[light_triad]

Part of the issue is the respective positioning:

- OpenAI wants to be the consumer version of AI, modeled after Google and Meta, with a mostly free universal service powered by ads and e-commerce. They haven't fully shown that model can work. The big problem is the lack of zero marginal costs as each new user requires GPU spend.

- Anthropic positions itself more as enterprise AI, modeled after Microsoft ironically enough, and charges big companies for services. The economics of coding agents work but GPUs get expensive fast and open models are getting good enough for most use cases.

So it's a race between ads and e-commerce offsetting AI spend and open source eating almost everyone's lunch.

[aurareturn]

Even open source models need hardware and energy to inference. Therefore, anyone offering a free ChatGPT competitor will be using the same unit economics.

My bet is that OpenAI will make free ChatGPT work through ads.

[pastamania]

It's a very open question whether the economics for ads work though. Ads aren't just an infinite money pit you can just reach into, they have a price ceiling you have to stay under before they stop making sense for the advertiser. And if some of the rumours about OpenAI's ad CPMs are true, the inventory is going to be massively expensive.

It makes sense for it to be expensive, mind. The unit cost of serving an LLM response is so much higher than the unit cost of serving a bunch of Instagram posts, or traditional search results or whatever.

But price too highly, most advertisers won't be able to justify them. Why spend $60 for what you can buy from Meta for $6? It's a brave media buyer who runs with that as a long term strategy. But if you don't price highly, you're just offsetting some of the losses. The whole reason Google, Meta et all's ad networks exploded what because they cost less to get reach than traditional media did before, which opened them up to a bazillion small businesses who otherwise didn't have the capital to get off the ground through traditional media. ChatGPT's will cost more than what's available now. Massively more. There's not a lot of history of that working out!

They'll get some buyers for a little while, the $60 vs $6 equation balances out if the ads are 10x more effective, and companies will throw a bit of money into campaigns to get a feel for how well they perform.

(Google is in a different position, they make basically near infinite margin on other ad types and can lump budgets in together to get still-attractive blended CPMs. It's a hit, but it's worth taking to protect their wider network, just like they did for years when Youtube wasn't remotely profitable.)

[TheOtherHobbes]

OpenAI's Codex could vibecode ads directly into production code.

In 2026 this is satire. By 2030 it might not be.