- Is this seriously trying to portray OpenAI/Altman or Nvidia/Huang as unlikely everyday dudes who reluctantly take up a challenge and rise to become heroes? I never stop being amazed at how people love to present rich, well connected, people as underdogs and turn them into heroes.
- > OpenAI’s refusal to launch and iterate an ads product for ChatGPT — now three years old — is a dereliction of business duty, particularly as the company signs deals for over a trillion dollars of compute.
I think this is intentional by Altman. He’s a salesman, after all. When there is infinite possibility, he can sell any type of vision of future revenue and margins. When there are no concrete numbers, It’s your word against his.
Once they try to monetize, however, he’s boxed in. And the problem with OpenAI vs. Google in the earlier days is that he needs money and chips now. He needs hundreds of billions of dollars. Trillions of dollars.
Ad revenue numbers get in the way. It will take time to optimize; you’ll get public pushback and bad press (despite what Ben writes, ads will definitely not be a better product experience.)
It might be the case that real revenue is worse than hypothetical revenue.
by RoddaWallPro
16 subcomments
- "advertising would make ChatGPT a better product."
And with that, I will never read anything this guy writes again :)
- Google is the favorite to win AI by a mile. Not only do they have some of the best AI people, they have absolute unmatched distribution with youtube, search, gmail, docs, chrome, and android. As impressive as OpenAI is they don't have anything except for their brand. It should be clear by now that nobody has a strong lead in training. Nobody has a strong lead in access to compute. Nobody has a killer app because the interface is just chat or voice. And what happens when you can't compete on product? Distribution wins. And Google's advantage here is almost insurmountable. Google can fumble the next 2 years and still end up on top.
- > A useful analogy here is the rise of AMD in the datacenter. [...] Large hyperscalers found it worth their time and effort to rewrite extremely low level software to be truly agnostic between AMD and Intel
As someone who works on such low-level software at a hyperscaler I am skeptical of this comparison. The difference between AMD and Intel is really not that great, and in the biggest areas, open source software (e.g. kernel (especially KVM) and compilers) is already fully agnostic, in large part thanks to Intel and AMD themselves. Nobody in this space is gonna buy an x86 CPU without full upstream Linux+KVM+LLVM support.
If breaking down the CUDA wall was the same order of magnitude a challenge as Intel vs AMD CPUs, I would think we would already have broken down that wall by now? Plus, I don't see any sign of Nvidia helping out with that.
I don't know anything about CUDA though so maybe I'm overestimating the barrier here and the real reason is just that people haven't been sufficiently motivated yet.
- > changing the habits of 800 million+ people who use ChatGPT every week, however, is a battle that can only be fought individual by individual
That's the basis for his conclusions about both OpenAI and Google, but is it true?
It's precisely because uptake has been so rapid that I believe it can change rapidly.
I also think worldwide consumers no longer view US tech as some savior of humanity that they need to join or be left behind. They're likely to jump to any local viable competitor.
Still the adtech/advertiser consumers who pay the bills are likely to stay even if users wander, so we're back to the battle of business models.
by jasonjmcghee
3 subcomments
- Idk if I'm just holding it wrong, but calling Gemini 3 "the best model in the world" doesn't line up with my experience at all.
It seems to just be worse at actually doing what you ask.
- "... the way to commoditize suppliers and internalize network effects is by having a huge number of unique users. And, by extension, the best way to monetize that user base — and to achieve a massive user base in the first place — is through advertising"
Urgh. There we go, advertising as the panacea.
How about a decent product that people actually want to pay for?
by raw_anon_1111
4 subcomments
- I do all of my “AI” development on top of AWS Bedrock that hosts every available model except for OpenAIs closed source models that are exclusive to Microsoft.
It’s extremely easy to write a library that makes switching between models trivial. I could add OpenAI support. It would be just slightly more complicated because I would have to have a separate set of API keys while now I can just use my AWS credentials.
Also of course latency would be theoretically worse since with hosting on AWS and using AWS for inference you stay within the internal network (yes I know to use VPC endpoints).
There is no moat around switching models unlike Ben says.
by diavarlyani
0 subcomment
- 2018 me: ‘Aggregation Theory is basically unbeatable’
2025 me, watching OpenAI voluntarily stay in the top-right quadrant while Google happily camps bottom-left with infinite ammo: ‘…maybe there’s an asterisk’
Great update to the Moat Map
- Actually Sourcegraph's "Amp Code" is testing out a free ad-supported coding agent. Here is a video showing how it works: https://ampcode.com/news/amp-free
"Supported by ads from developer tool partners we’ve carefully chosen"
It's not trying to secretly insert tools into LLM output but directly present the product offering inside the agent area.
