alt Hacker NewsA huge number of people are convinced that OpenAI and Anthropic are selling inference tokens at a loss despite the fact that there's no evidence this is true and a lot of evidence that it isn't. It's just become a meme uncritically regurgitated.
This sloppy Forbes article has polluted the epistemic environment because now theres a source to point to as "evidence."
So yes this post author's estimation isn't perfect but it is far more rigorous than the original Forbes article which doesn't appear to even understand the difference between Anthropic's API costs and its compute costs.
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Does this not count as evidence? I would agree that it sounds a little shaky, but I would not say there is no evidence.
> A huge number of people are convinced that OpenAI and Anthropic are selling inference tokens at a loss despite the fact that there's no evidence this is true
Theres quite a lot of evidence, no proof I'd agree, but then there's no absolute proof I'm aware to the contrary either, so I don't know where you're getting this from.
The two pieces of evidence I'm aware of is that 1) Anthropic doesn't want their subsidised plans being used outside of CC, which would imply that the money their making off it isn't enough, and 2) last time I checked, API spending is capped at $5000 a month
Like I say, neither of these are proof, you can come up with reasonable arguments against them, but once again the same could be said for evidence on the contrary
I think the wafer scale compute is a massive deal. It's already being leveraged for models you can use right now and the reception on HN has been negligible. The entire model lives in SRAM. This is orders of magnitude faster than HBM/DRAM. I can't imagine they couldn't eventually break even using hardware like this in production.
I'd love to be a fly on the wall when this argument is tried in front of a bankruptcy court. It drives me nuts. Of course there's evidence that they're selling tokens at a loss.
The only thing these companies sell are tokens. That's their entire output. OpenAI is trying to build an ad business but it must be quite small still relative to selling tokens because I've not yet seen a single ad on ChatGPT. It's not like these firms have a huge side business selling Claude-themed baseball caps.
That means the cost of "inference" is all their costs combined. You can't just arbitrarily slice out anything inconvenient and say that's not a part of the cost of generating tokens. The research and training needed to create the models, the salaries of the people who do that, the salaries of the people who build all the serving infrastructure, the loss leader hardcore users - all of it is a part of the cost of generating each token served.
Some people look at the very different prices for serving open weights models and say, see, inference in general is cheap. But those costs are distorted by companies trying to buy mindshare by giving models away for free, and of those, both the top labs keep claiming the Chinese are distilling them like crazy including using many tactics to evade blocks! So apparently the cost of a model like DeepSeek is still partly being subsidized by OpenAI and Anthropic against their will. The cost of those tokens is higher than what's being charged, it's just being shifted onto someone else's books. Nice whilst it lasts, but this situation has been seen many times in the past and eventually people get tired of having costs externalized onto them.
For as long as firms are losing money whilst only selling tokens, that means those tokens are selling at a loss. To not sell tokens at a loss the companies would have to be profitable.