What Chinese firms are doing makes perfect sense from the commercial perspective actually because they understand how a classic commoditization spiral works. The reality is that models themselves are general commodities and there's just not enough difference between them. A company can get ahead of others by a few months, but then the rest quickly close the gap. It's a really low margin business because there's no way to differentiate yourself.

Chinese companies know that there's no profit in general purpose models in the long run, and they're treating models as shared infrastructure akin to Linux. They're amortizing the cost of research by keeping models open, and rapidly closing the gap and driving prices towards the marginal cost of inference. The money is going to be in customization niches. Companies will charge to tune models for specific use cases and charge support for that. There's also going to be money at the bottom for hardware vendors making chips and memory. But the middle tier of generic LLMs is seeing involution where there's relentless competition driving profits towards the bottom.