alt Hacker News> That’s a charity, not a business model.
Joel Spolsky in 2002 identified a major pattern in technology business & economics: The pattern of "commoditizing your complement", an alternative to vertical integration, where companies seek to secure a choke point or quasi-monopoly in products composed of many necessary & sufficient layers by dominating one layer while fostering so much competition in another layer above or below its layer that no competing monopolist can emerge, prices are driven down to marginal costs elsewhere in the stack, total price drops & increases demand, and the majority of the consumer surplus of the final product can be diverted to the quasi-monopolist.
No matter how valuable the original may be and how much one could charge for it, it can be more valuable to make it free if it increases profits elsewhere.
This pattern explains many otherwise odd or apparently self-sabotaging ventures by large tech companies into apparently irrelevant fields, such as the high rate of releasing open-source contributions by many Internet companies or the intrusion of advertising companies into smartphone manufacturing & web browser development & statistical software & fiber-optic networks & municipal WiFi & radio spectrum auctions & DNS: they are pre-emptive attempts to commodify another company elsewhere in the stack, or defenses against it being done to them.
Replies
kristianp • today at 8:30 PM
Here's the Spolsky article, called "Strategy Letter V": https://www.joelonsoftware.com/2002/06/12/strategy-letter-v/
Here's links to the whole series up to VI: https://lettersremain.com/joel-spolsky-on-strategy/
vovavili • today at 8:58 PM
I don't really see how this applies to Anthropic. Claude Code _is_ their integral money maker. Their point above is a three-way neck-to-neck competition where they won't be able to become a near-monopoly any time soon.
cj • today at 8:01 PM
> it can be more valuable to make it free if it increases profits elsewhere.
That's a big "if" for Claude Code, et al.
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"Commoditizing your complement" is a convenient market phenomenon when it happens, but it's not a hard rule that everything that should be a commodity lands in the window of incentives that result in this strategy being the self-serving optimum for a company. Usage of "should" here can be interpreted as "would be most beneficial to the largest number of people in terms of cumulative productivity" or "not having this be commoditized leads to terrible incentives that harm a lot of people." There's no guarantee at all that it ends up being most profitable to individual market actors to attempt to commodify LLM compute, and in fact they seem more interested in securing legal moats and protected monopolies. You may think that reality will force this to fail via open source model releases from China or the like, but consider the world in which the US officially bans import and usage of all but specifically licensed and approved LLMs. The most powerful companies and people here seem broadly aligned on wanting that, so it's not implausible. Sure, you as an individual could illegally import and run an unsanctioned LLM yourself, but most people won't do that, and attempts to scale it would be beaten down with the force of law. The companies who strike deals will get 99+% of business and profit handsomely, no need to ever let their golden goose be commodified. It's a strictly better strategy if your government is dysfunctional enough to let it happen.