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Comment by aurareturn | Hacker News Reader

  OpenAI has ChatGPT (not a social platform).

You didn't state reasons why not being a social platform matters here.

Anyways, check this out: https://openai.com/index/group-chats-in-chatgpt/

  It seems to me you're comparing apples and oranges here.

I don't think so. 1 billion users and a clear intention to deliver ads with an immense amount of data on users. That's a clear threat to both Meta and Google.

PS. That's why Meta and Google are all in on AI. OpenAI is an existential threat to both in my humble opinion.

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> You didn't state reasons why not being a social platform matters here.

There's nothing to pointlessly waste your time on. You open it to do a thing, you either do the thing or get frustrated or leave. Social networks are designed to waste your time even when they outlive their usefulness, therefore they can serve you more ads.

You could argue Google is the same as ChatGPT in that regard, but that's why Google has Adsense in almost any search result you click on.

As for your group chats feature argument, anyone can make a social network, that's the easy part. Getting friend groups to switch is the more difficult part.

> PS. That's why Meta and Google are all in on AI. OpenAI is an existential threat to both in my humble opinion.

They're all in on AI because that's what their investors want them to do to "not be left behind". Meta was all in Metaverse. And on a cryptocurrency before that (Diem). And on Free Basics before that. The fact that none of those succeeded didn't hurt them at all precisely because they had an infinite money glitch known as ads.

They can afford to waste amounts of money equivalent to a yearly budget of a small country, ChatGPT can't.

>There's nothing to pointlessly waste your time on.

Like Google Search, this does not really matter. Fact is, chatgpt is the 5th most visited site on the planet every month. And it happened in about 3 years. 'Nothing to waste your time on?' Completely irrelevant.

Being the most visited or the most used or the most whatever is absolutely useless information, and you should delete it from your mind.

Any idiot off the street can be the most used website on Earth. Easy - go to my website, and I give you free stuff. So why am I not a billionaire? Because that's a dumbass business model and that won't go anywhere.

The idea that if you just "flood the market" you can be successful is a crock of shit, and I think we're all starting to realize it. It's not difficult, or impressive, or laborious to provide something people want. It's difficult to do it in a way that makes money.

You might say - but what about Spotify? What about Uber? Those companies are not successful. They are just barely profitable, after investment on the order of decades. We don't actually know if a service like Spotify even works long term. It sounds fantastic - pay ten bucks or whatever and get all the music you want.

But has anyone taken a step back and asked - hmm - how do we make money off of this? Because obviously that is not the cost of music, right? And we don't own any of the capital, right? And we don't actually make a product, right, we're just a middle man?

ChatGPT is in a similar predicament. The value of ChatGPT is not the ChatGPT, it's what ChatGPT produces. It's a middle man, operating at massive losses, with absolutely no path towards profitability.

> The value of ChatGPT is not the ChatGPT, it's what ChatGPT produces. It's a middleman...

Spotify and Uber are aggregators with high marginal costs that they do not control. Spotify has to pay labels for every stream; Uber has to pay drivers for every ride. They cannot scale their way out of those costs because they don't own the underlying asset (the music or the labor).

OpenAI is not a middleman; they own the factory. They are "manufacturing" intelligence. Their primary costs are compute and energy. Unlike human labor (Uber) or IP licensing (Spotify), the cost of compute is on a strong deflationary curve. Inference costs have dropped orders of magnitudes in the last couple years while model quality has improved and costs will keep dropping. Gemini's median query costs no more than a google search. LLM inference is already cheap.

> Any idiot off the street can be the most used website on Earth. Easy - go to my website, and I give you free stuff.

If they were only burning cash to give away a free product, you’d be right. But they are reportedly at ~$4B in annualized revenue. That is not "giving away free stuff" to inflate metrics; that is the fastest-growing SaaS product in history.

You are conflating "burning cash to build infrastructure" (classic aggressive scaling, like early Amazon) with "structurally unprofitable unit economics" (MoviePass).

Open AI's unit economics are fine. Inference is cheap enough for ads to be viable enough for profitability as a business today. The costs this article is alluding to ? Open AI don't need to do any of that for tier of models and use-cases they have today. They are trying to build and be able to serve 'AGI', which they project will be orders of magnitudes more costly. If they do manage that, then none of those costs will matter. If they don't, then they can just...not do it. 'AGI' is not necessary for Open AI to be a profitable business.

> But they are reportedly at ~$4B in annualized revenue. That is not "giving away free stuff" to inflate metrics; that is the fastest-growing SaaS product in history.

Right, which is just not very impressive giving how much money they are burning.

> Open AI's unit economics are fine

I disagree, they lose massive amounts of money on every query.

The only way for OpenAI to make money off queries is to make it cost more, but that won't work because they have no moat, and cannot even create a moat because of how LLMs work. Again, the model itself or the interface is worthless, consumers only care about what it produces.

