Don't get used to cheap AI

AI may never be as cheap to use as it is today. AI companies are hooking users with low prices that won't last—straight out of the Amazon and Uber playbook. The push to show profits before initial public offerings could end the era of cheap AI. "These LLM companies are going to go public and they're going to raise prices because they have to," said May Habib, CEO of Writer. Every time you send a complex query, the AI lab is effectively losing money on the transaction. Free accounts have limited token use, which is expanded when you sign up for a standard consumer subscription. But those low-cost subscriptions are among the most heavily subsidized. Silicon Valley has seen this movie before. The so-called "millennial lifestyle subsidy" meant venture capital money helped underwrite cheap Uber rides and DoorDash deliveries. Before that, Amazon built its base with low prices, free shipping and, for years, no sales tax in most states. Eventually, all of these companies had to charge enough to cover costs—and make a profit.