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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

#281

Post by ncls »

wyre wrote: post #271
camdenreslink wrote: post #259

Earlier quoted context omitted.

Google was by far the best product. Maybe an LLM provider will emerge in that way, but it seems they are all very similar in capability right now.

I don't believe google won the search engine wars because they had the best product, while it may be true, the won because the of the tools they provided to their users. Email, cloud storage, docs/sheets/drive, Chrome, etc

They were already pretty dominant in search by the time they released most if not all of those. They got into that position by being the better search engine - better results and nicer to use (clean design, faster loading times).

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

#282

Post by _aavaa_ »

treis wrote: post #188
koolba wrote: post #107

Earlier quoted context omitted.

There’s about 5M software devs in the US so even at $1000/year/person spend, that’s only $5B of revenue to go around. Theres plenty of other uses cases but focusing on pure tech usage, it’s hard to see how the net present value of that equates to multiple trillions of dollars across the ecosystem.

It's the first new way of interacting with computers since the iPhone. It's going to be massively valuable and OpenAI is essentially guaranteed to be one of the players.

Why is their product not palm? Or windows mobile?

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

#283

Post by matwood »

delis-thumbs-7e wrote: post #94
crazygringo wrote: post #39

This is such a strange article -- there's nothing particularly unusual going on here. The first example basically stands in for all of them -- Microsoft invests $13B in OpenAI, and OpenAI spends $13B on Azure. This is literally just OpenAI purchasing Microsoft cloud usage with OpenAI's stock rather than its cash . There is nothing unusual, illicit, or deceptive about this. This is entirely normal. You can finance you…

I remember the same argument being used before the 2008 crash. Point is that all of this companies need to start making real profits and pretty damn big ones, otherwise all of this will collapse. Problem is that unless Altman has some super-intelligent super-AI hidden in his closet, it is very unlikely that it will. And whose gonna take the bill when it falls? Let me guess… Where have I seen this before…?

> Point is that all of this companies need to start making real profits and pretty damn big ones

MS, Meta, Google, Apple, Nvidia make enormous profits. I think part of this AI push we're seeing is that all of these companies have so much money they don't know how to spend it all. Meta is a great case where they bounced from blowing excess cash on the metaverse and now to AI.

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

#284

Post by some_guy_nobel »

zemvpferreira wrote: post #44
jacquesm wrote: post #17

These kinds of deals were very much a la mode just prior to the .com crash. Companies would buy advertising, then the websites and ad agencies would buy their services and they'd spend it again on advertising. The end result is immense revenues without profits.

There’s one key difference in my opinion: pre-.com deals were buying revenue with equity and nothing else. It was growth for growth’s sake. All that scale delivered mostly nothing. OpenAI applies the same strategy, but they’re using their equity to buy compute that is critical to improving their core technology. It’s circular, but more like a flywheel and less like a merry-go-round. I have some faith it could go anot…

> OpenAI applies the same strategy, but they’re using their equity to buy compute that is critical to improving their core technology. It’s circular, but more like a flywheel and less like a merry-go-round. I have some faith it could go another way.

I'm commenting here in case a large crash occurs, to have a nice relic of the zeitgeist of the time.

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

#285

Post by fireflash38 »

slashdev wrote: post #232
staticautomatic wrote: post #143

Earlier quoted context omitted.

I sell you a cat for $1B and you sell me a dog for $1B and now we’re both billionaires! Whether the capital markets “want” that or not it’s still silly.

If we’re both willing to pay that in a free market economy, then we both leave the deal happy. Things are worth what people are willing to pay for them. And that can change over time. Sentiment matters more than fundamental value in the short term. Long term, on a timescale of a decade or more, it’s different.

Is that not fraud?

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

#287

Post by deadbabe »

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).

But then you get stuff like Deepseek R1.

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

#288

Post by boringg »

As an aside does anyone get the feeling that NYT is also training its fire on all California tech companies these days? I know that NYT really doesn't like California (always hasn't - from restaurants to culture to business) but curious if other people see that as well?

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

#289

Post by DenisM »

api wrote: post #247
DenisM wrote: post #171

Earlier quoted context omitted.

ChatGPT chat logs contain massive amount of data teased out of people’s brains. But much of it is lore, biases, misconceptions, memes. There are nuggets of gold in there but it’s not at all clear if there’s a good way to extract them, and until then chat logs will make things worse, not better. I’m thinking they eventually figure out who is the source of good data for a given domain, maybe. Even if that is solved, mo…

When I say models will plateau I don't mean there will be no progress. I mean progress will slow down since we'll be scraping the bottom of the barrel for training data. We might never quite run out but once we've sampled every novel, web site, scientific paper, chat log, broadcast transcript, and so on, we've exhausted the rich sources for easy gains.

Chat logs don’t run out. We may run out of novelty in those logs, at which point we may have ran out of human knowledge.

Or not - there still knowledge in people heads that is not bleeding into ai chat.

One implication here is that chats will morph to elicit more conversation to keep mining that mine. Which may lead to the need to enrage users to keep engagement.

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

#290

Post by boringg »

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

Real question -- how else is OpenAI supposed to fund itself? It has capital requirements that the most moneyed business companies can't provide. So it has to come up with ways to get access to money while de-risking the terms. Not saying the circularity works but I don't know how else you raise at their scale.

This money is well beyond VC capability.

Either this lets them build to net positive without dying from painful financing terms or they explode spectacularly. Their rate of adoption it seems to be the former.

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