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on Gopher (inofficial)
HTML Visit Hacker News on the Web
COMMENT PAGE FOR:
HTML Microsoft needs to open up more about its OpenAI dealings
1vuio0pswjnm7 wrote 9 hours 28 min ago:
Text-only:
HTML [1]: https://assets.msn.com/content/view/v2/Detail/en-in/AA1Pg1O4/
Razengan wrote 11 hours 45 min ago:
We should be more worried about OpenAI forever twisting the word "Open"
the same way as the "Democratic"/"Republic" in the names of countries
like North Korea etc.
HWR_14 wrote 17 hours 52 min ago:
The most valuable thing MS gets from its OpenAI dealings is that they
can incorporate its AI in all their products. If you look at it as a
defensive move to protect the value of Office, Windows, etc. from an AI
focused competitor it's worth absorbing the losses. But try showing
that on a balance sheet!
Plus, of course, if OpenAI makes money, that's also good for them.
raw_anon_1111 wrote 19 hours 4 min ago:
I always had a critical eye on the huge missteps that Microsoft had
especially when it came to acquisitions like Danger, Nokia, whatever
the ad network they bought and wrote down, etc.
And then I listened to an Acquired podcast about Microsoft when they
interviewed Ballmer as part of the research. He said âAt the end of
the day, it was only moneyâ. In other words, Microsoft was throwing
off so much money from their profitable businesses, they could afford
to lose money and take risks without it having any meaningful impact on
the company.
The deal with OpenAI is really a nothingburger as far as cash. They
arenât spending any. They are giving OpenAI Azure credits and in
return have a huge upside potential.
lukeschlather wrote 18 hours 10 min ago:
Yeah I find it really funny how companies are being lambasted
essentially for investing in R&D. How dare they put money into
anything that isn't guaranteed to yield profits this year! It's
positively anti-capitalist!
sxndmxn wrote 19 hours 12 min ago:
No they don't
agigao wrote 19 hours 41 min ago:
Tim Berners Lee: during .com bubble, companies were high on marketing
and low on profits.
jonny_eh wrote 17 hours 4 min ago:
Like Amazon?
odie5533 wrote 19 hours 51 min ago:
Microsoft won't even publicly say how much they paid to help demolish
the East Wing of the White House.
HTML [1]: https://www.cnbc.com/2025/10/23/trump-white-house-east-wing-ba...
jpadkins wrote 19 hours 25 min ago:
Note on how to spot propaganda: use of the phrase "demolish the East
Wing..." is used to get an emotional effect, instead of the more
factual "build a new ballroom for the White House" statement.
platevoltage wrote 15 hours 44 min ago:
Let's say he was demolishing the whole White House, and was
replacing it with a high rise, with his name in gold letters on the
outside. Would the headline be "Trump expands White House. It's now
bigger and better!". Or would it be that Trump destroyed a historic
building that he had no right to destroy?
Maken wrote 18 hours 1 min ago:
Is it really just a ballroom? I see few people mentioning the East
Wing was actually covering the White House's underground bunker.
Maybe Trump wants a more future-proof nuclear refugee.
pests wrote 17 hours 35 min ago:
Maybe Iâm mistaken but I thought I had read somewhere that
nukes are now so powerful that bunkers donât really work, even
Cheyanne Mountain not considered safe anymore. If so, not sure if
thatâs a possible upgrade.
keanebean86 wrote 8 hours 21 min ago:
They can gate to the alpha site if the danger is serious
enough.
hitarpetar wrote 18 hours 15 min ago:
I get it, it's hard to wrap your head around two statements being
true at the same time
HaZeust wrote 18 hours 29 min ago:
de·mol·ish -
/dÉËmäliSH/ -
verb -
pull or knock down (a building).
----
Picture of the East wing today: [1] ----
This isn't hard.
HTML [1]: https://ichef.bbci.co.uk/ace/standard/1024/cpsprodpb/2089/...
jpadkins wrote 14 hours 19 min ago:
Yup, demolishing is the first step in renovation. You are right,
this isn't hard. This is the weirdest topic for globalists to
use in their anti-Trump rhetoric. It just makes you look
desperate.
HaZeust wrote 8 hours 20 min ago:
Yawn. Nonetheless, glad we agreed on demolishment - it's hard
to get any of that from you guys these days.
sealeck wrote 19 hours 14 min ago:
Glad that every statement of personal opinion is now
"propaganda"...
jpadkins wrote 15 hours 42 min ago:
This isn't a subject that needs opinions. "Microsoft donated to
a new ball room for the east wing of the White House." is a
neutral, factual statement.
nicce wrote 19 hours 14 min ago:
Context matters. White House has history and the wing was
defenitely demolished.
Whether you want to hide it and ignore the history and praise the
ballroom, you alternatively omit the demolish part. Propaganda
works for both ways.
jpadkins wrote 15 hours 43 min ago:
[1] [2] It is obvious that demolishing is the first step in new
construction, and has been done before to the White House. You
can't give all the context in a single sentence. You can avoid
bias or wording that attempts to sway the audience (propaganda).
There is no praise or value judgement on the ballroom. The
neutral PoV statement is "Microsoft donated to a new ball room
for the White House east wing."
HTML [1]: https://www.whitehousehistory.org/collections/president-...
HTML [2]: https://en.wikipedia.org/wiki/White_House_Reconstruction
KaHasjG wrote 19 hours 15 min ago:
No, it is humorous. Everyone knows the story and there is literally
a link to a publication owned by one of the other donors (with full
disclosure).
I mean, it would have been possible to examine the birthday letters
of Myhrvold and Trump and a couple of Trump quotations to put the
financing into context.
throwaway13337 wrote 19 hours 52 min ago:
Does Microsoft even have an OpenAI stake? Their original more public
deal was revenue sharing up until they reached 100x $1 billion. That
doesn't sound like a stake.
They also had tech sharing valid until the OpenAI board declares 'AGI'.
That seems like a really bad deal. And that was probably at the time
when Microsoft had the most leverage to make a deal. Their subsequent
deals would make sense to be worse.
