Comment by nojs

Consumer brand quality is so massively underrated by tech people.

ChatGPT has a phenomenal brand. That's worth 100x more than "product stickiness". They have 700 million weekly users and growing much faster than Google.

I think your points on Google being well positioned are apt for capitalization reasons, but only one company has consumer mindshare on "AI" and its the one with "ai" in its name.

> What is OpenAI's competitive moat? There's no product stickiness here.

Would have agreed with you untill I saw the meltdown of people losing their "friend" when chatgpt 5 was released. Somehow openai has fallen into a "sticky" userbase.

>non-technical users can't tell the difference between these models at all

My non-tech friend said she prefer ChatGPT more than Gemini, most due to its tone.

So non-tech people may not know the different in technical detail, but they sure can have bias.

What is Google's competitive moat? There's no product stickiness here. What prevents people from just using Altavista/Yahoo/[any other search engine].

You vastly underestimate the power of habit and branding combined together. Just like then, the vast majority of people equate ChatGPT with AI chatbot, there is no concept of alternative AI chatbot. Sure people might have seen some AI looking thing called Copilot and some weird widget in the Google Search results but so far ChatGPT is winning the marketing game even if the offerings from rivals might be the same or even superior sometimes

ChatGpt has won. I talk to all teens living nearby and they all use chatgpt and not Google.

The teens, they don't know what is OpenAI, they don't know what is Gemini. They sure know what is ChatGPT.

ChatGPT (and all the competitors) are trivially sticky products: I have a lot of ongoing conversations in there, that I pick up all the time. Add more long term memory stuff — a direction I am sure they will keep pushing — and all of the sudden there is a lot of personal data that you rely on it having, that make the product better and that most people will never care to replicate/transfer. Just being the product that people use makes you the product that people will use. "the other app doesn't know me" is the moat. The data that people put in it is the moat.

Brand is the second most important moat (only shy to regulation capture).

If normal people start saying "ChatGPT" to refer to AI they win, just like how google became a verb for search.

It seems to be the case.

> What is OpenAI's competitive moat? There's no product stickiness here.

Doesn't look worse than Google Search's moat to me? And that worked really well for a long time.

"At some point OpenAI's investors are going to want their money back."

They do now, that's why they are using a shell game to pump up the stock value.

For consumer product, memory, the recent pulse one and _much awaited_ ai feed are the products that will build stickiness. I pay for both claude and openai currently and it is much more difficult to continue a chat on other platform as the context systems isn’t something i can cook up swiftly.

Users' chat history is the moat. The more you use it, the more it knows about you and can help you in ways that are customized to particular user. That makes it sticky, more so than web search. Also brand recognition, ChatGPT is the default general purpose LLM choice for most people. Everyone and their mom is using it.

Brand name and ChatGPT being the synonym of AI. Just like google is a synonym for search. That right there is very powerful.

There is definitely stickiness if you're a frequent user. It has a history of hundreds of conversations. It knows a lot about me.

Switching would be like coding with a brand new dev environment. Can I do it? Sure, but I don't want to.

> Normal, non-technical users can't tell the difference between these models at all, so their usage numbers are highly dependent on marketing.

When I think as a “normal” user, I can definitely see difference between them all.

It's a distinctive brand, pleasant user experience, and a trustworthy product, like every other commodified technology on the planet.

That's all that matters now. We've passed the "good enough" bar for llms for the majority of consumer use cases.

From here out it's like selling cellphones and laptops

I'm saying Google is going to win. They're not beholden to their current architecture as much as other shovelmakers and can pivot their TPU to offer the best inference perf/$. They also hold about as much personal data as anyone else and have plenty of stuff to train on in-house. I work for a competitor and even I think there's a good chance google "wins"(there's never a winner because the race never ends).

> Google has massive distribution with world-wide brands that people already know, trust, and pay for, especially in enterprise.

Do people trust Google in a positive sense? I trust them to try force me to login and to spam me with adverts.

Currently their moat is history. Why I keep coming back to ChatGPT is it ‘remembers’ our previous chats, so I don’t have to explain things over and over again. And this history builds up over time.

What prevents people from just using Google, who can build AI stuff into their existing massive search/ads/video/email/browser infrastructure?

Google have never had a viable competitor. Their moat on Search and Ads has been so incredibly hard to beat that no one has even come close. That has given them an immense amount of money from search ads. That means they've appeared to be impossible to beat, but if you look at literally all their other products they aren't top in anything else despite essentially unlimited resources.

A company becoming a viable competitor to Google Search and/or Ads is not something we can easily predict the outcome of. Many companies in the past who have had a 'monopoly' have utterly fallen apart at the first sign of real competition. We even have a term for it that YC companies love to scatter around their pitch decks - 'disruption'. If OpenAI takes even just 5% of the market Google will need to either increase their revenue by $13bn (hard, or they'd have done that already) or they'll need to start cutting things. Or just make $13bn less profit I guess. I don't think that would go down well though.

Let me direct you to the reddit AMA where people were literally begging to bring back 4o.

Chats have contexts. While search engines try to track you it is spookier because it is unclear to the user how the contexts are formed. In chats at least the contexts are transparent to both the provider and the user.

