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p0nce | on: OpenAI and Anthropic cut their LLM prices by up to 80% within a few months. Why?
How could they do anything but implode financially? Genuinely curious. The numbers are not right.
smallmancontrov | parent | next
Did the frontier labs take out debt or did they make flimsy unenforceable agreements to neoclouds who took out debt?
bunderbunder | root | parent | next
Borrowing money is not the only way to go into debt. They reportedly made binding and non-cancelable commitments. Once those commitments come due then they will be indebted to their counterparties until they pay up or the courts sort it out.

This is comparable to how, if I sign a 12 month non-cancelable lease and then don’t pay the rent, I will be in debt to my landlord.

freakynit | root | parent | next
People heavily underestimate the number of tricks available to corporates for taking on "debt": https://latentstate.net/the-hidden-ledger/
_heimdall | root | parent | next
That's effectively borrowing money with a different name though. The only way to go into debt is to sign an agreement to pay someone money in the future, regardless of the terms used to describe it.
smallmancontrov | root | parent
No, it's really not. Do you have a war chest to drag out a legal battle and the ability to bankrupt your landlord by withholding payment? The rules are different at this scale, and "you can't enforce a contract if the attempt will bankrupt you" is only one of the possible games.

Here's another one: pay a supplier to cripple their deployment. Suddenly it's the neocloud's fault for failing to deliver, not your fault for failing to pay.

Did we all forget how Sam Altman turned a non-profit into a for-profit? Do we think he'll bring less sociopathy to this battle?

eeedda | root | parent
You're delusional lmao.

Default is default.

E.g. Capital leases are treated as debt.

Stop posting nonsense.

rayiner | parent | next
Apple is worth more than all the AI companies combined. You think LLMs are less valuable in the global market than slightly updated iPhone models every year?
failbuffer | root | parent | next
LLMs? No. LLM companies? Yes. It's just math, data centers, and mass copyright infringement. The only scarcity is Nvidia, who just passed Apple in market cap, somewhat proving your point but not in the way you meant it.
_heimdall | root | parent
If you consider Nvidia an LLM company, and I do at this point given how heavily they've invested in frontier labs and where much of their revenue comes from, they alone are worth slightly more than Apple.
jasomill | root | parent | next
Maybe not, but it is probably less likely that Apple will face stiff competition from freely available alternatives, given that AOSP has been a thing for the iPhone’s entire lifespan and nonproprietary Android phones have failed to capture significant market share.
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daveguy | root | parent
I don't think we have seen an Apple of AI yet. I wouldn't describe the frontier that way, would you?
jasomill | root | parent
No, and moreover it’s not entirely inconceivable that the Apple of AI may turn out to be Apple itself.
jasomill | parent | next
Their costs could drop, competition could dry up, or they may only be unprofitable in the first place because they’re choosing to invest more money in growing their business than they’re currently making, a practice which need not and will not continue indefinitely.

It’s not at all unusual for companies to run at a loss for several years before turning a profit.

_heimdall | parent | next
The government could bail them out, that's the most likely scenario if they don't implode IMO.

They could also continue to grow at the rates they had last year. I don't know where those customers would come from, but if they did pull that off OpenAI and Anthropic could sustain propping up the circular financing going around the AI industry.

xlayn | root | parent
Goverment bailing they out will be using people tax to rescue the companies that absorbed most of the 801k money so they can get people out of work... it's the ultimate slap to the face... I would strongly resist this, I would vote if they implode to give to whoever owned shares via 801k their money, to people and let them (openai, anthropic, et al) eat shit... I would love to buy one of those gpus to run an open model at discount price...
_heimdall | root | parent
Completely agree it will be a huge slap in the face to the public, unfortunately that's a common solution.

When everyone is afraid the market will collapse, or more likely distracted because the market collapsed just enough to hurt the average person, the government will bail them out and either people won't notice or will welcome it as a solution to huge levels of fear.

Voting isn't usually much of a solution after the fact, the political machine doesn't allow for candidates that would fix anything to have a chance at any office that matters. There's a reason our politicians today all seem to have roughly the same goals and all seem to become extremely wealthy while in office.

velcrovan | root | parent | next
A bailout would be a slap in the face when the correct solution is to nationalize them. If they are too big to fail then the government gets a controlling share of equity and we finally start the sovereign wealth fund we should have started decades ago.
fourthark | root | parent
Maybe you should try voting harder.
_heimdall | root | parent
Meaning what? Cast more than one ballot?

I live in a state that votes heavily in one direction, most states are the same. Its fine for me to vote, but the winner of a majority of states is pretty well decided before a ballot is cast (by strong majority, I'm not claiming fraud).

daveguy | root | parent
If everyone who threw up their hands actually voted, the outcome would change. See also, the elections musk tried to buy in the last 18 months or so since he doged up the place.
_heimdall | root | parent
Sure, and I hope that (a) everyone votes and (b) most of them agree with me. Bit what is your point exactly?
SlightlyLeftPad | parent
Stuff like this that defies all logic happens all the time. Amazon operated at a massive loss first it’s first decade and still IPO’d years before they posted a profit.
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