HWR_14 wrote 18 hours 3 min ago:
OpenAI and MS have been negotiating about turning that into a
straight percentage of equity.
financetechbro wrote 19 hours 33 min ago:
They have a very creative investment structure but they do own a
stake in OpenAI. Itâs just sounds more like a commercial agreement
the way it was laid out, which primarily has to do with OAIs
organizational structure
throwaway13337 wrote 19 hours 28 min ago:
If the deal is still based around capped revenue, I wouldn't call
it an ownership stake.
As far as I know, they have not disclosed it. If you have more
information about something concrete regarding ownership, I'd love
to hear it. Maybe I haven't understood everything that was stated.
In the end, whatever Microsoft has is probably less valuable than a
sizable ownership chunk that most people seem to assume.
I imagine a lot of people are investing in Microsoft as a proxy to
OpenAI. Those people are set to be disappointed.
pluc wrote 20 hours 39 min ago:
Microsoft and open... I know kids these days don't bother learning the
story of things but... that's a hard sell.
BolexNOLA wrote 20 hours 54 min ago:
Maybe I just donât know this writer very well but this is a
surprising take to see on the WSJ
JCM9 wrote 21 hours 17 min ago:
Companies have a lot of tools at their disposal to hide things on their
balance sheet for a while. However when that happens it typically means
the numbers are bad. Really bad. If they werenât, theyâd do
everything they can to highlight how great the investment is going.
Same reason why seemingly every CEO on the planet is making hand wavy
statements about how their company is leading with AI and it will
revolutionize their industry, and yet almost nobody is willing to break
out this amazing stuff in their P&L. Funny how that works.
afavour wrote 18 hours 0 min ago:
I wonder if this is how it felt shortly before the dot com crash. So
enraging that my livelihood is likely to end up threatened by people
just flat out lying and they will not experience any consequences for
it.
JCM9 wrote 14 hours 52 min ago:
âIrrational exuberance.â
There are parallels here of folks getting so caught up in the hype
that they forgot business fundamentals. Everytime folks say âbut
this is differentâ and every time itâs not.
CamperBob2 wrote 14 hours 17 min ago:
It's certainly different this time; machines have never been able
to do anything like what they can do now. You might as well
argue that the Industrial Revolution or the Internet itself
wasn't "different this time."
But the phrase "this time" requires a lot of hand-waving. The
current generation of models is obviously a bubble, which means
that businesses based on them are also participants in a bubble.
The market seems to be pricing in various unspecified future
miracles. Given the history of AI to date, the miracles needed
to justify current valuations might arrive next week, next year,
or 30 years from now.
They will arrive, though. That part is no longer up for debate
by anyone who's been paying attention since AlphaGo, never mind
Vaswani.
afavour wrote 11 hours 7 min ago:
But that isnât different than previous bubbles, either. The
first dot com crash was an over investment in online shopping.
And yet we all online shop for everything now. Same with the
video games crash in the 80s, now a wildly successful industry.
andsoitis wrote 19 hours 24 min ago:
> Companies have a lot of tools at their disposal to hide things on
their balance sheet for a while. However when that happens it
typically means the numbers are bad. Really bad. If they werenât,
theyâd do everything they can to highlight how great the investment
is going.
There are many legitimate reasons to not disclose an investment on
your balance sheet:
- materiality: immaterial compared to overall position
- classification: research-phase or contingent on future event
- control & ownership: if you don't have significant control or
ownership
- off-balance sheet arrangements: SPVs, JVs, lease agreements that
don't meet consolidation criteria (disclosed in notes, but not
recognized as assets or liabilities due to limited exposure)
- strategy or confidentiality: minimize visibility to protect
competitive information or negotiations; must still comply with
disclosure rules so details might appear in aggregated or summarized
form
- regulatory or accounting policy differences: IFRS vs. US GAAP have
different recognition and measurement bases
- held-for-trading or short-term nature: e.g. marketable securities
might be short-term trading assets so would be grouped together in a
single line item, rather than disclosed separately
fluidcruft wrote 18 hours 20 min ago:
Sounds like you are suggesting there are a lot of legitimate
reasons to mislead shareholders. OpenAI is private and that's one
thing. Microsoft is not.
JCM9 wrote 19 hours 17 min ago:
Yes. The point of the article though is that the list of usual
excuses is becoming hard to justify here.
niwtsol wrote 19 hours 28 min ago:
AWS is a great example of the opposite, started around ~2006, it was
originally deemed an "internal project" so they did not break it out.
It was also really really tiny compared to retail revenue
(amazon.com). They didn't actually start to break it out until 2015
and that is after wall street was somewhat demanding for it as it was
well known it had experienced exponential growth and was generating
billions for amazon. Were they trying to had bad numbers? Negative,
they were trying to hide how awesome it was doing because it gave
them the ability to make further gains w/ first mover advantage
before competitors could react.
HTML [1]: https://www.channelfutures.com/cloud/amazon-com-breaks-out-a...
manquer wrote 16 hours 21 min ago:
It wasnât the opposite .
By 2015 they were trying to hide how much of the group growth and
profits were largely contributed by just AWS , i.e. they were
hiding the e-commerce margins .
Without AWS and subscriptions, Amazon is quite an unprofitable
company.
Both overall growth and margin driven by AWS(and prime) while
E-commerce revenue remains outsized because they count GMV as
revenue which is iffy even when they own the merchandise, but being
largely a marketplace these days GMV is very misleading metric.
It would be like Stripe decided to count their revenue as $1.4T the
amount they processed this year as revenue rather than $10-20B they
actually got after paying the banks, merchants , VISA etc . This
20B is not profit either just the pie from which salaries cloud
costs etc have to be paid to get to actual profit.
JCM9 wrote 14 hours 58 min ago:
Correct. It wasnât a secret that AWS was profitable. Revealing
those numbers put a lot more pressure on Amazon to get other
business lines in better shape financially. Something Amazon was
keen to avoid for as long as it could.
bcrosby95 wrote 18 hours 21 min ago:
The difference is Amazon was being quiet about AWS, whereas
everyone is hyping up how game changing their AI is.
JCM9 wrote 19 hours 8 min ago:
Fair. There are counter examples, although those are pretty rare.
Usually publicly traded companies donât hide when theyâre doing
really well.