Yeah, for me, the biggest issue is, counter-intuitively given it's Google, I know Gemini is going to continue existing as a product for a long time; I feel comfortable storing data and building things out for it. Anthropic's putting out great models, but it's financially endangered, and OpenAI isn't doing great either; and I'm confident Gemini 3 release will put it right back at top-of-pack again as far as model output quality, so these little windows where I'm not using The Best are not a big deal.

Once the single-focus companies have to actually make a profit and flip the switch from poorly monetized to fully monetized, I think folks will be immediately jumping ship to mega-companies like Google who can indefinitely sustain the freemium model. The single-focus services are going to be Hell to use once the free rides end: price hikes, stingy limits, and ads everywhere.

.... but the field will change unpredictably. Amazon offers a lot of random junk with Prime -- hike price $50/year, slap on a subscription to high-grade AI chatbot 10% of users will actually use (say 2% are "heavy users"), and now Anthropic is financially sustainable. Maybe NYT goes from $400 to $500 per year, and now you get ChatGPT Pro, so everything's fine at OpenAI. There're a ton of financial ideas you'll come up with once you feel the fire at your feet; maybe the US government will take a stake and start shilling services when you file taxes. Do you want the $250 Patriot Package charged against your tax refund, or are we throwing this in the evidence pile containing your Casio F91-W purchase and tribal tattoos?

Brand. Brand. Brand!

Literally nobody but nerds know what a Claude is among many others.

ChatGPT has name recognition and that matters massively.

The name ChatGpt is probably the most valuable brand at the moment. Everybody is talking and using it.

> There's no product stickiness here.

Very few of those 700,000,000 active users have ever heard of Claude or DeepSeek or ________. Gemini maybe.

> What is OpenAI's competitive moat? There's no product stickiness here.

20 years ago everyone said the exact same thing about Google Search.

I mean, how could you possibly build a $3T company off of a search input field, when users can just decide to visit a different search input field??

Surprise. Brand is the most powerful asset you can build in the consumer space. It turns out monetization possibilities become infinite once you capture the cultural zeitgeist, as you can build an ecosystem of products and eventually a walled garden monopoly.

>What is OpenAI's competitive moat?

The broken record's still running, someone please turn it off!

At this point I think people just suffer from some sort of borderline mental disorder.

700 MAUs in just a couple years? In a red(-pretty-much-pure-blood) ocean? Against companies who've been in the business for 20 years?

One would have to be quite dumb or obtuse not to see it.

AI has been incredibly sticky. Look at the outrage, OpenAI couldn't even deprecate 4o or whatever because it's incredibly popular. Those people aren't leaving OAI if they're not even leaving a last gen model.

The average is $x. But that's global which means in some places like the US it is 10x. And in other less wealthy areas it is 0.1x.

There is also the strange paradox that the people who are willing to pay are actually the most desirable advertising targets (because they clearly have $ to spend). So my guess is that for that segment, the revenue is 100x.

"Lots of users would gladly pay way more than $30/year have an ad-free experience"? Outside of ads embedded in Google Maps, a free and simple install of Ublock Origin essentially eliminates ads in Search, YouTube, etc. I'd expect that just like Facebook, people would be very unwilling to pay for Google to eliminate ads, since right now they aren't even willing to add a browser extension.

I’d agree. The biggest exception I can think of is X, which post-Musk has plans to reduce/remove ads. Though I don’t know how much this tanked their ad revenue and whether it was worth it.

Why would it be any different for youtube premium? I think Google just doesn't think enough people will pay for ad-free search, not that it would cannibalize their ad revenue.

Imagine if you are paying to publish an ad. One ad platform sends your ad to everyone, the other allows the most affluent users to avoid ads. If you choose the platform where affluent people won’t see your ad, you’re likely shooting yourself in the foot.

Pretty sure the reason they don't have a paid tier is because engagement (and results) is better when you include ads. Like Facebook found in the early days

They're the only ones making AI with a personality. Yeah, you don't need chocolate flavored protein shakes but if I'm taking it every day, I get sick of the vanilla flavor.

I'm afraid there's plenty of avenues for them to insert ads that probably won't be perceived as obnoxious by most people (I still find it incredibly obnoxious).

About half of AI queries are "Asking" (as opposed to Doing or Expressing) and those are the ones best suited for ads. User asking how to make pizza? Show ads for baking steels and premium passata. User asking for a three day sightseeing routine in Rome? I'm sure someone will pay you them to show their venue.

It seems unlikely that the ads will be embedded directly into the answer stream, unless they find a way to reliably label such portions as advertisements in a "clear and conspicuous" way, or convince law makers/regulators that chat bots don't need to be held to the same standards as other media.

Yeah, I agree with you.

Between Android, Chrome, YouTube, Gmail (including mx.google.com), Docs/Drive, Meet/Chat, and Google Search, claiming that Google "isn't more trusted" is just ludicrous. People may not be happy they have to trust Alphabet. But they certainly do.

And even when they insist they're Stallman, their friends do, their family does, their coworkers do, the businesses they interact with do, the schools they send their children to do.

