used to play by the same rules. Look up Samuel Slater.

[potsandpans]

A credit system that determine your upward mobility?

[abc42]

Free markets work when paired with property laws that can be enforced if broken. If China could offer a cheaper solution in that framework, it would be as you say.

[janalsncm]

If you continue studying econ you will learn about the various failure modes of free markets including the free rider problem.

https://en.wikipedia.org/wiki/Free-rider_problem

[achierius]

If you keep studying econ you will learn that these failures are actually the norm, and thus why the only "capitalist" states to really succeed have been the ones where the state was strong enough to reign in the market.

Of course, such a state of affairs is temporary at best -- since the alternative is so lucrative!

[Levitz]

>This is great for competition! Chinese vendors offering a cheaper solution = what economics told me the free market was all about.

Ah yes, systematic fraud and protectionist practices, free market through and through.

[TZubiri]

Nuance please.

They are:

1- breaking terms of conditions of the service

2- getting banned and creating thousands of accounts to break the conditions of the service at scale

3- using VPNs and proxies (possibly residential) to mask their network origin and identity

4- Using potentially fake names to sign up

5- Using different credit cards?

Fraud on so many levels, a lot of the infrastructure and modus operandi is what cybercriminals use, these are attackers man, whether you like the victim or not, and whether you think it's poetic or not, I recommend compartimentalizing and just trying to gauge whether an act is wrong or not in itself.

[toss1]

Externally subsidized predatory pricing is the opposite of a free market.

[amanaplanacanal]

So all those companies selling at a loss to gain market share aren't part of the free market? Like openai, anthropic, and SpaceX?

[toss1]

Externally subsidized predatory pricing is the opposite of a free market — precisely because it sells things at below market rates.

Free markets are where players compete on quality, efficiency, and supply. Prices are a result of cost and supply and provide real information on these factors. Competition for customers selects the most effective and efficient producer.

Sustained efforts of selling at a loss to gain market share is the exact opposite. The entire purpose is to corrupt the free market by sending false price signals which SUPPRESS free market competition and push market share to whoever can burn the most capital (whilst providing an actual service/product), not whoever is most efficient or highest quality or lowest actual price provider.

Uber and AirBnB are better examples of your "selling at a loss to gain market share", where they burned capital to undercut prices for close to a decade on falsely low pricing to destroy incumbents.

Spending on R&D while developing expensive technology is different and arguably very much a part of a free market, and is not what I was talking about.

Spending capital to steal your competitors' technology, and then spending more of it to make it available at below-market rates, is absolutely not a free-market activity.

Just because it is not stopped by someone enforcing a free market, does not make it a free market.

[gmd63]

If you can use mountainous capital to sell at a loss in order to distort the market, yes, that's not a "Free Market", as in, the vaguely understood competitive marketplace armchair economists idealize.

True freedom in the market means the freedom to capitulate your wealth to snake oil salesman and schemers who operate on generational timeframes until economic power consolidates and renders your society into de-facto tyranny. Before any sort of regulations existed, we were all trading shiny rocks with ultimate freedom, and that somehow has produced a bunch of economic situations in the modern day that a ton of people don't like.

What's more interesting to me is freedom from the need to have investigative journalists doing deep dives into potentially fraudulent, thieving, or scheming companies behind every purchase, and to know that what I'm granting market success to is exactly what my money or time is going towards - I'm not buying something at a loss that funds some other deliberately obfuscated project that's made opaque from my perspective of the market transaction.

The proverbial "market wisdom" doesn't emerge out of markets with extreme information asymmetry.

[noncoml]

Cough.. cough.. Uber.. cough cough AirBNB

[AlexCoventry]

The "free market" gave the PRC its current strategic lock on rare-earth minerals. There's definitely no such thing as a free market in a Maoist dictatorship. I personally think the "free market" concept is an unachievable ideal and thought-terminating cliche, but "free market in a Maoist dictatorship" is for sure a contradiction in terms.

[skybrian]

I guess you missed the fraud part.

[Gigachad]

Pulling out the worlds smallest violin for this case. It's just unheard of for AI companies to steal things.

