Artificial Intelligence

An opinion piece in the WSJ written by the CTO of Mozilla points to a divergence in AI:

The market is splitting in two. The narrow slice is the frontier, and the American models of this kind are the best in the world. … The frontier needs to thrive.

But it also is a narrow slice of the AI world. The broader slice is the everyday: the coding, the instruction-following and the bulk of real workloads. Mozilla’s first “State of Open Source AI” report found open-weight models near parity in cost, with prices massively down over the past three years. That broad everyday slice is the critical infrastructure for AI, and it needs to work by a different set of rules. A permission-based model is a fine way to buy excellence. But it is wildly inappropriate for the ordinary uses of AI.

Further driving this shift is the government’s involvement in frontier models:

The Commerce Department on June 12 barred any foreign national from using Anthropic’s latest frontier models without a license. Since Anthropic couldn’t verify users’ nationalities in real time, it turned the models off for everyone. Every buyer everywhere learned that the most capable artificial intelligence on the market has a shutdown switch.

The collapse in performance between best and second best, low switching cost, and the plummeting cost of training new AI models are driving the market towards cheaper alternatives.

Performance: “Using the Epoch Index as a gauge, the leading AI product is now just 6% more capable than the one at the 90th percentile, an ‘almost invisible’ difference…”

Cost: “GPT-5.5 and Claude Opus each charge $5 for a million tokens, compared with just $0.019 for DeepSeek.”

Outcome: “The Information reported on June 23, a service that compares AI models so developers know which ones should power their apps or handle different tasks within them, show that the share of all tokens processed on open-source models—primarily DeepSeek and MiniMax from China—climbed to roughly 65% in the second week of June, up from 34% during the same week in January and 26% the year prior.”

Per the article, Lindy AI switched from Claude to Deepseek, Coinbase Global, Inc. has announced a goal to move 80% of its workloads to low-priced alternatives by end of year, and even MSFT is considering adding DeepSeek to its product lineup.