Being Impolite about OpenAI
The polite among us—like the FT will equivocate with headlines like, “OpenAI’s lead under pressure” that includes waffle quotes from Stanford profs like, “it was too soon to count OpenAI out.”
I don’t need to pay for slightly pink ink and no reputable profs this side of Butte State will talk to me on the record. So, I’m left to make up my own crackpot theories and state them impolitely.
OpenAI is in a heap of toast. Like Pandora when Spotify got going toast.
Let’s look at the only side of the coin that polite media will talk about. OpenAI has nice revenue and mammoth bills. OpenAI is already started signaling they’d love a bailout—tugging on our American-first strings with their left hand and on our think of the company tethers on the other. Come on, Sam. We’re not marionettes.
You’d think certain financial ruin was their biggest problem. And it isn’t. Their biggest problem is their future is darker than the last coal-fired power plant that lost its carbon scrubbers straining to draw you “Grandma sips coffee in a café.” using Nano Banana.
Look at this picture that Google created in, oh, about two seconds from a stupidly simple simple.
Nice, right? No. It’s better than nice. It’s hauntingly real. That gets you thinking about how. How can Google do that? So you stop and realize that half the world has a Google phone. OpenAI can only train on the pictures the world makes public.
How many pictures in your phone do you make public? You snap forty-five pictures of your salad and post one. Actually, chances are you didn’t even post it. Has the new Instagram rolled out for you? Here’s how you check. What’s the middle icon on the bottom? Is it post or DM? If it’s DM, you’re part of the new world. You don’t post. You share—privately. The new world isn’t nearly as public and that’s a big win for Google.
Google has all your pictures. Remember that camera feature they started promoting two Christmases ago? The one that could let you remove something from a shot? It was like magic. Somehow, Google knew was behind a person in your picture. I marveled at it enough to ask my technically smart college roommate a rhetorical, “How do they do that?” And I was more marveled at his response, “They have that picture from someone else and use the other person’s picture to fill in the gaps in yours.”
Now, look at the Nano Banana grannie again. The picture has vivid detail. Far beyond an AI inferencing stuff. More like—look for coffee shop pictures in the vast library of half the pictures taken by billions of phones. Insert a granny. Rough it up a little. They’re not starting a picture from scratch and adding details. They’re matting real images and scuffing them up.
Only two companies in the world have a photo library that big—Apple and Google. Only one is making an AI. Before you say, “Meta",” Meta only sees the pictures we post and share. So, nope, not them.
I’m not going to belabor this advantage because this story is going to get even longer and even more boring. I’ll just say—now consider Gmail and Google docs and all the searching we do. Oh and YouTube. Google has more proprietary data than everyone. For text, for pictures, and for video. Oh, and YouTube music. And for songs too. Oh and Pixel phones and Chromebooks.
Which means they pay less for inputs than OpenAI. They can have better outputs than OpenAI. They can use their existing infrastructure to index it and serve it all which is a huge advantage going forward. Think huge like how Amazon, Microsoft, and Google dervied highly profitable cloud service businesses (AWS, Azure, Cloud) from existing internal services.
Really, the biggest thing OpenAI had was being first to market. And, give them credit. GPT went from being nothing to being an acronymic placeholder for Artificial General Intelligence.
But Google is catching up. Look at OpenAI’s glass being half empty in that same FT story. Gemini app downloads are closing in on OpenAI and people spend more time on Gemini than on OpenAI. Think about what happens when creating pictures and video is the primary use, not text summaries.
Here’s what really clinches the deal for me. From the same prof in that same FT story, “All these companies have a surplus of very profitable opportunities all around them. There’s room for multiple companies to do extremely well because the opportunity is so large.”
OK, so one prof says one thing that could be seen as entirely self-serving since he’s at Stanford’s Institute for Human-Centered AI. What’s he going to say? The AI world is going to belong to Google? He basically becomes a Google employee. So, no.
But, the next day, The Verge published a deep research piece about the societal impact of AI and how nine people at an AI company at least half of you have never heard of are thinking about it (did you guess, Anthropic?). Yeehaw. But this line stood out, “In an industry where mind-boggling profits could await.”
When all the media are politely telling us the same thing. The impolite story IS the story.
They keep telling us that big profits are coming. Why? Because three hours ago, we read—in the same FT—Anthropic and OpenAI are racing to go public. If the government won’t use our money to bail us out AI, then AI will get what it can from those of us who want a thrill ride.
And the tunes played on that ride will be streamed from Pandora. Once a frontrunner now a nearly forgotten division with Sirius. You remember Pandora. Before Spotify it was music streaming. In an era slightly before AI, we thought it had wired the sentience of Johann Sebastian Mozart and Dave Bonham into a machine that knew the next song you’d like to hear. They were smart. They were first. They were huge. They’re forgotten. Moved to the deleted folder on the computer in your junk drawer along with names like Netscape. And Corel. And WordPerfect. Oh, and VisiCalc. Pioneers who didn’t have the distribution and business models to go the distance against someone even bigger, even stronger, and better resourced.
Google is going to have a better product. Served at a lower cost. And distributed to more people that OpenAI can ever dream of. That dream has become a nightmare.
I’m a blunt guy.