A quick rant on that 2023 “leaked” Google memo “We Have No Moat And neither does OpenAI”:

But the uncomfortable truth is, we aren’t positioned to win this arms race and neither is OpenAI. While we’ve been squabbling, a third faction has been quietly eating our lunch.

Boy, does this entire memo smell of bullshit; a red herring; the ol' pit us against the lunch lady routine.

First, it implies Google and OpenAI are on equal footing. They’re not. Google is far better suited to cash in on AI tech adoption—more on that in a sec.

It then identifies open-source AI models as the third faction about to “eat [Google’s] lunch.” Again, basura, bro. Straight trash.

Don’t get me wrong, open-source tech is great and important, and wonderful. But it’s not like the average person runs a Large Language Model on their Mac to make grocery lists. If you are, in fact, doing this, you are a nerd and I love you. But you’re not the average user.

Most AI-centered features, whether powered by open or proprietary tech, will be baked into consumer-facing software for mass consumption.

But, AI features are power-hogs and expensive to maintain. Look at ChatGPT. With one hundred million users and close to two billion in revenue, OpenAI is losing money. There’ll be efficiency gains for sure. But not before they pay the pied piper.

Which brings me to my final point.

The SaaS model runs on the cloud. The cloud is effectively owned by three companies— Amazon, Microsoft, and, yes, Google. (Four companies if you count Meta, but that’s another rant).

The big three are spending eye-watering amounts of capex dollars on data centers and reporting growth almost exclusively from cloud services. And that’s without ubiquitous AI in all of our subscription software that folks actually want to use.

So go ahead, says Google. Be fruitful and multiply those AI features. Open-source it up. We’ll even give you the tech for free. Just call us when you launch your app and need that cloud service.

Because why give a shit who sells the milk jars when you own the motherfucking cows, baby!

Jason Velazquez @fromjason