The inverse true now with AWS. Lots of press about analysis on how
AWS is in âlast placeâ on AI and while AWS leadership has been
doing a lot of hand waving to say theyâre not, itâs a pretty
safe bet this weekâs earnings call wonât have any hard
financial numbers to counter press that theyâre way behind.
JustExAWS wrote 18 hours 59 min ago:
In the grand scheme of things it doesnât matter. As long as
companies are building infrastructure on AWS and AWS can host
third party models like itâs doing now with Bedrock.
In my experience - and Iâve run comparisons against the various
models for projects (consulting) - their in house Nova models
usually give me the best results on the spectrum of
speed/quality/cost I need for a given project.
brookst wrote 20 hours 39 min ago:
I think youâre calling out two different phenomena: 1) the gold
rush mentality leads to bad investments (at least in the short term),
and 2) in a hype bubble companies are incentivized to attach
everything to the hype, even if itâs not real (many companies talk
AI but arenât seriously investing).
Both are true in many cases. But to the extent companies are making
major investments that are strategically correct but wonât make
money for years, itâs still the right move to hide stuff in
financial statements.
Markets donât reward long term investments. Everything has to be
short term, and if itâs not paying off instantly, short term
investors get no value and want it stopped.
Net result: lots of PR about AI, but almost every company is
incentivized to downplay it financially.
JustExAWS wrote 18 hours 57 min ago:
That opinion really doesnât jibe with all of the money âthe
marketâ is putting into money losing AI companies with no hopes
of profitability in the near future or - Tesla.
Yizahi wrote 19 hours 57 min ago:
IF said investments are strategically correct (considering their
amounts). A few years bck companies were making strategic
investments in the VR/AR/XR goggles, on a bet that tech would
become cheaper in a few years while quality would improve
dramatically. And they were correct in the price and quality
aspects. But they were fundamentally wrong strategically, regarding
millions of people wanting a display semi-permanently strapped in
their visual area. Apparently not many people want it and even less
need it, which was drastically different from the mode of work of
CEOs, which is to always move and issue commands while
walking/driving etc. Same story with multiple failed voice
assistants.
adventured wrote 20 hours 23 min ago:
> Markets donât reward long term investments. Everything has to
be short term, and if itâs not paying off instantly, short term
investors get no value and want it stopped.
The AI investment bubble is almost entirely about making long-term,
extremely expensive investments. That's what the gigantic
datacenter build-out is about, not short-term investments and
short-term returns. They're telling everybody, persistently, that
they're making huge long-term bets, and the market is rewarding
them like crazy. See: Oracle's run due to long-term bets on AI
(it's certainly not short-term results causing the stock to do
that, their short-term growth has been mediocre).
Amazon for two decades repeatedly told investors they were making
extremely expensive, long-term investments in build-out (eg their
fulfillment build-out era), where the primary payoff would be far
into the future. The market bought into the long-term on the basis
that it was attached to Bezos at the center (that he'd be there to
deliver that long-term result). The same is true about Elon Musk
with Tesla: they have endlessly made outlandish long-term
proclamation to drive their stock. Tesla: robot super business,
self-driving taxi business, et al - these are 10-20-30 year
long-term claims by Tesla and the market has aggressively rewarded
it. That's because they think Musk will/might be there to guide it
to actuality. In most cases investors don't buy in because they
know the CEO & team won't be around even seven years from now.
Markets (investors) reward long-term if they can be made to believe
in the long-term. The issue is that most companies are not
believable on long-term statements, they don't have a leadership
that will be around for any long-term delivery. Buffett, Bezos,
Musk, Zuckerberg were/are long-term attachments so the market has
been willing to buy in on various long-term bets.
JCM9 wrote 19 hours 49 min ago:
Agree on the long term concept, but thereâs little comparison
between Amazonâs early years and now. Amazon spent money on
tangible capital infrastructure that was highly differentiated
and long lasting (fulfillment centers, logistics networks). That
costs a ton up front but can be used for decades. Folks struggle
to compete with Amazon now because that infrastructure is a giant
physical logistics moat thatâs not easily replicated.
The AI bubble is far from that. Companies are spending tons on
GPUs that have limited lifespan, building models that have
limited lifespan, using algorithms that are all basically the
same, in a space where someone can dump a âgood enoughâ open
source model on the market and blow up your business overnight.
Thereâs very little lasting value in whatâs being built and
the âweâre investing for the long termâ arguments donât
hold much water. Itâs like saying youâre investing in real
estate but then you keep tearing down the building and rebuilding
it every 18 months. That just doesnât work.
There might be some longer term fungible value from some of the
baseline infrastructure investments (data centers, electrical
upgrades) but those are undifferentiated and highly fungible.
JCM9 wrote 20 hours 32 min ago:
Youâre not wrong, but the point of the article is that for a
publicly traded company thereâs an expectation of more
transparency. The size of the losses is getting to a point where it
canât just be kept hidden inside a handwavy âotherâ line
item.
jgalt212 wrote 20 hours 42 min ago:
> Companies have a lot of tools at their disposal to hide things on
their balance sheet for a while.
That's why some analysts ignore most company-provided metrics and
just focus on cash-flow. You need inside and outside of the house
fudgers to mess with that metric.
actionfromafar wrote 15 hours 58 min ago:
But isnât there some of that? Microsoft buys services for prices
it might influence the sticker price of
zerosizedweasle wrote 21 hours 1 min ago:
Even if this isn't Enrony, this sounds so Enrony (if you know
anything about the Enron accounting scandal)
"How Microsoft has managed to avoid disclosing such basic details is
baffling. The company in its financial reports identifies OpenAl as
an equity-method investment. That means OpenAl, by definition, is a
related party of Microsoft under the accounting rules. Microsoft,
however, doesn't identify OpenAl in its financial reports as a
related party, and doesn't say anything about its transactions with
OpenAl in its related-party disclosures."
philipwhiuk wrote 19 hours 27 min ago:
A play about Enron's financial scandal was recently back showing in
London.
Feels somewhat prescient.
moralestapia wrote 20 hours 29 min ago:
AFAIK Microsoft didn't put any kind of liquid money into OpenAI,
it's something like "you can use up to nB USD of our resources for
free", not sure how that should go into accounting. It could even
be a liability without much juggling.
