Their entire business is predicated on search dominance, which is now on much shakier footing. Agreed that those comments were ridiculous pre-ChatGPT, but now they have a genuine challenger.
This take only makes sense if you don’t know what people use Google search for. If you’re looking for your local Ford dealership, or to book a Carnival cruise, or need a disability lawyer, or to refinance your credit card debt, you’re searching for an ad. You’re not using Chat-GPT for that. You’re asking Chat-GPT about a research project. It’s stealing away all the hard to monetize searches and leaving the incredibly lucrative searches.
Your narrative depressed Google’s stock price for years, and bears finally gave up since they kept coming out with huge earnings beats.
I actually use Claude for finding stuff and recommendations. like "Find me a decent shoe with blah blah conditions" this query now goes to LLM Chat instead of google search. I use google search to find the url of something that i know exists like find the website of a company or finding address of a store.
The issue is Claude is losing money serving you that, and while Google makes money serving you the same result. On top of that, you are paying Claude to get that same result.
Unless Claude adds ads, it isnt going to be sustainable for both Anthropic or you - and congrats, you've invented Google Search.
Google and ChatGPT are both running LLMs on free user queries. If Google is doing it more profitably, it’s because they have a much more mature ad business, and/or they are running a cheaper LLM. There’s no fundamental difference in the business model in that specific product line.
Regarding Claude, it’s true they must be losing money on free users since they promised they won’t put ads there.
Speculatively, I think people are overestimating the cost of inference for the consumer free tier chatbots. I suspect it’s effectively a marketing cost. The primary expenses are compute to train the next model, stock compensation, and heavy-duty enterprise inference (which pays for itself).
> But that’s it. I never use Google outside of that. It’s just ads, and most of the web is just ads or AI slop.
Funnily enough, their core revenue driver (Google Ads) is very broken too. I'm trying to run some ads, but for a week they haven't been showing due to some invisible combination of flags when the campaign was created. There's no way of knowing they're not showing from the dashboard, it only becomes apparent when you try and preview the ads with one of your search terms.
I know everyone is long Google but that experience seriously makes me question how valuable their ad business will stay in the future.
Someone deleted a reply to this comment “And where does ChatGPT get the data for those answers?” they wrote and I think the question is important: LLM chatbots can crawl the web just as well as Google.
Nah, just another startup that’ll get acquired or a similar fate. Building the capability is a superior option imho, if you’re at Anthropic or OpenAI scale. Cut out the middleman.
Indeed, but what is the difference between crawl data and model data but decay rate? Models are trained on previous crawl data, but if an LLM provider engages a search engine to get "live data," that data isn't live but previously crawled as well (and perhaps not yet integrated into models as crawl data).
So, why would you use Google as a tool or search target when you can, in some combination, go direct to the website (or whatever the target data endpoint is) yourself as an LLM provider to retrieve the most recent data or rely on your own "hot cache" of that data that was crawled recently but said data is not stale enough warranting a live web crawl to retrieve and present to the user or AI agent? Is this capability to perform retrieval from a data source in real time not similar to an AI agent?
Broadly speaking, I'm just spitballing on the concept of "You must use a search engine for an LLM to return 'live-ish' results" as I think we're directionally headed to where that isn't the case.
You clearly haven't spent much time around young adults. I work with college students a fair amount and they use chatbots for 100% of their questions, including the ones you listed. And much like google got a rich data trove from user's searches, OpenAI is getting an even richer trove from chatbot chats.
I would actually recommend using a LLM over normal search for that sort of thing, because SEO has ruined those high intent phrases. The AI equivalent of SEO is also a problem there, but it's so much less prevalent.
"google it" has a stain on it. And that's not said in jest. In my social circle, it has grown a boomer-tint. Like it or not; it's just how it is.
I personally like google over asking an AI. Esp. since something like google is a substrate without which an AI would be far more prone to hallucinations.
That’s over half of their business, but they do have some diversification with YouTube, Play Store, and cloud services.
Some of their newer efforts like Waymo and AI hosting for Apple could turn into large businesses to make up for any lost search revenue.
They also have significant costs to maintain their search revenue, such as $20B a year to Apple alone to make Google the default search engine in Safari.
If search becomes less lucrative, they would presumably pay less for such deals.
