Users have to pay for the compute somehow. Maybe by paying for models run in datacenters. Maybe paying for hardware that's capable enough to run models locally.
It's a different set of trade-offs.
* Theoretically; I don't own an iPhone.
Server side means shared resources, shared upgrades and shared costs. The privacy aspect matters, but at what cost?
The cost, so far, is greater.
How so if efficiency is key for datacenters to be competitive? If anything it's the other way around.
[0] https://interestingengineering.com/innovation/elon-musk-xai-...