JCM9 wrote 19 hours 57 min ago:
Accounting mostly focuses on the value of things, not âliquid
money.â
otterley wrote 17 hours 11 min ago:
A cash-flow statement does exactly that.
moralestapia wrote 19 hours 31 min ago:
[flagged]
jasomill wrote 16 hours 30 min ago:
IANAA, but AFAIK income from bartering is taxable on the
basis of the fair market value of the goods or services
bartered at the time of exchange.
JCM9 wrote 14 hours 49 min ago:
Yes. You donât need to be moving $ to have a profit or
loss. You could take your salary in sacks of potatoes. You
still owe the government taxes on the fair market value of
your pile of potatoes.
A while back there was a big fuss because executives were
caught not paying tax on the fair market value of extra
perks they were getting like use of the corporate jet on
the weekends for trips to the beach house. Anything
thatâs not purely a business expense is considered
compensation and is taxable.
tiahura wrote 18 hours 41 min ago:
0
zerosizedweasle wrote 20 hours 26 min ago:
Yeah, Enron didn't really put any money into its related parties,
it just used to them to move things around. I don't think it is
Enron, but related parties shenanigans give me the chills.
KoolKat23 wrote 20 hours 48 min ago:
If its equity accounted it won't be considered a related party as
far as I understand. Related party in IFRS isnt what you think it
is. Its the equivalent of "extended family".
kgwgk wrote 20 hours 21 min ago:
[1] 26.5 Common related party transactions
In order to comply with the related party disclosure
requirements, a reporting entity must identify all of its
transactions with related parties.[â¦]
26.5.1 Disclosure of related party equity method investments
Equity method investees are, by definition, related parties of
the equity holder.
HTML [1]: https://viewpoint.pwc.com/dt/us/en/pwc/accounting_guides...
KoolKat23 wrote 11 hours 48 min ago:
It's not a related party that's the point.
kgwgk wrote 3 hours 22 min ago:
âEquity method investees are, by definition, related
parties of the equity holder.â suggests otherwise. You may
need to elaborate your point.
isolay wrote 21 hours 36 min ago:
They can open up all day long, I still don't want them forcing "AI"
down my throat.
neonate wrote 21 hours 41 min ago:
HTML [1]: https://www.msn.com/en-us/money/companies/microsoft-needs-to-o...
thisisauserid wrote 21 hours 42 min ago:
Oh, so they did lay people off because of AI.
raverbashing wrote 21 hours 54 min ago:
"How is it a write-off?"
"They just write it off."
"Write it off what?"
"Jerry, all these big companies, they write off everything."
Deegy wrote 19 hours 40 min ago:
You don't even know what a write-off is do you?
cruffle_duffle wrote 19 hours 4 min ago:
I love that bit. So many people think write offs mean you get the
thing for free somehow. No, no you do not get the thing for free.
latexr wrote 21 hours 49 min ago:
HTML [1]: https://www.youtube.com/watch?v=XEL65gywwHQ
_sword wrote 21 hours 57 min ago:
This is a silly article. Since MSFT took a ~49% stake in OpenAI, it
records its share of OpenAI's net losses in the other income line under
the equity method of accounting. MSFT is offsetting its taxable income
based on a prior investment
bunderbunder wrote 19 hours 53 min ago:
The complaint is not that MSFT is reporting the loss. It's that, in
terms of both the % of OpenAI and the dollar value of the stake, it's
large enough that there should also be a related party disclosure.
IANAA so I don't know how true that is. Just wanting to point out
that I don't think you're responding to the key point of the article.
logankeenan wrote 21 hours 9 min ago:
Can you elaborate on this a bit more? Does that mean OpenAI had a
~$9.4 billion loss so MSFT needs to put 49% of that loss in their
books?
KoolKat23 wrote 20 hours 40 min ago:
Yes
toxic72 wrote 21 hours 44 min ago:
I always chuckle when tech writers take a stab at financial
statements
HaZeust wrote 18 hours 32 min ago:
Anything else you can add to the conversation?
zerosizedweasle wrote 21 hours 36 min ago:
Heard on the Street is the financial side of the WSJ.
bunderbunder wrote 17 hours 42 min ago:
Moreover, the author of this article is the reporter who first
reported on Enron's sketchy accounting:
HTML [1]: https://en.wikipedia.org/wiki/Jonathan_Weil
financetechbro wrote 19 hours 35 min ago:
This is a funny sentence bc I consider the WSJ to be a financial
news source in general
zerosizedweasle wrote 19 hours 16 min ago:
It's from the financial side of a financially focused paper.
exasperaited wrote 22 hours 0 min ago:
But hey they are betting on optimism!
choudharism wrote 22 hours 1 min ago:
They're doing hundreds of billions of revenue a year, a one-off 4.7B to
OAI honestly sounds like nothing on that balance sheet.
sealeck wrote 19 hours 12 min ago:
This sounds like a terrible approach to accounting. Surely large
public companies should account for their expenditure at greater
fidelity than billions.
an0malous wrote 21 hours 51 min ago:
Reuters says $12B:
HTML [1]: https://www.reuters.com/business/openai-hits-12-billion-annu...
newsclues wrote 21 hours 39 min ago:
Microsoft did $245B in revenue in 2024.
an0malous wrote 18 hours 24 min ago:
Oh sorry, I misread the parent
JCM9 wrote 22 hours 2 min ago:
The real story will be when companies report valuation losses from
their investments in AI companies after the bubble bursts, or even
deflates a bit.
Expect lots of hand wavy ânon-GAAPâ numbers pushed by leadership
trying to gloss over their failed AI investments.
Thatâs earnings call speak for âIf you ignore the pile of your
money we lost with bad AI investment decisions, weâve had a good
quarter. Moving onâ¦â
bwfan123 wrote 16 hours 28 min ago:
I am surprised and glad that journalists are reporting on this.
