So is American models. They are subsidised heavily but still can't provide cheaper access. Their fault is to assume all countries can afford them.
So is American models. They are subsidised heavily but still can't provide cheaper access. Their fault is to assume all countries can afford them.
By whom?
If you want a direct example of the US subsidising a major AI lab, we can use Microsoft's investment in OpenAI. Microsoft has the largest ownership stake - 27%.
Microsoft did not pay with money - it paid (mostly) with Azure cloud computing credits. MSOFT is then able to write this off as a loss against tax.
It is generally far more tax-efficient in the US to write a loss in this way than it is to write a loss for a cash investment.
In this case, I believe the difference was ultimately highly significant. When including MSOFT eventually writing-off the deprecating Azure hardware it had used to buy the OpenAI equity, the result was MSOFT's tax reduction being either close-to or exceeding the actual cash value of MSOFT's investment in OpenAI - IIRC.
These examples represent taxes that the US chooses not to collect - the US could choose to make investments like these less tax-efficient. Instead, by making them extremely tax-efficient, the US subsidises the transaction hugely.
This is a joke right?
Even ignoring monetary subsidies, there are the non-monetary ones: not being sued into oblivious by the government for their countless hacks of other companies and countries, the slaps on the wrist for massive piracy, the waving of environmental (and other) regulations in order to allow their data centres to be built an operated.
> Even ignoring monetary subsidies
That's what I'm asking - which monetary subsidies?
> not being sued into oblivious by the government for their countless hacks of other companies and countries
That isn't normally how enforcement works, and it hasn't been very long since they disclosed those breaches. If the victims want to pursue legal action, they can, and they still may!
> the slaps on the wrist for massive piracy
So judges and juries are involved in the subsidization conspiracy, too?
> the waving of environmental (and other) regulations in order to allow their data centres to be built an operated
Sure, though if you think this isn't happening in China too, I have a bridge to sell you.
CHIPS act, OBBA, defense, AI upskill grants.
That's just the ones i know off the top of my head in the US. Those programs account for more than 60 billion in committed spend.
The original comments is "DeepSeek, and other Chinese models, are heavily subsidised by the Chinese government"
> That's what I'm asking - which monetary subsidies?
I am listing for you the non-monetary subsidies, which are just as real and equally important.
> not being sued into oblivious by the government for their countless hacks of other companies and countries
If it was one of the Chinese labs doing this hacking, the government would be stepping in. If it was European labs they'd be stepping in. If it was you or I the government would be stepping in. That is a massive subsidy (they don't have to worry about the same legal fees and exposure) and being allowed to continue doing business is in fact priceless.
> So judges and juries are involved in the subsidization conspiracy, too?
There is no conspiracy. They are objectively operating by a different set of rules than you or I could operate in this market.
> Sure, though if you think this isn't happening in China too, I have a bridge to sell you.
I never said it wasn't, I'm saying that it's happening here and it's a very real subsidy.
> equally important
They really aren't. Nothing in the development of these systems, absolutely nothing, is as important as money. Stop these silly false equivalences.
These are not silly equivalences.
All the major labs would be dead in the water if the government acted on the things I mentioned. If they treated the labs the way they would have treated us for all those hacks. Or if they enforced pollution measures (or god forbid ban on-prem turbines because of the climate damage). Or rule that training on data is not fair use, or that ingesting GPL3 code and then turning that into weights counts as a derivative work. Or. Or. Or.
Those are all just as important as cash.
Nah, nothing here is a special advantage of US firms.
The hacks are pretty bland as long as there is no mens rea and the hacked victims do not want to press charges. This isn't a "subsidy", it's just our normal legal process at work.
The pollution question is winding its way through court systems and getting a lot of pushback. I wouldn't call this a subsidy, just a slow bureaucracy. And at any rate this isn't special to the US; certainly China's environmental policy is far more lenient.
With the training data, again there's nothing specific to US corporations here. Anyone can use that dataset. It's just how our legal system works. You might not like it, but it's the accepted law right now. This doesn't meet any reasonable definition of "subsidy".
