4 ms·

Rather odd that MSFT invests $13B into a partnership with OpenAI, integrates OpenAI's most popular product into several MSFT products (bing, GitHub copilot, etc

Rather odd that MSFT invests $13B into a partnership with OpenAI, integrates OpenAI's most popular product into several MSFT products (bing, GitHub copilot, etc), and then the OpenAI-hosted ChatGPT (which is now in competition with MSFT's offerings) degrades over time. I'm old enough to remember a time when MSFT got in a bit of trouble for anticompetitive behavior. This post has some reasonable-seeming explanations for the observed GPT-4 degradation other than explicit anticompetitive coordination between MSFT and OpenAI, but given their interests (MSFT: to get people to use bing and get access to as much private code as possible, OpenAI: to get paid), I suspect those reasonable explanations are in service of reducing competition. I could give bing a try, and I don't have any valuable private code (well, valuable-to-MSFT code), but I would like to play with running big models locally, so I guess I'll take this as motivation to pony up on a 40GB+ VRAM GPU.

jeremyjh 3y ago
We don’t need a conspiracy to explain OpenAI motives. They released an early access model that cost far more to operate than they could ask for in subscriptions. They were selling dollars for $0.50 and of course everyone loved it. Then they decided they should stop bleeding money and maybe even make some.
- modriano 3y ago
  The main silicon valley business model (over at least my profession life) follows this rough pattern: 0) get enough money to start stage 1, 1) make product, 2) build userbase, 3) monetize (investors, bootstrap, acquisition, however) After a bit of googling, I couldn't find out how many paying users ChatGPT has, but many touting the number of users (100M). MSFT invested $13B [0] into OpenAI (650M paying-user-months @ $20/mo). OpenAI doesn't have a durable moat, so they are incentivized to monitze what they have (users, earned media hype, and their models/services) sooner rather than later. If 20% of their touted users are paying users (with the simplifying assumptions that subscriptions exactly offset churn and ignoring all operational costs), MSFT's investment is 2 yrs 8.5 mos of ChatGPT income and there's a 100% chance that something better will come out in the near future that eats OpenAI's market share. And OpenAI knows this. Per crunchbase, OpenAI has raised $11.3B from VCs [1], and they've also secured $13B from MSFT, and in contrast, paying subs/API users provide steady pocket change. The numbers make it clear that OpenAI's strategy should prioritize MSFT before paying subs, but let's posit OpenAI decided to prioritize paying subs. If that were the case, they would want to gain as many paying subs as possible before a viable (or most likely superior) substitute appears, so it wouldn't make sense to slow growth by degrading the product in the short window before substitutes arrive (at which point they could cut costs and milk their paying subs, assuming they don't have a new product to release and recapture the lead). Further it would be completely irrational to create a viable substitute if paying subs and users were vital to the business strategy. Yet OpenAI has both seeded a substitute (bing+copilot) and degraded their own service. This would be incoherent if paying subs were the strategy, but it becomes perfectly coherent if the goal is to sell their userbase to MSFT. Degrading ChatGPT both cuts costs and makes substitutes like bing or copilot more attractive, so churning users may migrate to those products (one of which had so little market share that it was a punchline). Call it a conspiracy or just call it a business deal, this is the only cogent explanation I see for the observable facts. [0] https://www.bloomberg.com/news/features/2023-06-15/microsoft-prepares-to-cash-in-on-openai-partnership-with-copilot https://www.bloomberg.com/news/features/2023-06-15/microsoft... [1] https://www.crunchbase.com/organization/openai https://www.crunchbase.com/organization/openai
  - jeremyjh 3y ago
    Every single GPT 4.0 user is a paying sub. Free users don't have access to it.

jeremyjh 3y ago

We don’t need a conspiracy to explain OpenAI motives. They released an early access model that cost far more to operate than they could ask for in subscriptions. They were selling dollars for $0.50 and of course everyone loved it. Then they decided they should stop bleeding money and maybe even make some.

modriano 3y ago
The main silicon valley business model (over at least my profession life) follows this rough pattern: 0) get enough money to start stage 1, 1) make product, 2) build userbase, 3) monetize (investors, bootstrap, acquisition, however) After a bit of googling, I couldn't find out how many paying users ChatGPT has, but many touting the number of users (100M). MSFT invested $13B [0] into OpenAI (650M paying-user-months @ $20/mo). OpenAI doesn't have a durable moat, so they are incentivized to monitze what they have (users, earned media hype, and their models/services) sooner rather than later. If 20% of their touted users are paying users (with the simplifying assumptions that subscriptions exactly offset churn and ignoring all operational costs), MSFT's investment is 2 yrs 8.5 mos of ChatGPT income and there's a 100% chance that something better will come out in the near future that eats OpenAI's market share. And OpenAI knows this. Per crunchbase, OpenAI has raised $11.3B from VCs [1], and they've also secured $13B from MSFT, and in contrast, paying subs/API users provide steady pocket change. The numbers make it clear that OpenAI's strategy should prioritize MSFT before paying subs, but let's posit OpenAI decided to prioritize paying subs. If that were the case, they would want to gain as many paying subs as possible before a viable (or most likely superior) substitute appears, so it wouldn't make sense to slow growth by degrading the product in the short window before substitutes arrive (at which point they could cut costs and milk their paying subs, assuming they don't have a new product to release and recapture the lead). Further it would be completely irrational to create a viable substitute if paying subs and users were vital to the business strategy. Yet OpenAI has both seeded a substitute (bing+copilot) and degraded their own service. This would be incoherent if paying subs were the strategy, but it becomes perfectly coherent if the goal is to sell their userbase to MSFT. Degrading ChatGPT both cuts costs and makes substitutes like bing or copilot more attractive, so churning users may migrate to those products (one of which had so little market share that it was a punchline). Call it a conspiracy or just call it a business deal, this is the only cogent explanation I see for the observable facts. [0] https://www.bloomberg.com/news/features/2023-06-15/microsoft-prepares-to-cash-in-on-openai-partnership-with-copilot https://www.bloomberg.com/news/features/2023-06-15/microsoft... [1] https://www.crunchbase.com/organization/openai https://www.crunchbase.com/organization/openai
- jeremyjh 3y ago
  Every single GPT 4.0 user is a paying sub. Free users don't have access to it.