Comment by runako

The "hand wave" comment was more to preempt the common pushback that X has to get to scale for the economics to work. My contention is that 700m MAUs is "scale" so they need another lever to get to profit.

> AI has gotten good enough that next year people can continue to use the current gen AI

This is problematic because by next year, an OSS model will be as good. If they don't keep pushing the frontier, what competitive moat do they have to extract a 70% gross margin?

If ChatGPT slows the pace of improvement, someone will certainly fund a competitor to build a clone that uses an OSS model and sets pricing at 70% less than ChatGPT. The curse of betting on being a tech leader is that your business can implode if you stop leading.

Similarly, this is very similar to the argument that PCs were "good enough" in any given year and that R&D could come down. The one constant seems to be people always want more.

> Not unlike the Uber/Lyft wars

Uber & Lyft both push CapEx onto their drivers. I think a more apt model might be AWS MySQL vs Oracle MySQL, or something similar. If the frontier providers stagnate, I fully expect people to switch to e.g. DeepSeek 6 for 10% the price.