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How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

nytimes.com

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Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#201

Post by dmoy »

guywithahat wrote: post #140
nova22033 wrote: post #117

Related https://www.theregister.com/2025/10/29/microsoft_earnings_q1... Microsoft seemingly just revealed that OpenAI lost $11.5B last quarter

It's incredible how Tesla used to lose a few hundred million a year and analysis shows would freak out claiming they'd never be profitable. Now Rivian can lose 5 billion a year and I don't hear anything about it, and OpenAI can lose 11 billion in a quarter and Microsoft still backs them. I do think this is going to be a deeply profitable industry, but this feels a little like the WeWork CEO flying couches to offices…

> Now Rivian can lose 5 billion a year and I don't hear anything about it, and OpenAI can lose 11 billion in a quarter and Microsoft

Rivian stock is down 90%, and I fairly regularly read financial news about it having bad earnings, stock going even lower, worst-in-industry reliability, etc etc.

I don't know why you don't hear about it, but it might be because it's already looking dead in the water so there's no additional news juice to squeeze out of it.

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#202

Post by teiferer »

slashdev wrote: post #122
_heimdall wrote: post #111

Earlier quoted context omitted.

I think that, at best, that description boils down to Nvidia, Oracle, etc inventing fake wealth to build something and OpenAI building their own fake wealth by getting to use that new compute effectively for free. There are physical products involved, but the situation otherwise feels very similar to ads prior to dotcom.

The same way the stock market invents a trillion dollars of fake wealth on a strong up day? That's capital markets working as intended. It's not necessarily doomed to end in a fiery crash, although corrections along the way are a natural part of the process. It seems very bubbly to me, but not dotcom level bubbly. Not yet anyway. Maybe we're in 1998 right now.

> It seems very bubbly to me, but not dotcom level bubbly.

Not? Money is thrown after people without really looking at the details, just trying to get in on the hype train? That's exactly how the dotcom bubble felt like.

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#203

Post by philistine »

gtirloni wrote: post #22
rw3 wrote: post #6

Hank green did a vlog on this a few weeks ago and it’s a great explainer.

This one? https://www.youtube.com/watch?v=Vz0oQ0v0W10 This comment is pretty depressing but it seems to be the path we're headed to: > It's bad enough that people think fake videos are real, but they also now think real videos are fake. My channel is all wildlife that I filmed myself in my own yard, and I've had people leaving comments that it's AI, because the lighting is too pretty or the bird is too cute. The real…

> We already have some people in pretty powerful positions doing this to manipulate their bases.

You don't have to be vague. Let's be specific. The President of the United States implied a very real voiceover of President Reagan was AI. Reagan was talking about the fallacy of tariffs as engines of economic growth, and it was used in an ad by the government of Ontario to sow divide within Republicans. It worked, and the President was nakedly mad at being told by daddy Reagan.

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#204

Post by embedding-shape »

NBJack wrote: post #47
embedding-shape wrote: post #34

Earlier quoted context omitted.

Why is ML knowledge "in the engineers" while chip manufacturing apparently sits in the company/hardware/something else than the engineers/humans?

Read up a bit on the effort needed to get a fab going, and the yield rates. While engineers are crucial in the setup, the fab itself is not as 'fungible' as the employees involved. I can spin up a strong ML team through hiring in probably 6-12 months with the right funding. Building a chip fab and getting it to a sensible yield would take 3-5 years, significantly more funding, strong supply lines, etc.

> I can spin up a strong ML team through hiring in probably 6-12 months with the right funding

Not sure what to call this except "HN hubris" or something.

There are hundreds of companies who thought (and still think) the exact same thing, and even after 24 months or more of "the right funding" they still haven't delivered the results.

I think you're misunderstanding how difficult all of this is, if you think it's merely a money problem. Otherwise we'd see SOTA models from new groups every month, which we obviously aren't, we have a few big labs iteratively progressing SOTA, with some upstarts appearing sometimes (DeepSeek, Kimi et al) but it isn't as easy as you're trying to make it out to be.

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#205

Post by whimsicalism »

OtherShrezzing wrote: post #169
guywithahat wrote: post #140

Earlier quoted context omitted.

It's incredible how Tesla used to lose a few hundred million a year and analysis shows would freak out claiming they'd never be profitable. Now Rivian can lose 5 billion a year and I don't hear anything about it, and OpenAI can lose 11 billion in a quarter and Microsoft still backs them. I do think this is going to be a deeply profitable industry, but this feels a little like the WeWork CEO flying couches to offices…

>and OpenAI can lose 11 billion in a quarter and Microsoft still backs them. For Microsoft, and the other hyperscalers supporting OpenAI, they're all absolutely dependent on OpenAI's success. They can realistically survive through the difficult times, if the bubble bursts because of a minor player - for example if Coreweave or Mistral shuts down. But if the bubble bursts because the most visible symbol of AI's future…

They’re dependent on usage of their cloud. I don’t agree that they are as dependent on OAI as you suggest. Ultimately, we’ve unlocked a new paradigm and people need GPUs to do things - regardless of whether that GPU is running OAI branded software or not.