OpenAI is the hinge in the whole AI bubble, and it has every
incentive to keep its financials private if it is not very
flattering. So, thats the place to look for funny business -
specially given their outlandish and provocative announcements of
16GW of datacenter buildouts which defies economic sense and demands
more scrutiny.
alangibson wrote 21 hours 42 min ago:
Most of these data centers are built with special purpose vehicles to
make the balance sheet look better. Imagine the gnashing of teeth
when those get written down
JCM9 wrote 21 hours 36 min ago:
Yes⦠a lot of this is pretty hidden on the balance sheets but
eventually GAAP catches up one way or another.
elif wrote 22 hours 3 min ago:
This is exactly why I am telling people the AI bubble is different. It
is not poppable, even if it's size is bigger than other bubbles.
Megacorps control so much of them that the financial side has so little
volatility.
elif wrote 18 hours 19 min ago:
It's wild that I get down voted like I'm advocating for it while I'm
clearly calling out the hazards of megacorporate power
JCM9 wrote 21 hours 34 min ago:
Fair point that thereâs less direct retail investor exposure than
there was with the dot-com implosion, but I donât think many folks
believe this bubble is non-poppable. Even megacorps canât just keep
inflating it forever if no viable business model for AI materializes
elif wrote 18 hours 15 min ago:
"no viable business model for AI materializes"
Literally every aspect of commerce is exposed and the costs are
arbitrarily scalable and diminishing over time.
I'm really curious for you to elaborate on this world where AI
progress is a dead end in the evolution of man or intelligence
alangibson wrote 21 hours 41 min ago:
No seriously this time line really will go up forever guys.
techblueberry wrote 21 hours 10 min ago:
I donât know about forever, but thereâs a reason all these
companies gave so much money to Trump. I think it can keep going
up a while.
alangibson wrote 19 hours 44 min ago:
I figure it's at least a couple of years until the Great
Disappointment sets in. When you've been investing half a
trillion a year with no realistic hope of a descent ROI, you'll
do anything you can to not admit your error.
mrbungie wrote 20 hours 3 min ago:
I've heard that one too!, but seriously, it could keep going for
a while.
Mistletoe wrote 21 hours 43 min ago:
Would you say we are in a New Paradigm?
HTML [1]: https://transportgeography.org/contents/chapter3/transportat...
elif wrote 17 hours 45 min ago:
I've got, and you likely as well, a lifetime ouvre which shows that
dot com was, in fact a new paradigm.
Mistletoe wrote 11 hours 0 min ago:
We were entering a new paradigm, but the price took about 13
years to recover after 2000. Price can get very far ahead of
reality, even at the cusp of a new paradigm. The bubble chart is
about the price.
HTML [1]: https://fred.stlouisfed.org/graph/?g=zR9T
ReliantGuyZ wrote 17 hours 5 min ago:
Yes, but it took 15 years after the bubble popped for life via
internet to really cement for our society in a broader sense. The
bubble mechanics still played out, even if the ultimate result
was a new paradigm.
conartist6 wrote 21 hours 50 min ago:
Hahahaha, that's the spirit. We're invincible. Unsinkable. Nothing
could ever stop the music : )
marbro wrote 17 hours 8 min ago:
By analogy, think about the government. They've been printing money
since August 1971, the price of gold has increased from $35 to
$4000, and people still accept dollars rather than gold, and even
Switzerland sold their gold because they believe that paper money
is better. THe party can last forever!
zerosizedweasle wrote 22 hours 7 min ago:
How is it already losing that much money on its OpenAI investment?
mosura wrote 21 hours 13 min ago:
The other commenters in here oblivious to the history of companies
like Amazon and Google.
Profit is what you have when you have no confidence in how to
reinvest what you earn already.
JCM9 wrote 21 hours 58 min ago:
OpenAI is a textbook example of having fun by burning cash. Nobody
doubts itâs âcool.â Lots of people questioning if thereâs an
actual business there.
lukeschlather wrote 18 hours 13 min ago:
I definitely think fundamental research is fun, I think it's
unfortunate that people are so focused on quarterly profits that
they think Microsoft shouldn't be investing in fundamental
research. And are deriding it as "cool" as if that were a bad
thing.
justsid wrote 6 hours 54 min ago:
That's not how any of this is sold though. Google did a lot of
fundamental research quite publicly in this space for many years,
and people were generally quite favourable of this and didn't ask
to see insane revenue from it (yet). But Microsoft is not doing
that, not even by proxy of funding OpenAI. They are selling it as
the greatest business thing ever, so where are the numbers to
back that?
tcmart14 wrote 5 hours 4 min ago:
Not to mention also shoving it into every product even without
a solid reason or use case for it. Microsoft has been making AI
the focal point of everything they do recently. Google spend
years investing in fundamental research into AI while not
making it the focal point of everything they did.
justapassenger wrote 16 hours 18 min ago:
You can invest in a fundamental research without investing in a
company creating tons of weird circular financial deals.
datavirtue wrote 18 hours 33 min ago:
Microsoft already has a new business out of the deal. OpenAI can
now be extinguished at the earliest convenience.
impossiblefork wrote 21 hours 13 min ago:
I think it makes Microsoft feel bigger though.
If Microsoft were just Windows, Teams, Azure, Bing and whatever it
is, Microsoft would actually feel like a competitor for firms like
Canonical or Red Hat or SUSE which happens to be big but nothing
special relative to the others, whereas it now, with with this very
public service feels like a behemoth.
noir_lord wrote 19 hours 53 min ago:
I think you might be right but the other side of it is that
Microsofts business outside of AI is mature other than their lock
on the windows desktop you listed the others :-
Windows competitors are OSX (and the very good Apple hardware),
Linux (which thanks to Valve is gaining users at an increased
rate).
Teams competes against Slack/Discord
Azure competes against AWS/GCP.
Bing "competes" against Google Search
While they do have a share of each (and a big share of the
desktop) they don't really have anywhere they can grow, they've
filled their existing niches and are competing with other equally
sized companies in all of them.
So spaffing some cash on AI on the off chance it pays off down
the line might look smart.
Hell if AI does pay off then they look good and if it doesn't,
it'll look bad for everyone who invested and they can at least
shrug off the cash hit.
Insanity wrote 20 hours 57 min ago:
Huh, thatâs a funky statement because having âAzureâ, one
of the largest Cloud Providers outside of China is definitely a
different camp than Canonical, Red Hat and SUSE.