So yeah, definitely a time of disruption for Google and they need to keep moving fast on many fronts, but they are still well positioned in multiple markets to be successful.
Curious to see how long that lasts - YouTube and Google Maps were fairly mainstay apps for iPhones for a while, and eventually Apple cut the Maps cord to do their own thing. I don’t know if that’s from an existential concern of “we need to eventually move Maps in-house”, but given the Google of it all I wouldn’t be surprised if Apple is already at least planning on how to do the same with AI once the bulk of the usage evens out i.e. let someone else worry about it now while also getting a read on what rolling their own would feasibly require.
A model serves a different purpose from a web crawler.
I'd prefer to be able to find source material over steering a model I have no control over while managing hallucinated outputs without the ability to fact check.
Just because it sourced some materials using RAG doesn't make its outputs valid, accurate, or factual.
Is it though? As far as I can tell they continue to maintain total domination of web search, and LLMs do not replace search engines, they work on top of them.
Not so much hardware these days, about half of IBM's revenue comes from software (Red Hat related stuff alone probably brings in a ton), and about 20% comes from consulting
People have been saying that for over a decade now, and their business is still going.
So is IBM.
There was a pretty interesting article in the Wall Street Journal a few weeks back about how IBM is flying under the radar, and doing well by not taking the hype bait.
It noted that 70% of all credit card transactions on the planet go through an IBM system.
It ought to be extremely easy now to use LLMs to transpile cobol and do the necessary reverse engineering to migrate off mainframes and aix servers.
I think IBM will lose many customers.
It ought to be extremely easy now to use LLMs to transpile cobol and do the necessary reverse engineering to migrate off mainframes and aix servers. I think IBM will lose many customers.
The problem is that those COBOL systems have to be absolutely provably correct, for both financial and regulatory reasons. LLMs can't do that. They're designed to be variable.
You can't vibe code a bank transaction system. "Close enough" isn't good enough in some fields. A minor glitch in a video game may result in screen artifacts. A minor glitch in a banking system can crash the economy.
IBM had something of a downward blip last quarter, partly because of mainframe cycles. But it's actually done generally well the past few years and pays a pretty good dividend. $10B in net income for 2025 isn't shabby.
I dunno about going strong. $1,000 in Microsoft stock in 1990 would have made you a multi-millionaire today. $1,000 in IBM stock in 1990 would make you a ten-thousandaire today.
For reference, IBM was founded in 1911. At the time "computer" was a profession, not a machine, and the majority of US households had no electricity or telephone service
Yeah, but the future will essentially be building extensions for agents. Agents will become the new web browser and extensions will be the new apps. We are already seeing the early stages of this.
Dam, we are never going to have anything cool in the US. Our robot companies are too busy raising money to make more cool looking power points to then raise more money to burn not making an actually sellable product before they go under :(
Yeah, in fact you can actually make the model perform worst. You should allow the model to "think for itself" instead of pushing your reasoning into the prompt. You should give it simple prompt and steer it along the way.
Skills, CLAUDE.md/AGENTS.md should only ever be used if the model struggle at something or doesn't know how to use something. Vast majority of project should never need a skill or CLAUDE.md. If you writing React apps you don't need these.
Give a LLM a bash tool and a prompt and it will outperform your complex setup with skills and tools.
You need agents.md and similar for indications about stuff that is not in the code itself. There are plenty of use cases for that, the alternative is have the LLM guess the most probable solution, which may be correct but may also be wrong.
The only repos I find skills particularly useful for are in small languages with useful new tools. For elixir I have some tools pointing to cicada[1] for code search because it's better than grep and meaningfully reduces churn.
No, we still need CLAUDE.md to override bad system prompt goals. The system prompt goes for the simple fast solution, no error handling, no hardening, no abstractions, but overly verbose comments. Vast amount of people need to override this AI slop.
i use it primarily to enforce my personal conventions that are not super commonly followed in the wild. structure of comments at the top of .h , structure of bibliography in .tex, etc etc things that i would otherwise have to repeat periodically.
Yeah, but unlike China we have laws and ways to fight against it. China can and will do whatever the fuck they want they don't have to listen to the people of China.
The problem is that at the current moment with the current administration, it does not seem like we do "have laws and ways to fight against it".
