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They are subsidized by the huge losses incurred by the AI companies.
by erfgh 3mo ago
They are subsidized by the huge losses incurred by the AI companies.
- chilmers 3mo agoOnly if those losses are coming from subscriptions, instead of capex and training, which is not at all clear.
- Hamuko 3mo agoI don't understand this argument. How does it make the subscription any less subsidised if the losses are only because developing the product is just so darn expensive? Feels like arguing that it's not clear if Bugatti's losses came from selling the Veyron instead of designing and developing the Veyron.
- fragmede 3mo agoThe equivalent is when Amazon was running a loss because they were spending all their money on building warehouses. It exactly make sense, but that's the argument.
- smokedetector1 3mo agothis argument assumes that capex and training costs will go down over time. but theyll have to keep up with one another and stay on top of latest knowledge so Im not sure if thats true
- Yizahi 3mo ago"Our 2015 car models are totally profitable if we will just stop making new cars and continue producing only 2015 models for the next decade."
- winternewt 3mo agoFrom the article: > What is happening here is that leading AI labs are charging not only for inference but also for research in model architecture, training data collection and curation, model training cost (which can be tens or even hundreds of millions of dollars), paying their employees and recovering the marketing costs. That's what's being subsidized.
- yreg 3mo agoYou are saying it as if those costs were not necessary to provide the service.
- LUmBULtERA 3mo agoOpenAI inference revenue exceeds its cost of inference by a good margin in 2025 (https://cdn.arstechnica.net/wp-content/uploads/2026/06/openaifinance.001.png https://cdn.arstechnica.net/wp-content/uploads/2026/06/opena...)
- jijijijij 3mo agoGreat, but that's only a part of operational costs. A craftsman's revenue may exceed the electricity bill for the power drill, doesn't mean the business is sustainable.
- LUmBULtERA 3mo agoDay 2 the craftsman has not made up for the investment/loss of their equipment. Not a useful example.
- jijijijij 3mo agoSorry, I don't understand what you are trying to say.
- LUmBULtERA 3mo ago
- usef- 3mo agoAnthropic have claimed they expect their first profitable quarter this year. As far as we can infer their current API prices have decent margins.
- Yizahi 3mo agoAnyone can claim they are profitable, simply by reclassifying their expenses as some other thing or shuffling them to separate corporate structure. Until we will real financial audit, the CEOs claims are just a hot air.
- usef- 3mo agoOpenAI's leaked documents also said OpenAI was profitable on inference. The small resellers of open models have nowhere near the resources to optimise their models or inference and yet usually have a lower cost, why wouldn't the big labs?
- rightbyte 3mo agoThe leak really doesn't say that. We have no way of knowing what posts are in the different categories.
- Yizahi 3mo agoThat is exactly the document I've been thinking about while writing top comment :) . Oh, our "cost of revenue" is smaller than the revenue, we are so profitable guys! If we just don't count our marketing expenses, our administrative expenses, and our unspecified losses from operations to the tune of x3 times higher than our revenue. But if we don't count them we are totally profitable guys! If we will just stop all RnD and also stop paying our salaries, support and marketing departments (and also cut 20 billion of operational losses too, whatever that is) we will earn soo soo much monies guys!
- LUmBULtERA 3mo agoFair to include A&G, but their marketing and training cost is about generating future growth. People say that the subscriptions are highly subsidized as if its fact -- it's certainly not a well-established fact. These people simply don't know the truth one way or another, but portray their not well supported opinion as fact.
- LUmBULtERA 3mo agoData from OpenAI shows their 2025 inference revenue exceeded their cost of inference by a good margin (https://cdn.arstechnica.net/wp-content/uploads/2026/06/openaifinance.001.png https://cdn.arstechnica.net/wp-content/uploads/2026/06/opena...). Saying this is being subsidized is like saying any investment in future productive assets is "subsidized".