Although I donât particularly like their cloud services they
are undeniably an important part of Microsoftâs business. (And
they also own a large chunk of the gaming industry nowadays).
impossiblefork wrote 20 hours 32 min ago:
Yes, of course those things are huge, but I was focused on
perceptions.
Suddenly Microsoft has gone from being some software to being
everywhere. I know that Azure is huge, but you don't see Azure.
BolexNOLA wrote 20 hours 52 min ago:
>(And they also own a large chunk of the gaming industry
nowadays).
Theyâre shuttering half their studios, cancelling half their
games, and firing game devs by the thousands as they hand halo
over to PlayStation lol. Youâre technically right but they
clearly arenât taking that part of their business seriously
anymore. IIRC Gamepass has plateaued on subscribers for years
now even prior to their very aggressive price hikes over the
last 18 months.
I saw an article the other day that said Microsoft is telling
developers they have to have a 30% return on their games, which
is almost double the industry standard. Thatâs just absurd.
Edit: worth mentioning that you have people openly speculating
at this point that they might not even make another Xbox. Iâm
not quite in that camp, but I also think it is a distinct
possibility given the back slide they are clearly in right own
when it comes to gaming. Fun fact: Itâs been 4 console
cycles, almost 25 years, since we saw a major player drop out.
alexjplant wrote 19 hours 42 min ago:
> firing game devs by the thousands as they hand halo over to
PlayStation
They kind of took it from Apple to begin with. We almost had
Halo on the iMac before Microsoft acquired Bungie [1]
HTML [1]: https://www.youtube.com/watch?v=6eZ2yvWl9nQ
BolexNOLA wrote 19 hours 17 min ago:
Very familiar with that actually! Apple abandoned halo and
Bungie, desperate for money, signed with M$. Hence the
change 3rd to 1st person!
alexjplant wrote 19 hours 8 min ago:
I'd no idea about this... any good additional reading?
I'm a big Marathon fan and will likely try and finish
Infinity over the holidays.
BolexNOLA wrote 17 hours 31 min ago:
Iâm going to try and find a good source on it but the
short version is that Bungie was in deep financial
trouble and approached Apple for an acquisition. Jobs
didnât want a video game company as part of their
core business as it was not the future he saw for the
company, but Microsoft was willing to make that deal,
so Bungie went with that for the security. Jobs was
pissed but ultimately he passed on an acquisition they
felt was necessary for survival.
Maken wrote 17 hours 12 min ago:
And Jobs was probably right. Apple was a bad fit for
Bungie (and games in general). There is a reason
Marathon is virtually unknown when it was one of the
best "Doom clones" of the era.
BolexNOLA wrote 14 hours 49 min ago:
Yeah I agree with it too - plus they were hurting
financially, thatâs a lot of risk to assume. And
frankly what we got with FPS halo seems way better
to me anyway. Itâs hard to imagine the Apple
version wouldâve been a better game, but
admittedly I am speculating.
Insanity wrote 19 hours 59 min ago:
Yeah, you're right on all those fronts.. but they do own some
large IP like Call of Duty which will continue to generate
money for them for the foreseeable future.
I did hear the speculation about Xbox as well and I hope it's
not true. I quite like the Xbox as a console (Series X was
the first one I bought, used to be on PlayStation before
that). Competition is good for the console space, and
Nintendo and PlayStation aren't really competitors IMO. The
audience for Switch and PS/Xbox isn't the same.
BolexNOLA wrote 19 hours 15 min ago:
Yeah Iâd be bummed too. I think they were on to something
with the Series S (my Xbox currently) in particular but
they blew whatever interest they had at the start. For $300
itâs been a fantastic investment, even though itâs
collecting dust now.
mandeepj wrote 22 hours 4 min ago:
You may not be following OA for a while! Theyâve never turned a
profit. So, someone on the other side has to lose for them to stay
afloat!
whiplash451 wrote 21 hours 29 min ago:
To be fair, MSFT is likely making a ton of money (or more likely,
preventing churn) with their GPT-powered products for the
enterprise.
So the math is probably harder than it seems.
tcmart14 wrote 4 hours 56 min ago:
Would be totally a guess since as mentioned, they are not being
too forth coming. But chances are, the inclusion of GPT into the
products probably did not make those products any more profitable
than before, and just make them more expensive to run. Everyone
who would buy Sharepoint/dynamics 365 already has it. I doubt
they saw a massive influx to the user base of these tools due to
GPT. Have you heard of a massive influx of new Windows license
being bought because og co-pilot? No, its just the normal churn
of people upgrading their machines they were probably gonna
upgrade soon anyways.
The exception might be Azure with their LLM services.
cube00 wrote 19 hours 44 min ago:
Nobody really knows, they hide Copilot inside each of the
business units and then claim it's too hard to split out.
A_D_E_P_T wrote 21 hours 38 min ago:
They're in a tough place with respect to pricing. Qwen3 and
DeepSeek's latest local models are too good and are practically
free -- so if they try and jack up pricing to a level that ensures
profitability, it won't work, as they're simply going to lose too
many customers.
There's a mechanism here similar to a Laffer Curve: Charge too
much, they lose; charge too little, they lose. OAI needs to strike
a delicate balance vs. surging low-cost competition.
Mistletoe wrote 21 hours 45 min ago:
Surely nothing bad could happen by basing our entire economy and
stock market health on these companies!
mrweasel wrote 21 hours 52 min ago:
> Theyâve never turned a profit
Now that OpenAI is starting to talk about ads and allowing "erotic"
content, I feel more comfortable in my prediction that not only
have OpenAI never turned a profit, they never will. They will be
consumed by Microsoft or crash the market so hard it's not even
funny. The technology will survive, and it will be useful, but
OpenAI as a company is done.
throwaway314155 wrote 15 hours 48 min ago:
> OpenAI is starting to talk about ads and allowing "erotic"
content
I'm curious what you're referring to here. Did Sam Altman tweet
something about this?
wongarsu wrote 20 hours 39 min ago:
Just based on the number of ads I get for thinly veiled erotic
chatbots, and the success sites like character.ai have with
pretty bad LLMs, there has to be a lot of money in erotic LLM
content. OpenAI turning to that market is a sign they are running
out of easy investor money, but if they can survive the
associated controversy without lobotomizing the models this
sounds like a method to turn the entire company profitable over
night. They might have to raise prices or abandon the flatrate
model to deal with heavy users, but locking adult content behind
separate plans might even increase acceptance
Not sure if increased availability of LLM porn or the gradual
erosion of LLMs with ads and sponsored content would be the
greater evil on a societal level. Neither is particularly great.
