Comment by kentonv

I mean... I don't like it either but this is pretty standard stuff and it's obvious why they're doing it.

Claude, ChatGPT, Gemini, and Grok are all more or less on par with each other, or a couple months behind at most. Chinese open models are also not far behind.

There's nothing inherent to these products to make them "sticky". If your tooling is designed for it, you can trivially switch models at any time. Mid-conversation, even. And it just works.

When you have basically equivalent products with no switching cost, you have perfect competition. They are all commodities. And that means: none of them can make a profit. It's a basic law of economics.

If they can't make a profit, no matter how revolutionary the tech is, their valuation is not justified, and they will be in big trouble when people figure this out.

So they need to make the product sticky somehow. So they:

1. Add a subscription payment model. Once you are paying a subscription fee, then the calculus on switching changes: if you only maintain one subscription, you have a strong reason to stick with it for everything.

2. Force you to use their client app, which only talks to their model, so you can't even try other models without changing your whole workflow, which most people won't bother to do.

These are bog standard tactics across the tech industry and beyond for limiting competitive pressure.

Everyone is mad about #2 but honestly I'm more mad about #1. The best thing for consumers would be if all these model providers strictly provided usage-based API pricing, which makes switching easy. But right now the subscription prices offer an enormous discount over API pricing, which just shows how much they are really desperate to create some sort of stickiness. The subscriptions don't even provide the "peace of mind" benefit that Spotify-like subscription models provide, where you don't have to worry about usage, because they still have enforced usage limits that people regularly hit. It's just purely a discount offered for locking yourself in.

But again I can't really be that mad because of course they are doing this, not doing it would be terrible business strategy.