I'm more optimistic about the likelihood of the US system of government to heal itself than that statement might seem to imply. But it's just also the case that at the current moment in the US, the rule of law is very much under threat. And as your comment suggests, that same rule of law is a very important thing to the way of life in the US. It's a very bad situation that we've allowed ourselves to slouch into.
Well that what the people voted for. In a few months you can replace these people that allow this. Good luck replacing anyone in the goverment of China.
This is not an argument that the Chinese system of government is better than the US system. Like I said, I'm more optimistic than a lot of people I know that the US will be able to pull out of the tailspin we've been in for the past decade. But it's also imminently reasonable to believe that this episode has raised real questions about the durability of the rule of law in this country.
> this episode has raised real questions about the durability of the rule of law in this country.
Ya, I'm not American, but I have seen people say "we can vote them out" a few times now. Assuming the democrats take the next election, they are going to have a massive mess to clean up with much of the damage not even being reversible. With peoples' fickle nature and seeming that is a very big right-leaning population in the US, there's a non-zero chance the Republicans just get voted back in four years later. Whose to say?
So, this might not be clear as an outsider to American politics, but to me this is not a "Republican vs. Democrat" thing. To me, it's about what kinds of Republicans and what kinds of Democrats are elected.
To me, as an American, what has happened this past decade is that a ton of vulnerabilities in the rule of law (and other things, but this is the one I care most about) have been exposed. But it's not a given that the next Republican president will take advantage of those vulnerabilities in the way the current president has. They might end up being a reformer who seeks to fix those glitches!
But on the more pessimistic side of the same coin, it's also not a given that the next Democrat will seek to fix the glitches rather than saying "they had eight years to take advantage of these vulnerabilities, we're going to do the same to make up for that and even the playing field!".
It's just very hard to know what is going to happen from here. So I'm very sympathetic to people in other countries not trusting us.
I was going to bring this up but was wary of getting too deep into a political hole when I'm not super on US politics (although in the past year and a bit I've been paying way more attention). Mostly, I have no idea what the Republican party will look like post-Trump or how any of that works and it's not clear to me what kind of influence they will have as the opposition next term. The current term has made the democrats look extremely weak.
Although, again, my over understanding of your political system is poor and I just relate it to the one in my country where they hold parliament and hurl schoolyard insults at each other.
What I would say is that to me the "Democrats look weak" thing is pretty silly. By design, if one party holds the presidency and both houses of Congress at once, they get to enact their preferred agenda (as long as it is deemed constitutional by the current judiciary, which is also controlled by that same party at this moment). So, like, by design Democrats are powerless at this moment. They aren't "weak", they are out of power, by dint of the design of the system and the desire of the voters. So if the current government administration and policy is bad (which, in my view, it certainly is), the blame lies entirely with the people in power. It's not because the Democrats aren't "fighting" enough. I think that's nonsense, they genuinely have no power.
Ok ya that makes sense, and makes sense why I get confused. That sort of thing can still happen here, though we can minority and majority governments, and I generally prefer when it's minority, even if my "preferred party I still don't really like" has power.
Yeah in our system, those kinds of governments happen when there is a split in Congress (one party has a majority in the House, the other in the Senate) and/or when Congress and the presidency are held by opposite parties. And this is actually more the usual setup! For instance, it was that way until last January, and it's very likely that it will be that way again this coming January. But it just happens that at the moment, and since the beginning of the current presidential administration, there has been totally unified government in which the Democrats have no power whatsoever.
To me, the thing that was "weak" was losing all those elections in the last cycle. But it's not "weak" to be unable to do anything with no power.
You have "representative democracy". It is not the same as democracy, whatever you had been told in school. And since 2001 it is painfully clear: whichever representative you had, eventually he went to throw bombs on people, and no one asked joe if he liked that.
The american state routinely shoots and kills its own citizens in broad daylight with 0 repercussions. Thinking it answers to its citizens is severely deluded.
Their pricing...also leaves much to be desired. They are almost at Big Three cloud/Vercel level of cost with none of the stability. Their anycast network however is decent.
I think people just think it getting worst because you use software for literally everything in your life now compare to before and this means you will most likely run into bugs more often.
On top of that software has to be build with more users in mind so you are often going to get bloated software. That why enterprise software is often horrible because they have to support multiple industries that all need different types of workflows and UI.