But they will certainly drive shareholder value
gosub100 wrote 20 hours 59 min ago:
Porn is enormously profitable. This might just be the saving
grace for AI. Historically, porn has been a pioneer in new tech
industries (home video, online commerce, video and streaming).
This time they aren't first to the game but don't underestimate
the industry.
cube00 wrote 19 hours 49 min ago:
It's not as profitable as the original promise of AI to cut
labour costs on a massive scale. Stockholders won't be happy.
mrweasel wrote 19 hours 55 min ago:
The saving grace here might be that you can hide your porn
subscription in your monthly OpenAI subscription. Only question
then: Will VISA and Mastercard cut off OpenAI for peddling
porn?
A quick search seems to indicate that the porn industry has a
$100B in revenue per year, 20% of which is from subscriptions.
If OpenAI consumed the entire global market for subscriptions,
$20B, would that cover their yearly operational cost?
nativeit wrote 20 hours 50 min ago:
Assuming it deals somehow with the folks who use it for revenge
porn, deep fakes of non-consenting parties, and depictions of
minorsâ¦has it said anything about doing that? Has anyone?
Does anyone know the legal implications of generating mass
quantities of sexual exploitation, or is this just another
thing with AI that society will have to simply tolerate in the
name of âprogressâ?
amarcheschi wrote 21 hours 25 min ago:
The switch from "Ai might kill us" to "you'll goon to Ai" was
kinda funny, not gonna lie
decae wrote 21 hours 17 min ago:
This may be the funniest comment I've ever read, considering
the circumstances.
ml-anon wrote 21 hours 34 min ago:
Itâs amusing how âadsâ is seen as an obvious way to make
profit for OAI as if Googleâs (especially) and Metaâs ads
businesses arenât some of the most sophisticated machines on
the planet.
Three generations of Twitter leadership couldnât make ads on
that platform profitable and that exposes far more useful user
specific information than ChatGPT.
The hubris is incredible.
HWR_14 wrote 18 hours 0 min ago:
I think ChatGPT's user info will be far more valuable than
twitters or even metas.
ml-anon wrote 17 hours 16 min ago:
Yes, all that user info such as âwrite me hot waifu
eroticaââ¦super valuable.
disgruntledphd2 wrote 18 hours 21 min ago:
Twitter executed incredibly, incredibly badly in the ads space.
It came out that a majority of their business was brand
advertising which just blows my mind.
They should've made so much money on direct response and yet
somehow they messed it all up.
Just like they should have been a few times as large in terms
of users, but they executed really, really badly.
So I'm not sure Twitters failures imply anything about OpenAIs
prospects.
ml-anon wrote 17 hours 11 min ago:
Twitter at least booked profit which is more than anyone can
ever say about OpenAI.
disgruntledphd2 wrote 30 min ago:
Eventually, yes. But they should've been huge, making
substantial fractions (50% )of Meta or Google's revenue. I
could never understand what went wrong, tbh.
nicce wrote 19 hours 11 min ago:
> Itâs amusing how âadsâ is seen as an obvious way to
make profit for OAI as if Googleâs (especially) and Metaâs
ads businesses arenât some of the most sophisticated machines
on the planet.
There is much more manipulation potential with LLMs than
typical ads. I am worried. It gets more and more difficult to
distinct ads and the neutral information.
jpadkins wrote 19 hours 19 min ago:
The court order from the Google search antitrust case gives OAI
access to Google Ads for 5 years, if they choose.
ForHackernews wrote 20 hours 31 min ago:
[1] > Thereâs a famous Sam Altman interview from 2019 in
which he explained OpenAIâs revenue model [1] :
>> The honest answer is we have no idea. We have never made
any revenue. We have no current plans to make revenue. We have
no idea how we may one day generate revenue. We have made a
soft promise to investors that once weâve built this sort of
generally intelligent system, basically, we will ask it to
figure out a way to generate an investment return for you.
[audience laughter] It sounds like an episode of Silicon
Valley, it really does, I get it. You can laugh, itâs all
right. But it is what I actually believe is going to happen.
> It really is the greatest business plan in the history of
capitalism: âWe will create God and then ask it for money.â
Perfect in its simplicity. As a connoisseur of financial
shenanigans, I of course have my own hopes for what the
artificial superintelligence will come up with. âI know what
every stock price will be tomorrow, so letâs get to
day-trading,â would be a good one. âI can tell people what
stocks to buy, so letâs get to pump-and-dumping.â âI can
destroy any company, so letâs get to short selling.â âI
know what every corporate executive is thinking about, so
letâs get to insider trading.â That sort of thing. As a
matter of science fiction it seems pretty trivial for an
omniscient superintelligence to find cool ways make money.
âCharge retail customers $20 per month to access the
superintelligence,â what, no, obviously thatâs not the
answer.
> On a pure science-fiction suspension-of-disbelief basis, this
business plan is perfect and should not need any updating until
they finish building the superintelligent AI. Paying one
billion dollars for a 0.2% stake in whatever God comes up with
is a good trade. But in the six years since announcing this
perfect business plan, Sam Altman has learned [2] that it will
cost at least a few trillion dollars to build the super-AI, and
it turns out that the supply of
science-fiction-suspension-of-disbelief capital is really quite
large but not trillions of dollars.
> [1] At about 31:49 in the video. A bit later he approvingly
cites the South Park âunderpants gnomeâ meme.
> [2] Perhaps a better word is âdecided.â I wrote the other
day about Altmanâs above-consensus capital spending plans:
â'The deals have surprised some competitors who have far more
modest projections of their computing costs,â because he is
better at this than they are. If you go around saying âI am
going to build transformative AI efficiently,â how
transformative can it be? If you go around saying âI am going
to need 1,000 new nuclear plants to build my product,â
everyone knows that it will be a big deal.â
HTML [1]: https://www.bloomberg.com/opinion/newsletters/2025-10-...
mrweasel wrote 21 hours 26 min ago:
There's an absolutely massive disconnect between the technology
Sam Altman is presenting in interviews and what is available.
