The Subprime AI Crisis - Ed Zitron
Ed is a bit verbose for me but a friend of mine sent me his blog and I [shared his latest article today](https://stacker.news/items/707609). He seems to get what is going on in the tech world and where AI is heading in a business sense. As someone that has been in the tech world for the last 20 years there are not enough people looking at the hype in the way Ed does.
I know I know. Bob, you're just an old. You're just dumb. Sure. Those things may be true but I've seen hype before and I've seen crashes before. The AI hype is not all smoke but it sure isn't what we are being told.
From Ed:
Generative AI is being sold on multiple lies:
* That it's artificial intelligence.
* That it's "going to get better."
* That it will become artificial intelligence.
* That it is inevitable.
> My concern is that I believe we’re in the midst of a subprime AI crisis, where thousands of companies have integrated generative AI at prices that are far from stable, and even further from profitable.
Here is the key point:
> Almost every "AI-powered" startup that uses LLM features is based on some combination of GPT or Claude. These models are built by two companies that are deeply unprofitable (Anthropic is on course to lose $2.7 billion this year), and that have pricing designed to get more customers rather than make any kind of profit. OpenAI, as mentioned, is subsidized by Microsoft — both in the "cloud credits" it received and the preferential pricing Microsoft offers — and its pricing is entirely dependent on Microsoft's continued support, both as an investor and a services provider, a problem that Anthropic faces with its deals with Amazon and Google.
This affects more than JUST these companies that are using "AI" in their products.
> And what we really don’t know is how unprofitable generative AI is for the hyper-scalers, because they bake those costs into other parts of their earnings. While we can’t know for sure, I imagine if this stuff was in any way profitable, they’d be talking about the revenue they were receiving from it.
> They’re not.
He explains why this is happening
> So, why does this keep happening? Why have we had movement after movement — cryptocurrency, the metaverse, and now generative AI — that doesn’t seem like it was actually made for a real person?
> Well, it’s the natural result of a tech industry that’s become entirely focused on making each customer more valuable rather than providing more value to the customer. Or, for that matter, actually understand who their customers are and what they need.
I'm still thinking about this article but I can see his points.
Here we have an example of tech not providing value to the customer but rather trying to suck people into the existing systems. Its why so many of us despise these companies.
> The products you’re being sold today almost certainly try to wed you to a particular ecosystem — one owned by Microsoft, Apple, Amazon or Google, as a consumer at least — and, in turn, increase the burden of leaving said ecosystem. Even cryptocurrency — ostensibly a “decentralized” technology — quickly abandoned its free-wheeling libertarian ideas and sought to consolidate users on one of a few big platforms like Coinbase, OpenSea, Blur or Uniswap, all backed by the same venture capital firms (like Andreessen Horowitz). Rather than being flag bearers for a new, radically independent online economic system, they were all only able to scale through the funds and connections of the same people that funded every other recent era of the internet.
originally posted at 
Ed Zitron's Where's Your Ed At
The Subprime AI Crisis
None of what I write in this newsletter is about sowing doubt or "hating," but a sober evaluation of where we are today and where we may end up on ...
Stacker News
The Subprime AI Crisis - Ed Zitron \ stacker news
Ed is a bit verbose for me but a friend of mine sent me his blog and I shared his latest article today. He seems to get what is going on in the tec...
