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Not to mention nobody bothered chasing Amazon-- by the time potential competitors like Walmart realized what was up, it was way too late and Amazon had a 15-yea

Not to mention nobody bothered chasing Amazon-- by the time potential competitors like Walmart realized what was up, it was way too late and Amazon had a 15-year head start. OpenAI had a head start with models for a bit, but now their models are basically as good (maybe a little better, maybe a little worse) than the ones from Anthropic and Google, so they can't stay still for a second. Not to mention switching costs are minimal: you just can't have much of a moat around a product which is fundamentally a "function (prompt: String): String", it can always be abstracted away, commoditized, and swapped out for a competitor.

robertjpayne 1y ago
This right here. AI has no moat and none of these companies has a product that isn't easily replaced by another provider. Unless one of these companies really produces a leapfrog product or model that can't be replicated within a short timeframe I don't see how this changes. Most of OpenAI's users are freeloaders and if they turn off the free plan they're just going to divert those users to Google.
- aurareturn 1y ago
  AI has no moat - yet here I'm been paying for ChatGPT Plus since the very start.
  - OGEnthusiast 1y ago
    The real test of a moat is pricing power - would you still stick with OpenAI if they increased the Plus subscription to $40/mo?
    - aurareturn 1y ago
      Most likely, yes. I don’t see any viable alternatives. And if they increase to $40, I assume others must as well due to similar unit economics.
Sateeshm 1y ago
It's not just the head start, it's the network effect.
mike_hearn 1y ago
Well, web search is also function(query: String): String in a sense, and that has one heck of a moat.
- Analemma_ 1y ago
  Right, because just like the Amazon case, potential competitors didn't realize at the time what a threat it was, and so they gave Google a 15-year head start (Microsoft half-heartedly made "Live Search" circa 2007 and didn't really get at all serious about Bing until ~2010). That's very different from the world where everyone immediately realized what a threat Chat-GPT was and instantly began pouring billions into competitor products; if that had happened with search+adtech in 1998, I think Google would have had no moat and search would've been a commoditized "function (query: String): String" service.

robertjpayne 1y ago

This right here. AI has no moat and none of these companies has a product that isn't easily replaced by another provider. Unless one of these companies really produces a leapfrog product or model that can't be replicated within a short timeframe I don't see how this changes. Most of OpenAI's users are freeloaders and if they turn off the free plan they're just going to divert those users to Google.

aurareturn 1y ago
AI has no moat - yet here I'm been paying for ChatGPT Plus since the very start.
- OGEnthusiast 1y ago
  The real test of a moat is pricing power - would you still stick with OpenAI if they increased the Plus subscription to $40/mo?
  - aurareturn 1y ago
    Most likely, yes. I don’t see any viable alternatives. And if they increase to $40, I assume others must as well due to similar unit economics.

Sateeshm 1y ago

It's not just the head start, it's the network effect.

mike_hearn 1y ago

Well, web search is also function(query: String): String in a sense, and that has one heck of a moat.

Analemma_ 1y ago
Right, because just like the Amazon case, potential competitors didn't realize at the time what a threat it was, and so they gave Google a 15-year head start (Microsoft half-heartedly made "Live Search" circa 2007 and didn't really get at all serious about Bing until ~2010). That's very different from the world where everyone immediately realized what a threat Chat-GPT was and instantly began pouring billions into competitor products; if that had happened with search+adtech in 1998, I think Google would have had no moat and search would've been a commoditized "function (query: String): String" service.