At one point, I speculate that Cursor will test this out as well, probably in a more covert way so that tool use paths get modified. Once the industry realizes tool-use-ads, then we're toast.
by martin_drapeau
7 subcomments
- Most analysts seem to forget what actual consumers do. Normal people use ChatGPT. They accidentally use Gemini when they Google something. But I don’t know anyone non-technical who has ditched ChatGPT as their default LLM. For 99% of questions these days, it’s plenty good enough—there’s just no real reason to switch.
OpenAI's strategy is to eventually overtake search. I'd be curious for a chart of their progress over time. Without Google trying to distort the picture with Gemini benchmark results and usage stats which are tainted by sheer numbers from traditional search and their apps.
- The analysis fails to mention that if TPUs take market share from Nvidia GPUs, JAX's software ecosystem likely would also take market share from the PyTorch+Triton+CUDA software ecosystem.
by stanfordkid
1 subcomments
- I agree with his take on Googles enormous strategic advantages.
I think he’s wrong that OpenAI can win this by upping the revenue engine through ads or through building a consumer behavior moat.
At the end of the day these are chat bots. Nobody really cares about the url and the interface is simple. Google won search by having deeply superior search algorithms and capitalizing on user traffic data to improve and refine those algorithms. It didn’t win because of AdWords … it just got rich that way.
The AI market is an undifferentiated oligopoly (IMO) and the only way to win is by having better algos trained on more data that give better results. Google can win here. It is already winning on video and image generation.
I actually think OpenAI is (wrongly) following Ben’s exact advice — going to the edge and consumer interface through things like the acquisition of things like Jony Ives device company. This is a failing move and an area where Google can also easily win with Android. I agree with Ben that upping the revenue makes sense but they can’t do it at the cost of user experience. Too much at stake.
by throwawayffffas
0 subcomment
- > advertising would make ChatGPT a better product.
Stuck 20 years ago.
- > that it is a nearly perfect representation of the hero’s journey.
Absolutely. It's a shame Return of the Jedi ruined the arc with those silly teddy bears.
- An often overlooked extra advantage to Google is their massive existing ad inventory. If LLMs do end up being ad supported and both products are roughly the same, Google wins. The large supply of ads direct from a diverse set of advertisers means they can fill more ad slots with higher quality ads, for a higher price, and at a lower cost. They’re also already staffed with an enormous amount of talent for ad optimization. Just this advantage would translate into higher sustained margins (even assuming similar costs), but given TPU it might be even greater. This plus the gobs of cash they already spin off, and their massive war chest means they can spend an ungodly amount on user acquisition. It’s their search playbook all over again.
- An often overlooked extra advantage to Google is their massive existing ad inventory. If LLMs do end up being ad supported and both products are roughly the same, Google wins. The large supply of ads direct from a diverse set of advertisers means they can fill more ad slots with higher quality ads, for a higher price, and at a lower cost. They’re also already staffed with an enormous amount of talent for ad optimization. Just thus advantage would translate into higher sustained margins (even assuming similar costs), but given TPU it might be even greater. This plus the gobs of cash they already spin off, and their massive war chest means they can spend an ungodly amount on user acquisition. It’s their search playbook all over again.
by tsunamifury
2 subcomments
- I have never seen a more poorly informed and badly written article on this blog.
Advertising is not easy and not automatic money. This seems to be written by a teenager unfamiliar with anything.
by rhubarbtree
1 subcomments
- In football (soccer), a team leading the match but conceding a late goal is then very likely to concede again and lose the game. The reason is momentum: the challenger is highly motivated and opportunity driven, whilst the incumbent typically drops deep defensively and is loss averse.
So it is in business. It is very, very, difficult for an incumbent terrified of losing to the upstart. The momentum is with the challenger. They are faced with nothing but opportunity. Panic sets in. And the people responsible for the original win at the incumbent have either left (been substituted? Stretching my analogy) or don’t have the energy for the new battle.
Google will lose to OpenAI because it is a huge bureaucratic monster that has enshittified its main product. It deserves to die.
Google will survive, but it will become a shadow of its former self. And it deserves to wither, because it has ruined its own product.
- At this point it's not even OpenAI vs Google. It's OpenAI vs themselves. They're burning through more money making the models than they can realistically hope to make. When their investors decide they've burned through enough money it's basically over.
Google's revenue stream and structural advantages mean they can continue this forever and if another AI winter comes, they can chill because LLM-based AI isn't even their main product.
- "the naive approach to moats focuses on the cost of switching; in fact, however, the more important correlation to the strength of a moat is the number of unique purchasers/users."
by citizenpaul
1 subcomments
- Its a long article and one of the first points "google strikes back." Is completely wrong ime. Not only is Gemini much worse than all the other models. The latest release is now so bad it is almost useless half the time or more. Hard to read more with such a bad take what I've seen myself. I don't care what benchmarks it beats if it just churns out comically bad results to me.
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