Google, Meta, et al. could trivially overthrow OpenAI in my view. Most users probably wouldn't even notice, because they use other interfaces on top of models.

I also think ads are a dead end. Consumers absolutely will not tolerate advertisements in their LLMs. No student is going to submit an essay which has obvious hints towards Bose making the best speakers. No programmer is going to write code that embeds a Java runtime because Oracle paid for OpenAI ad space. No artist is going to publish art that just so happens to contain lots of references to Coca Cola.

LLM chats are just not like other tools. If Google has ads, they can get in the way, but the core Google thing is not compromised. If an LLM has ads, I can no longer trust ANY of it's output, ever, and it's as good as worthless.

OpenAI might be tempted to do the dark pattern thing and hide their ads as much as possible, but I don't think that will work either. It's just not acceptable for the tool to do that, and I don't think consumers will be stupid enough to fall for it. Already, we are seeing online advertisement rapidly plummet in value due to the sheer volume and amount of scams.

Advertisers don't know that yet, but they will. Google might know it, but they certainly won't say it out loud. I can tell you right now, the average consumer has been so bombarded by shitty ads they've become masterminds. They expertly navigate around them, and elegantly ignore them in their peripheral vision. They know X, Y, Z is a scam. New advertisement mediums shake it up, for a bit, but then those die too. Metrics won't necessarily tell you that, because most users are robots so you wouldn't know.

>Right, which is just not very impressive giving how much money they are burning

They are not burning that much money right now.

>I disagree, they lose massive amounts of money on every query.

Both google and Altman confirm the fact that a median LLM query is no more expensive than a google search. Beyond that, we have multiple third parties with who offer profitable access to open source llms and others. Inference is cheap, there's no doubt about it. They lose money because they have hundreds of millions of weekly active users that are not monetized in any way (no ads, nothing).

>Google, Meta, et al. could trivially overthrow OpenAI in my view.

If they could, it would have happened. Both of these players are stuffing their clones in front of billions of users (android and all of meta's apps), and neither have dented Open AI's growth or relevance. ChatGPT is still the undisputed leader in the consumer llm space. Gemini is a very very distant second, and the rest might as well not even register.

There's a reason edge and bing usage is still minuscule despite microsoft having a chokehold on consumer laptops/computers and setting those as defaults. People need to understand that you don't unseat a leader just by copying them. They wish the could trivially overthrow Open AI, but they actually can't.

>I also think ads are a dead end. Consumers absolutely will not tolerate advertisements in their LLMs.

People have said that about Netflix and countless services that introduced ads. Instead, it quickly became Netflix's most popular tier. The Implentation has to be really obnoxious before people actually care about ads.

>No student is going to submit an essay which has obvious hints towards Bose making the best speakers. No programmer is going to write code that embeds a Java runtime because Oracle paid for OpenAI ad space. No artist is going to publish art that just so happens to contain lots of references to Coca Cola.

I'm sorry but you are making up problems that don't need to exist. You are essentially imagining the llm equivalent of obtrusive pop up ads and I have no idea why. Of course chatgpt won't be doing any of these, that's ridiculous.

Online ads simply do not have anywhere NEAR even value for OpenAi. And with each passing day, they become more and more worthless.

You're missing the forest here. Yes, Netflix has ads, but to do so they had to bring down the value of ALL ADVERTISING. The more ads consumers see, the less valuable each individual ad is. Because consumers are tired, and they only have so much money.

As of currently stands, online ads are very close to worthless. Again - nobody is going to tell you that, because they're trying to sell you ad space! But it's true. Just look at how the people around you behave.

> You didn't state reasons why not being a social platform matters here.

The network effects matter so much more for a social platform than a chat bot. The switching costs for a user are much lower, so users can move to a different one much easier.

How sticky will chat bots prove to be in the long term? Will OpenAI be able to maintain a lead in the space in the long term, the way Google was over Bing? It's possible, but it's also pretty easy to imagine other providers being competitive and a landscape where users move between different LLMs more fluidly

Another reason why social media matters is that people actually spend their free time in all those feeds. On the other hand, using LLMs is much more oriented towards specific utilities. Having 1B users who visit you once a day to ask for an email proofread will not make you profitable.

But, like search, it captures intent to buy much better, while looking at feeds for internatinment does not. Adwords worked because of that, they could capture ad revenue on queries that lead to sales. The amount of extra context in AI chat is even better, as is the ability to steer the conversation to different options.

No one spends their free time on Google search either. Didn't stop Google from being even more profitable than Meta.

I think Google is the much bigger threat. I've more or elss stopped using ChatGPT now, it's easier to just type the question directly into Google and get the response from their AI rather than navigating to chatgpt first. Anecdotal but I don't see anything long term keeping people on that site.

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