Why AI Model Makers Might Develop Like Cable and Cellular Companies

Could the artificial intelligence business develop like cable TV or cellular, where the real money is made by apps running on top of internet pipes, rather than by the telecom firms that spent billions building those pipes? That would be a big deal for AI. It implies that AI agent developers will end up more profitable than AI model makers, like OpenAI, which are spending billions on AI development costs. And yet this emerged as a possibility from a discussion on The Information’s TITV today involving Winston Weinberg, co-founder of legal AI firm Harvey, and Bret Taylor, a veteran tech executive now running customer service AI startup Sierra, who also happens to be the chair of OpenAI’s board.

Taylor wasn’t speaking as a representative of OpenAI but in his capacity as a founder working on agents, we should stress. But in explaining how he thinks the AI agent market will develop, he argued that “agent companies will end up like the software as a service market,” whose players typically enjoy healthy profit margins. In contrast, he said the “frontier and foundation model companies”—the OpenAIs and Anthropics—will “look like the infrastructure as a service market,” (industry jargon for cloud firms) which is “really high-scale revenue [but] margins will always be a question.” (Read the transcript of the interview here).