Fact◆Article · 20 words
Claude Fable 5 will be included in all Max and Team Premium plans starting July 20, at 50% of limits.
Anthropic (@claudeai) · Simon Willison's Weblog
ClaimVideo · 34:26 — 35:56
AI model providers are pricing inference below cost to grab market share instead of raising prices, even though demand is outstripping supply, which is unsustainable.
Bill Gurley warns that flush venture capital lets AI labs price inference under cost to chase share rather than raise prices to throttle demand, with some top brands reportedly running negative gross margins. ✦ AI generated
Bill Gurley · BG2 Pod · 2025-07-31 · original ↗
starts at this moment · 34:26
No one's pricing the cost because they're pricing to take market share... the thing that throttles demand is price, but no one here is raising price. Like Anthropic doesn't need to throttle. They just raise price, but they're not willing to do that because they're afraid to lose share. And so everyone's pricing to share. That means they're pricing under cost.
verbatim transcript · starts at 34:26
Transcript · around this moment
34:26have the capacity for it it's one of those things people are consuming Jven's paradox or whatever. Yeah. Sorry. Go ahead, Bill. You're >> No, I was just going to offer one caveat to to this uh super uh exciting line of of of thought, which is because of the amount of venture capital out there. Um companies are not pricing the cost like no one no one none of the model
34:51companies I don't think anyone even in the verticals like no one's pricing the cost because they're pricing to take market share. And you know, you and I, Sunny, we had a previous discussion about the unlimited pricing and inference has variable costs. So, is that even sustainable, right? And and even when people say to me, "Oh, well, we're going to run out of power." You wouldn't run out of power if you just
35:15took the price up. Like, like the thing that throttles demand is price, but no one here is raising price. Like Anthropic doesn't need to throttle. They just raise price, but they're not willing to do that because they're afraid to lose share. And so everyone's pricing to share. That means they're pricing under cost. There's rumors of even some of the best known brands in AI having negative gross margin. And so I
35:40don't know when that settles out, but that there that will create a bump in the supply demand curve if that ever has to be, you know, fixed. Um but for now it doesn't >> because because >> Can I ask a question there? >> Yeah. >> Yeah. No, no. which is going back to the point that we made on open source, but if you know in the back of your mind
36:02that there's something that's 90% as good, but it's 90% cheaper. How does that factor in because we've also never had that that factor as we're going through this growth curve. I mean since almost since we started the pod you know I've I've routinely highlighted that the steepness of that price curve on you know as you as it kind of becomes you know less less cutting edge is something
Related moments
Claim◆Video · 54:10 · 2m
Frontier AI labs are caught in a 'capex trap' where massive data-center and compute spending forces them into a 'toll road' business model that charges for every use of the model, and this won't survive competition from cheaper open alternatives like Chinese models.
Zeve Farman · The Cognitive Revolution
Claim◆Video · 54:10 · 2m
Closed AI labs are trapped by their own capex spending into building 'toll road' business models that charge for every use of their models, but this approach won't survive competition from cheaper Chinese models and open alternatives, so LTX offers free use up to $10M revenue with predictable licensing after.
Zeve Farman · The Cognitive Revolution