Customers can easily jump ship. Everyone is using effectively the same compute, nearly identical training data, very similar algorithms, etc. Worse past investments in a model become outdated quickly.
The average subscriber to these services isn’t following a constant stream of LLM news and jumping from platform to platform every time the leaderboard changes slightly. The average customer signs up and then inertia and familiarity take over. They stay signed and comfortable.
It explains OpenAI’s valuation but no one else
I expect, whether OpenAI is even still around in 15+ years or not, that my grandparents will continue telling me about "that ChatGPT" well into the future.
4.5 is also great for certain things. Of all models, it's the second best writer. (DeepSeek R1 is the best prose stylist, surprisingly!)
[1] - This is Grok 4: https://x.com/i/grok/share/e51O9rK0W7UaIN81nFBQoJDSs
This is o3-pro, same question: https://chatgpt.com/s/t_68710185cf04819185dc25233280e46b
o3 made fewer mistakes and drafted a more neatly structured and better written output.
If winning the LLM’s game long term means the product needs to compete on cost and be the best to win, that’s not going to be nearly as profitable in the near term.
But when the price is non-zero, that gives another dimension to compete on, and monopolies without significant barriers are much less common. It looks like good LLM's are going to have a price tag, so a monopoly is going to need a moat.
In terms of AI coding assistant, almost every product out there allows you switch to a different model with a single click. If Gemini is not giving you the answer you want, what do you do? Switch to Claude and bang you have it.
The only thing that has some stickiness is products like ChatGPT. But that's so much more than just a model -- it's a product with many features smoothly integrated.
xAI does not currently have any product that is sticky for the average user.
Err... What about twitter? Where it is firmly embedded. And Telegram recently has been paid to do the same.
Machines with LLM acceleration hardware are barely coming out at this point. I think it is early to expect people to really be stuck to anything.
None of these companies will survive if they don't own multiple parts of the stack. As deep as possible, to the hardware if they can. That's why Anthropic is investing heavily in Claude Code, and why OpenAI is looking at hardware. You can't just build models and sell tokens, yet that seems to be Grok's entire strategy right now [1]
https://arstechnica.com/tech-policy/2025/07/xai-gets-an-air-...
I wonder how investors have priced in their regulatory situation.
They bought a cargo ship worth of GPUs though
OpenAI also announced their own web browser too.
Leaving aside the controversies, Elon is one of the best players at capitalism there has ever been. As per his wealth. And to think you and I know more than someone with a deep network of Investors and fellow CEO's would be a bold claim.