[skybrian]

No, I mean that dodgy Chinese firms are cheating their customers:

> Because users’ inputs and model outputs are mediated through a proxy, users cannot verify which model their request was actually routed to. A user selects Opus 4.7, but the proxy can silently route to Sonnet, Haiku, or, in the worst case, GLM or Qwen, and fraudulently relabel the output. In a recent paper from Germany’s CISPA Helmholtz Center for Information Security (which cited my article last year on grey market!), researchers audited 17 API proxies and found widespread model swapping–API proxy access to “Gemini-2.5” achieved only 37.00% on a medical benchmark, a staggering drop from the 83.82% performance of the official API. On the user end, the tell only comes on complex tasks, when the output feels off (often referred to as 降智, or “dumbed-down”), but there is no clean way to prove it. Numerous public records highlight concerns that certain API proxies have noticeably compromised model performance. These proxies are suspected of “diluting” (掺水) services by substituting premium frontier models with inferior tiers.

> Besides model swapping, overconsumption of tokens also makes the price per token cheaper, though at the expense of driving up the total cost. Some of it is structural, as proxies that rotate accounts frequently destroy cache continuity as a side effect, forcing users to burn full-price tokens on context that would otherwise be nearly free. Some of it may be deliberate as the proxy providers try to milk more usage. The line between the two is difficult to draw from the outside.

https://www.chinatalk.media/p/how-to-buy-cheap-claude-tokens...

[gaiagraphia]

>Fraud

According to which lawyer caste?

Are American laws absolute truth? If not, who cares?

[CGamesPlay]

I mean, which lawyer caste do you respect? Is that one is cool with stealing credit cards to buy Claude subscriptions?

> 3. At an Italian airport: Constantly stealing bags, opening them to pick out MacBooks and credit cards, a credit card manufacturer-who sells stolen "black" credit card info to transfer stations— is racking his brains to save you money.

[wqaatwt]

Stealing credit cards seems not directed related to using legitimately acquired LLM outputs for whatever legitimate purpose you want to use them.

[yard2010]

Where is this quote from?

[CGamesPlay]

Midway through https://www.chinatalk.media/p/how-to-buy-cheap-claude-tokens... which was the article from the top-level comment.

[LtWorf]

Has any tribunal ruled that fraud did happen?

[techblueberry]

Fraud is just what losers call disruption.

[naturalmovement]

Do you also think Chinese selling counterfeit US postage stamps on eBay for 50% retail price (which is a major problem CBP and USPIS are fighting presently) is the free market at work?

This post is so delusional and dripping with condescension I've read it three times and I still can't figure out if you're trolling or not.

[bandrami]

Postage stamps have specific legal protection from duplication. The output of an LLM is not itself eligible for any legal IP protection.

[naturalmovement]

So it's a proxy.

Do you think you can re-stream cable TV or Netflix to your own paying customers at a cheaper price?

[bandrami]

If it's streaming an uncopyrightable product, absolutely. This isn't even a gray area.

I'm curious why you think you cannot re-stream a public domain stream.

[naturalmovement]

You're playing word games to justify something which is clearly ethically wrong.

You can't re-stream free over-the-air network TV.

That one company with the datacenter full of TV tuners tried and was sued out of existence.

[cycomanic]

If I understand your argument it's ethically ok to destill huge swathes of copyrighted work into a model without compensation, but then it is ethically wrong to use that model without compensation (well actually reduced pricing)?

I don't get the moral framework that you're applying. Could you elaborate?

[eloisius]

Over the air TV also isn’t public domain. It’s licensed to a station for broadcast. The output of an LLM has been deemed ineligible for copyright. Until you square that pickle your circle isn’t circling.

[bandrami]

Free over-the-air network TV is (generally) copyrighted.

The output of LLMs cannot be copyrighted. This isn't a semantic game; it's literally the case that Anthropic cannot seek relief for people duplicating the output of an LLM.

[piva00]

Why is the ethical line specifically on model distillation for you?

Was it ethical for Anthropic/OpenAI to train their models by gobbling a treasure trove of copyrighted material?

[wqaatwt]

Using a bunch of nonsensical/irrelevant analogies to somehow make a point seems worse than these “word games”? What does streaming copyrighted content have to do with LLM outputs (which are public domain)?

[noncoml]

> clearly ethically wrong

Ethics are subjective. That’s why we have courts judge based on the law and not ethics

[achierius]

Post offices aren't meant to operate in the free market. More things should be like them.