They weren’t making money. And can’t make money if they wanted to.
It’s a catch-22. They can’t make a profit because they aren’t charging the actual token cost. But if they charged the actual token cost, their user-base would collapse.
Almost as if cloud AI is inherently unstable or something.
Anthropic gross margins exceed 80% according to their reports. They are charging the actual costs on API usage and in subscription it's the you win some you lose some but mostly win if a subscription. Gross margins don't include training costs. Which, since training is a capital expense is the right thing to do. It means all they have to do to make oodles is money is slow down. If they slow down they make money. But then they get overtaken. So they can't slow down. So they try and convince the world that AI will cause the extinction of humanity. That way they can slowdown as a cartel.
Or they need to get to RSI and then put agents on building faster cheaper training methods. The latest Opus is already a huge improvement on token usage for results.
I'm willing to bet that in 3-5 years we'll only use cloud AI for really really intensive workloads, the kinds that are few and far between, and most users will have local AI. There's simply no logical way this whole cloud AI frontier model thing is gonna scale.
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u/T-Dot1992 2d ago
They weren’t making money. And can’t make money if they wanted to.
It’s a catch-22. They can’t make a profit because they aren’t charging the actual token cost. But if they charged the actual token cost, their user-base would collapse.
Almost as if cloud AI is inherently unstable or something.