American AI is locked down and proprietary. It's losing
China's open-weights AI strategy is winning: its companies are taking the lead. America's closed-first, locked-down strategy is doomed to failure - and it could take the US economy down with it.
Link: China delivers a one-two punch to America’s AI dominance, by Robert Hart in The Verge
AI models, as a product in themselves, have very little moat beyond what amounts to brand loyalty and superficial switching costs. Instead, the moat is in the enterprise services that sit around them: the deals and contracts, connectivity with enterprise systems, and quality of life features in an enterprise context.
If we consider the models themselves, it’s easy to switch between them: someone could be using ChatGPT today and Claude tomorrow, with very little impact on their workflows. This is particularly true in the engineering world, where models are accessed via API: you can swap out the API and use the same prompt.
Those companies can make deals to lock their customers in, but in practice there’s very little long-term technical incentive to use one vendor over another. You pick the best model for your needs and change models and vendors if another one becomes better.
The US government has placed export controls on GPUs. There are also strong regulations that (reasonably) prevent sharing certain kinds of data with Chinese servers. The result is that while Chinese companies have enough compute to train models, they can’t really provide the kinds of global-scale centralized services that we see from OpenAI and Anthropic — at least, not in the same way.