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#206

Post by adastra22 »

OtherShrezzing wrote: post #169
guywithahat wrote: post #140

Earlier quoted context omitted.

It's incredible how Tesla used to lose a few hundred million a year and analysis shows would freak out claiming they'd never be profitable. Now Rivian can lose 5 billion a year and I don't hear anything about it, and OpenAI can lose 11 billion in a quarter and Microsoft still backs them. I do think this is going to be a deeply profitable industry, but this feels a little like the WeWork CEO flying couches to offices…

>and OpenAI can lose 11 billion in a quarter and Microsoft still backs them. For Microsoft, and the other hyperscalers supporting OpenAI, they're all absolutely dependent on OpenAI's success. They can realistically survive through the difficult times, if the bubble bursts because of a minor player - for example if Coreweave or Mistral shuts down. But if the bubble bursts because the most visible symbol of AI's future…

Why? Microsoft has permanent, royalty free access to the frontier models. If OpenAI went under, MSFT would continue hosting GPT-5 on Azure, GitHub Copilot, etc. and not be affected in the slightest.

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#207

Post by forgetfulness »

kurisufag wrote: post #191
Workaccount2 wrote: post #173

Earlier quoted context omitted.

The goal isn't to be the best LLM, the goal is to be the first self-improving LLM. On paper, whoever gets there first, along with the needed compute to hand over to the AI, wins the race.

The moment properly self-improving AI (that doesn't run into some logistic upper bound of performance) is released, the economy breaks. The AI, having theoretically the capacity to do anything better than everyone else, will not need support (in resources or otherwise) from any other business except perhaps once to kickstart its exponential growth. If it's guarded, every other company becomes instantly worthless on t…

The machine god would still need resources provided by humans on their terms to run; the AI wouldn’t sweat having to run, for instance, 5 years straight of its immortality just to figure out a 10 years plan to eventually run at 5% less power than now, but humans may not be willing to foot the bill for this.

There’s no guarantee that the singularity makes economic sense for humans.

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#208

Post by whimsicalism »

chii wrote: post #174
aaronblohowiak wrote: post #156

Earlier quoted context omitted.

Do you have any reasoning to support the notion that this market is winner takes all?

With enough money to lobby, they can make it a winner takes all market (ala, a regulated monopoly).

Want to bet? I see this claim all over the internet and do not believe it for a moment.

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#209

Post by loudmax »

randomNumber7 wrote: post #145
guywithahat wrote: post #140

Earlier quoted context omitted.

It's incredible how Tesla used to lose a few hundred million a year and analysis shows would freak out claiming they'd never be profitable. Now Rivian can lose 5 billion a year and I don't hear anything about it, and OpenAI can lose 11 billion in a quarter and Microsoft still backs them. I do think this is going to be a deeply profitable industry, but this feels a little like the WeWork CEO flying couches to offices…

The winner takes it all, so it is reasonable to bet big to be the one.

As I understand the argument, it's that AI will reach a level where it's smart enough to improve itself, leading to a feedback loop where it takes off like a rocket. In this scenario, whoever is in second place is left so far in the dust that it doesn't matter. Whichever model is number one is so smart that it's able to absorb all economic demand, and all the other models will be completely obsolete.

This would be a terrifyingly dystopian outcome. Whoever owns this super intelligence is not going to use it for the good of humanity, they're going to use it for personal enrichment. Sam Altman says OpenAI will cure cancer, but in practice they're rolling out porn. There's more immediate profit to be made from preying on loneliness and delusion than there is from empowering everyone. If you doubt the other CEOs would do the same, just look at them kissing the ass of America's wannabe dictator in the White House.

Another possible outcome is that no single model or company wins the AI race. Consumers will choose the AI models that best suit their varying needs, and suppliers will compete on pricing and capability in a competitive free market. In this future, the winners will be companies and individuals who make best use of AI to provide value. This wouldn't justify the valuations of the largest AI companies, and it's absolutely not the future that they want.

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#210

Post by potato3732842 »

lokar wrote: post #193
guywithahat wrote: post #140

Earlier quoted context omitted.

It's incredible how Tesla used to lose a few hundred million a year and analysis shows would freak out claiming they'd never be profitable. Now Rivian can lose 5 billion a year and I don't hear anything about it, and OpenAI can lose 11 billion in a quarter and Microsoft still backs them. I do think this is going to be a deeply profitable industry, but this feels a little like the WeWork CEO flying couches to offices…

Very few industries are “deeply profitable” absent the illegal abuse of monopoly power

Don't forget the perfectly legal use of legislation and bureaucratic precedent that gives them "soft/lossy monopoly" power or all but forces people do to business with them.
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