I really don't trust either. Google because of what they've already done, OpenAI because it has a guy at the helm who doesn't know how to spell the word 'ethics'.

This really depends on where you are are. Some countries' populations, especially those known to value privacy, are extremely distrustful of anything associated with Facebook or Google.

I agree with you, and my impression of the trust-level of Google is pretty much zero.

Google and trust are an oxymoron

Well even without a melody, this is pretty catchy ngl

Drink verification can

People said the same thing about so many other online services since the 90s. The issue is that you're imagining ChatGPT as it exists right now with your current use case but just with ads inserted into their product. That's not really how these things go... instead OpenAI will wait until their product becomes so ingrained in everyday usage that you can't just decide to stop using them. It is possible, although not certain, that their product becomes ubiquitous and using LLMs someway somehow just becomes a normal way of doing your job, or using your computer, or performing menial and ordinary tasks. Using an LLM will be like using email, or using Google maps, or some other common tool we don't think much of.

That's when services start to insert ads into their product.

I agree, but the question is whether or not normal people will stop using them.

> moment they start mixing ads into responses Ill stop using them

Do you currently pay for it?

> Open models are good enough

Are they though? I have the best consumer hardware and can run most open models, and they are all unusable beyond basic text generation. I'm talking 90%+ hallucination rate.

> running an LLM will never be as cheap as search engine.

Complete and unfounded speculation.

You've run a false equivalency in your argument. Growth is not representative of the entire economy. The economy is, in aggregate, much more than tech - they have the biggest public companies which skews how people think. No exclusive sector makes up "most" of the economy, in fact the highest sector, which is finance only makes up 21% of the US economy.

https://www.statista.com/statistics/248004/percentage-added-...

If advertising helps high-quality / innovative products spread faster, it can power growth. Indeed, the rate of adoption of innovations seems a fairly critical input for growth. Advertising can speed such adoption.

US GDP is 30T so that revenue is less than 1% of it. But 1% of GDP us still eye popping amount. But remember in the non Google world that is split up into Yellow Pages and TV ads and etc. and possibly many ventures that were not possible because of lack of targeted ads didnt come to fruition.

I think your argument isn't exactly right.

You can imagine a future world where producing real goods and services is ~free (AI compute infinite etc.)

In this world, the entire economy will be ~advertising only so you can charge people anything at all instead of giving it away for free.

I believe regular people will not change from chatGPT if it has some ads. I know people who use "alternative" wrappers that have ads because they aren't tech savvy, and I agree with the OP that this could be a significant amount of money We aren't 700 million people that use it.

I suspect ads would be an attempt to monetize the free users not people paying $200/mo for Pro. Though who knows...

There is also the IMO not exactly settled question of whether an advertiser is comfortable handing over its marketing to an AI.

Can any AI be sensibly and reliably instructed not to do product placement in inappropriate contexts?

It feels similar to Google to me - what is (was) their moat? Basically slightly better results and strong brand recognition. In the later days maybe privileged data access. But why does nobody use Bing?

This! The cost of training models inevitably goes down over time as FLOPS/$ and PB/$ increases relentlessly thanks to the exponential gains of Moore's law. Eventually we will end up with laptops and phones being Good Enough to run models locally. Once that happens, any competitor in the space that decides to actively support running locally will have operating costs that are a mere fraction of OpenAI's current business.

The pop of this bubble is going to be painful for a lot of people. Being too early to a market is just as bad as being too late, especially for something that can become a commodity due to a lack of moat.

It's Sam.

From what I understand he was the only one crazy enough to demand hundreds of GPUs for months to get ChatGPT going. Which at the time sounded crazy.

So yeah Sam is the guy with the guts and vision to stay ahead.

brand recognition

A lot of that money comes from search result ads. Sometimes I click on an ad to visit a site I search for instead of scrolling to the same link in the actual search results. Many companies bid on keywords for their own name to prevent others from taking a customer who is interested in you.

You use to be a useful site and be at the top of the search results for some keywords and now you have to pay.

It's a lot more complicated, but yes advertising works.

There is a saying in India, whats seen is what is sold.

Not the hidden best product.

I work/have worked ecom adjacent for a long time. Ads absolutely work and the continued bewilderment of HN users to this reality will never cease to amaze me.

Yes, they do. Advertising works. "Free with ads" isn't really free because on average you'll end up spending more money than you would otherwise. You're also paying more than if it was a subscription because the producer has to create both the product and also advertise it.

Google is older and many of the products you describe were acquisitions (inorganic growth).

Good luck with that. Every supermarket I've been in has those stupid baskets or racks of stuff blocking the aisle and their data must show that it gets people to buy a little more of that stuff even though it makes me quite resolved to never buy the shit they're forcing me to look at in order to go get the five things I really need.

Some will but you’re underestimating the burning desire to avoid IT and sysadmin work. Look at how much companies overspend on cloud just to not have to do IT work. They’d rather pay 10X-100X more to not have to admin stuff.

Ok, but there will be users using even more insanely powerful datacenter computers that will be able to our-AI the local AI users.

I think they mean OpenAI showing ads from other companies to users, not buying ads themselves.