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OpenAI is Visa

Dec 26, 2024 - sherwood.news
The article compares OpenAI's current position in the artificial intelligence industry to Visa's historical dominance in payment processing. It highlights how Visa built barriers to lock in customers and fend off competitors, a strategy OpenAI seems to be emulating. OpenAI faces competition from tech giants like Google, Meta, and Amazon, as well as the commoditization of large language models (LLMs), which are becoming widely available and potentially free. To counter these threats, OpenAI is reportedly engaging in tactics such as lobbying for AI regulation and securing exclusivity deals with investors and partners to limit competition.

The article suggests that OpenAI's strategy focuses on market dominance through legal and strategic maneuvers rather than superior technology. This includes securing government contracts, limiting competitors' access to resources, and establishing long-term exclusivity contracts with major clients. However, this approach may encounter political and competitive challenges, particularly with figures like Elon Musk influencing AI regulation. The article concludes that both Visa and OpenAI seem to share the belief that "competition is for losers," emphasizing their focus on creating barriers to maintain market dominance.

Key takeaways:

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  • OpenAI is attempting to establish a dominant position in the AI market by creating barriers to entry, similar to Visa's strategy in the payments industry.
  • OpenAI's revenue growth is threatened by the commoditization of large language models, as competitors like Google, Meta, and Amazon develop their own models.
  • OpenAI is engaging in exclusivity deals and lobbying efforts to limit competition and secure government contracts, aiming to become the primary AI provider.
  • Political and competitive challenges, including potential regulatory changes and rivalries, could hinder OpenAI's efforts to maintain its market edge.
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