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A big part of the frontier labs abilities to charge 80% gross margins on inference is having the cornered resource of frontier models.

If that inference becomes popular and valuable enough that those companies make billions of dollars in profit, those companies could use that profit to fund the building of alternative products and platforms that dis-intermediate google's relationship with the customer.

Google already has an 80% gross margin business, the biggest one in the world. Everybody wants a slice of it.

By offering frontier inference closer to cost and open-sourcing everything that's sub-frontier, they're commoditizing frontier labs' models, which inhibits their ability to durably make high gross margins on inference.

It's a strategic play.

A 12B-sized model is a far cry from "frontier inference". That's more like DeepSeek V4 Pro territory which is a 1.6T model. Or for multi-modal models, Kimi 2.6 which is 1T.
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Don't think its that.

Basically with upcoming spark laptops, the smaller models will likely get fine tuned to interface with google services. Then, Google can essentially make Chromebook software include those models, which is the same use case as android.

And you better believe that they will be collecting user data and building advertising models.