Like they're going to create an AI that will design fusion
power plants, but right now they can't turn a profit on a
technology that millions of people actually use in their day to
day work? Can you sell enough ads to carry you through to the
fusion capable AI?
More and more OpenAI is drawing parallels to the Danish scandal
of IT Factory. Self-proclaimed world leading innovation and
technology in the front, financial sorcery in the back.
exasperaited wrote 19 hours 50 min ago:
"Could it be that, once again", Sam Altman is really not that
far removed from a grifter?
bee_rider wrote 21 hours 17 min ago:
If they really believe their AI is going to be so great, I
guess they can just ask it for a business model when it gets
there. So their lack of business model is at least
self-consistent.
HWR_14 wrote 17 hours 59 min ago:
I never saw it, but I heard that was the actual original
pitch deck.
bee_rider wrote 17 hours 34 min ago:
I have basically no sympathy toward them, but thatâs
cool, thatâs ballsy.
HWR_14 wrote 17 hours 14 min ago:
I should point out that making the pitch deck sound
ballsy and cool was that persons goal. So it may have
been a made up story.
exasperaited wrote 19 hours 48 min ago:
That is more or less their actual plan. They ignore or want
us to ignore that the technology is commoditising so fast
that even if it is great, they won't have enough of an
advantage for this to provide an edge for more than a
matter of months. Just as Microsoft and anyone betting on
AI data centre rollouts want us to ignore that the
equipment they are rolling out will be functionally
inadequate to support new models in far less time than they
can make money to offset the cost; the only part of this
capital expenditure that will provide lasting value is the
building/power/cooling infrastructure, and probably not all
of that.
It's a giant money pit, funding a bunch of people who are
not long off the crypto grift train if they are at all.
righthand wrote 19 hours 3 min ago:
> funding a bunch of people who are not long off the
crypto grift train if they are at all.
Your last statement: are you implying that the AI-bubble
is perhaps an attempt at building out more cryptocurrency
mining outfits?
exasperaited wrote 17 hours 44 min ago:
No I just think it's the same people (because it is the
same people). They jump from hype technology to hype
technology, and many of them had an enormous incentive
to jump from one GPU-investment-heavy technology with a
bad reputation for grift to the new
shiny-clean-hope-for-the-future thing that might help
them make use of their capital investments.
But specifically at least one of these people â Sam
Altman â- is not, IMO, off the crypto grift train,
because he's still chairman of Worldcoin, which strikes
me (and more importantly strikes regulators around the
world [0]) as a pretty shoddy operation (not to mention
creepy and weird).
[0]
HTML [1]: https://en.wikipedia.org/wiki/World_(blockchai...
cruffle_duffle wrote 19 hours 8 min ago:
The LLM space is so weird. On the one hand they are
spectacularly amazing tools I use daily to help write
code, proofread various documents, understand my home
assistant configuration, and occasionally reflect on
parenting advice. On the other hand, they are the
product of massive tech oligarchs, require $$$$ hardware,
dumber than a box of rocks at times, and all the stuff
you said. Oh yeah, and it definitely has a whiff of
crypto grift all over it, but yet unlike crypto it
actually is useful and produces things of value.
Like, where is this tech headed? Is it always going to
be something that can only be run economically off shared
hardware in a data center or is the day I can run a
ânear frontier modelâ on consumer grade hardware just
around the corner? Is it always going to be trained and
refined by massive centralized powers or will we someday
soon be able to join a peer 2 peer training clan ran by
denizens of 4chan?
This stuff is so overhyped and yet so under hyped at the
same time. I canât really wrap my head around it.
exasperaited wrote 17 hours 41 min ago:
> the day I can run a ânear frontier modelâ on
consumer grade hardware just around the corner?
I suspect it is, in fact. But you can also see why a
bunch of very very large, overinvested companies would
have incentives to try to make sure it isn't. So it's
going to be interesting.
_heimdall wrote 20 hours 21 min ago:
Right now they may be a bit scarce on business plans and
revenue, but I hear they're ushering in an era of
"post-scarcity" so that should fix it.
alangibson wrote 21 hours 44 min ago:
This. If you really think you're a couple of years away from
building Digital God, and today have virtually unlimited access
to capital, you are not going to spend time shipping a sexy mode.
thfuran wrote 21 hours 25 min ago:
Why not do both if you have unlimited capital today?
alangibson wrote 19 hours 48 min ago:
Because you don't have unlimited attention
Yossarrian22 wrote 21 hours 11 min ago:
Do they also have infinite labor?
nativeit wrote 21 hours 2 min ago:
Isnât the whole point of AI to replace labor? If they
really want to put their money where their mouth is,
theyâd be casting off staff at a prodigious rate.
ed_elliott_asc wrote 21 hours 46 min ago:
Do you predict the same for Anthropic? Hopefully they will stick
around.
Yizahi wrote 19 hours 45 min ago:
If we go purely by economics, then Anthropic belongs to the
same category of LLM corporations - ones which have only LLM as
a product. As opposed to the likes of Google, Microsoft, even
Facebook. Sure, these LLM-first corporations have a very tiny
lead in both technology and (LLM) brand recognition, but it is
shrinking fast. I suspect that only companies which will bundle
LLMs with other big products (and do it cheaply) will survive
in the long run.
mrweasel wrote 21 hours 40 min ago:
The problem, I think, is that IF OpenAI fail, they'll take with
them a lot of other AI companies, simply because funding will
be redirected away from the field entirely. If you're
profitable, then you're probably going to be fine. If anything
your operating costs will go down as there is less competition
for staff and compute.
smt88 wrote 22 hours 4 min ago:
Because OpenAI loses far, far more. It may be one of the least
profitable companies in history.
IlikeKitties wrote 22 hours 13 min ago:
Knowing Microsoft I assume this is due to a sharepoint bug.
irl_zebra wrote 22 hours 2 min ago:
This is from the Annual Report.
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