I have been using software for decades and there has always been horrible software. Like I'm mind blown that people think human always wrote good code, and that AI is somehow worst than human code. AI writes better code then the vast majority of programmers that's a fact. Yes, including you. Yes there are certain areas of programming that it sucks at but 99% of programmer aren't writing that code.
It shouldn't be surprising OpenAI does have the most compute out of all the major labs. The only reason why Anthropic models are expensive is they are the most in demand models in the world and Anthropic is fighting for compute. The only way to you limit demand for your model is increasing API pricing this is also why Anthropic probably has great margin and probably is profitable compared to OpenAI.
I doubt there's any sort of criminal behavior there - the model is anthropic's up and anthropic probably charges a very expensive license fee that's the same for all of them, and their cogs on compute aren't going to be wildly different, so the main drivers of the cost are roughly the same and they're all offering customers the same end product so the prices would likely also be similar in the end
You seem terribly confused. Manufacturers are almost always able to set prices. That is not anti-competitive because it does not imply they are colluding with their competition...
No manufacturers might suggest prices, they can't set them, not in any sensible country.
If they do, they do it secretly and when governments find about that they are going to receive a big fine, together with shops that colluded with them.
The competition is between openai and anthropic, if there are price agreements between them that's absolutely price fixing. Or if there's collusion between the cloud providers to inflate compute. I would expect Amazon and gcp to both pay about the same in license fees to anthropic for their models though because they're paying for the same thing. If I buy an apple for a dollar at one store and an apple for a dollar at another store - maybe there's price fixing, or maybe that's just the cost of apples at the moment.
In capitalism there are many many competitions going on at the same time. Both models can compete and inference providers can compete for costs.
In your apple example if at the same stores you saw "open" apples having different prices and having sales you might question if the costs of those frontier apples are not being manipulated.
Yeah there's a brand premium. Like literally with apples the ones with trademarked names can cost more. And the ones with trademarked names have an organization behind them that promote that apple variety and set fees etc for growing and selling those apples. And customers are willing to pay more because those apples usually taste way better (the group exists to stop growers from enshittifying the apple by selecting for yield over flavor like what happened to honey crisp). Those prices are being "manipulated" but that's not criminal behavior - it's not illegal and wouldn't make sense to try and make illegal. The frontier models also do have different coats and have "sales" (for personal plans, the amount of usage you can get on the 200 dollar plans is orders of magnitude more than you could get for a similar cost for any open model - you'd need the same capability at the same token efficiency at literally 1/40th the cost to be able to be cheaper) - to the extent that if there is illegal stuff going on it seems more likely to me that it's on the category of dumping/pricing unreasonably low to kill competitors in some anti-competitive way (though as I understand it it's not something courts tend to find as illegal) instead of price fixing
Do you really think there is nothing someone could do to make it a fraction of a percentage cheaper to serve like having access to cheaper electricity or a more mature cloud management software. Even saving a fraction of a penny on the prices can make a different due to how much volume people are paying for.
Go read the safeguards section in the report and you will realize why that is.
These models are heavily as safeguarded and that was the initial reason why they said they couldn't and haven't released Mythos because that model is the one without the safeguards.
OpenAI is did the same thing when they announced a model without safeguards broken into HuggingFace servers.
> We can also imagine the application of these models for malicious purposes , including the following (or other applications we can’t yet anticipate):
* Generate misleading news articles
* Impersonate others online
* Automate the production of abusive or faked content to post on social media
* Automate the production of spam/phishing content
Have you been patching your systems for the past two months? It was crazy even if you completely forget the supply chain literal FUBARs and you must’ve been living under a rock to not see OpenAI (accidentally) pwning hugging face
I see a pretty big gap between finding software vulnerabilities and “the world is about to end”. It is literally true that AI models are finding software vulnerabilities. It is also to my mind a reasonable thing that you’d want to be cautious about rolling out a model that can find more vulnerabilities. So what is the objection you have to these sources?
both companies have large spending commitments while their margins will be continuously wiped by open models / router-like solutions. both companies are rushing for ipo and doing an awful lot of financial engineering to look good (highly recommend ed zitrons analysis on anthropic profitability) before their margins are eroded that much.
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