The frontier labs' call to 'pace the frontier' of AI — endorsed by Anthropic and OpenAI — is performative: these companies have no intention of slowing down, and the real motives are virtue signaling, CYA liability-shifting, regulatory capture (Dario wants an FDA for AI), RSI groupthink among elite engineers, and above all 'monopoly masking' — a two-company duopoly that wants to pretend the market is far more competitive than it is.

Well, look, I mean, it wasn't just Anthropic employees signing the letter. Anthropic itself, the company ended up signing the letter and then OpenAI then copied them. So now you have these two companies both endorsing a pause. And here's my question is, did they disclose in their S1 as a risk factor that they plan to pause or slow down their Frontier model development? And the answer, I'm sure, is no way because that would signal to investors that they're going to allow all their competitors to catch up and erode their margins and market share. And so, look, this is all performative. These companies have no intention of slowing down. And the question then is why are they doing this? And I think there's basically five reasons for this. Number one is virtue signaling, and that can never be underestimated as a as a motive in Silicon Valley. Number two is there's a CYA aspect to this, which is if something terrible happens, they're going to be able to say, 'Well, we want it to stop. You made us keep going. It's not our fault. It's your fault.' Number three is rag capture. Daario wants an FDA for AI. He's not going to stop until he gets it. And in order to get it, you have to keep spiking the cortisol and panic people. So, I think that's a big part. Number four is there's a group think or even religious aspect to this. So it's not all just sort of this calculated rate capture. I think there is sincerity to the belief. There's an elite cadre of engineers who believe in RSI. So I think this caters to them and I think arguably if OpenAI did not follow Anthropic's lead on this, they could have lost talent. So that was a big motivation. But then there's the last number five here which I would call monopoly masking which I think might be the most important thing that's happening here. Peter Teal once said that monopolies pretend to be commodities and commodities pretend to be monopolies. And I think the market for frontier AI is already a duopoly. I mean a year ago you had five major labs all in the hunt to be the leading model. Now we're really down to two. I mean the others are still investing. they're participating, maybe they can catch up, maybe they can make something happen. But again, as we've talked about on many previous shows, if you look at the market for frontier intelligence in terms of revenue and usage, it's really down to a duopoly already. It's basically anthropic and open AI. And my view is that as Peter said, when you're in that situation, you want to pretend like the market is much more competitive than it is. And I think this is behind a lot of the stories that we see like the the panic over Kimmy K3. In a weird way, these companies have an incentive to promote the idea that Kimmy is a huge threat, that it's caught up with the frontier, that it's stealing their IP, that it could basically put them out of business. I think this is all nonsense. I think that once the panic passed, you saw reports coming out that actually no, Kimmy is it did not reach the frontier. It's it's just not at that level. It's not that cheap to run. Actually, it's pretty expensive to run. So, I think that you saw that actually the Chinese open source models are not an existential threat to this duopoly. But I think the duopoly actually has an incentive in promoting or amplifying that story because again they want to pretend to be commodities. So, whenever there is a story like this, you have to think about well, what's really going on here? And again, I just think that the the AI duopoly has a big incentive to promote anything that suggests that they're not actually in complete control of this market.

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