Anthropic and OpenAI face commodification threats. Here’s what to watch for

The economic moats that we believe frontier AI model companies are building can differentiate leaders like Anthropic and OpenAI over the long term. That said, there is a non-zero chance large-language models could commodify, becoming largely interchangeable. Bears say the capabilities of competing LLMs, including those from leading labs such as Anthropic and OpenAI, are already starting to converge. Chinese open models are a clear competitive threat. On top of that, per-token prices are on a downward trend, and users can easily switch between models without friction. Should all three challenges stay pertinent in the long run, models become interchangeable inputs, with pricing power transferring from model builders to firms that control the scarce inputs (chips, power, cloud infrastructure, and distribution). Competitive advantages and differentiation can help overcome these challenges.