The business model for GenAI companies is still very unclear. The tech is super interesting and can be quite useful, but this space has turned into an arms race that’s led to mass commoditization of said arms. The tech world benefits from the very interesting advancements of the last few years, but commercially this all seems to be setting up a big train wreck.
I'd argue that the current business model is clear (pay subscription for chat or api) but the valuations are unclear.
If open models continue to keep up and industry as a whole just keeps improving on benchmarks fairly slowly and evenly (a big assumption but what has been happening over past year), then you would assume valuations would eventually drop. Saying that there is still a lot of easy value left on the table (great voice integration etc) and a lot of room for innovations to be incorporated in other industries.
Additionally each foundation LLM provider has a non-zero chance of a large step change in performance. If they can keep the value of this step change it would have huge upsides but this is also hard to reason about (what is the valuation of private companies and the share market if AGI exists - does this even matter anymore).
If it's true that Apple isn't going to pay OpenAI a dime for the Siri queries they hand off to ChatGPT then things are surely only going to get worse in the short term. That's potentially a huge strain on their systems which they will have to subsidise out of pocket.
I would assume Apple purchased dedicated hardware capacity at their own expense, which lets them run isolated instances of OpenAI’s models “free”. It would make no sense otherwise!
>Privacy protections are built in for users who access ChatGPT — their IP addresses are obscured, and OpenAI won’t store requests. ChatGPT’s data-use policies apply for users who choose to connect their account.[0]
Sounds like they are just sending regular requests to 'Open'AI.
I don't get why they'd do it. What's the advantage to OpenAI of giving away their core product for free?
On their own app and website they can upsell you the Pro version. But integrating with Siri for free kind of sounds like paying an artist in 'exposure'. That's their core work, why give it for free?
It's not free, it's the battle for market dominance.
That's why everybody else launched early even it's buggy.
That's why Meta is "open sourcing" Llama.
Because Meta deployed to every phone in the planet turning the ocean blood red.
It wasn’t their choice but as a growth company they’d be toast without continued user growth and Meta cut them off a the knees at any price pint above 0
> I don't get why they'd do it. What's the advantage to OpenAI of giving away their core product for free?
No one else can provide AI web services while the leader gives it away for free. They can corner or at least consolidate the market then monetize later. We have seen this kind of loss leading many times with groups like Uber and Facebook. It is a risky strategy for OpenAI and might not work for the company, but for the founders they just need to make it look good for a few quarters and they can cash out when they want or stick around if it does work.
It’s not like Apple hasn’t done this before with services it doesn’t think are ready to release. The original iPhone shipped with Google maps and they still pay Apple to use search. Apple will eventually replace it with something home grown. Maybe OpenAI got a good deal.