On the other hand, shoveling billions of dollars of taxpayer funds into corporations is by definition a subsidy. Full stop.
Investors, but also the government in allowing these companies to siphon electricity away passing the increased cost to the consumers
>Investors, but also the government in allowing these companies to siphon electricity away passing the increased cost to the consumers
Not arbitrarily banning companies from buying a product from a supplier doesn't meet my definition of the term "subsidy".
Fair enough, but it sure meets the definition of 'helpful intervention'.
>Fair enough, but it sure meets the definition of 'helpful intervention'.
I don't see how. Anyone can buy electricity without any intervention from the government. An intervention is an action that changes what would happen by default.
By investors. OpenAI and Anthropic are not profitable (Anthropic is profitable if you allow them to invent what profitability means).
I heard someone calling the key metric in Anthropic financial reports EBBT: Earnings Before Bad Things[1] :-)
[1] Where "Bad Things" would be the typical interest, taxes, depreciation, amortisation plus the Anthropic specific employee compensation, LLM training (you know, for the LLM lab), revenue sharing agreements (which is a form of paying for infrastructure), etc.
A recent YouTube video by Patrick Boyle said the same thing. They are only profitable if you ignore all the costs that make them unprofitable such as paying employees and developing A models.
That's not how gross margin works.
For LLMs, marginal cost is just electricity
I made a statement about whether Anthropic was profitable I don't understand your reply.
Assuming you meant to reply to me and not someone else are you saying under GAAP accounting standards Anthropic is a profitable business because under GAAP accounting their only expense is electricity?
(I see what happened you skimmed the conversation and didn't follow what was being discussed.)
There's also things like training costs, spend on AI data centres and GPUs, R&D, sales and marketing, etc. See e.g. https://www.reuters.com/business/finance/anthropics-ipo-pros....
Those are not marginal cost or unit economics
If the "fixed costs" kill you unit economics won't save you. Scare quotes because true fixed costs generally have a long shelf life. Right now AI models die every 6-9 months.
1. And that marginal cost is large, much larger than the marginal cost of serving a Google Search query
2. The marginal cost is electricity until the hardware overflows. So it's continuous for electricity and a step function for hardware capacity.
Plus you don't address the core point. Frontier AI is capital intensive. A lot more capital intensive than regular software. The existing clouds supporting the entire internet (!!!!) were built for a fraction of the cost of AI infrastructure, and there isn't even an end in sight to this continuous hardware investment.
Let alone hardware refresh cycles.
AI is basically investment into roads.
Software used to be a magical place, closer to selling music albums but even better.
AI is a much worse business margin wise than regular software.
Investment is not a subsidy. Words still have meanings. Nobody in this thread has successfully answered the question: subsidized by whom?
Non-punishment is also not a subsidy; again, words have meanings. Let's use the correct words.
Indirect subsidies are an accepted economic concept and well studied. The posts you replied to are obviously talking about indirect subsidies and dismissing them because they didn't say "indirect" everywhere is just sophism.
But some investments are subsidized (tax liabilities) among all the other things.
The government, specifically Trump's government and the current money circle in AI inflating American company stocks. In addition to all that American models do not share their papers like Deepseek and Qwen do. So you can literally say Chinese models are doing it for charity at this point.
Of course you can say that, but you literally cannot be serious if you do!
Can you say a US company donating to a non-profit and writing off taxes on the basis of it is donating to charity?
Would you say you could be serious in stating this?
Sure, but I couldn't say that a US company writing about some work they did in paper form is charity. At least not seriously! If it were charity, Google might be the most charitable company of all time, since their researchers published "Attention Is All You Need." But it is not.
Google has published a lot of open source software and a lot of research papers: I do believe they used to be very charitable even if they are less so today.
They have other issues as well, but among other things, I'd classify them as somewhat charitable too.
Oh I am serious!
The US regime, which includes the ruling class: the US VCs and megacorps are just as much of an extension of the US regime. They're incredibly intertwined.
Capitalistic exploitation against the working classes.