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The evolution of the LLM API market - by Finbarr Timbers

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Note: if you’re coming to this post online, this is the same as the free post, I ran into issues opening this article up on Substack. Before I studied machine learning, I was an Econ grad student banging out OLS problem sets (I see the OLS equation— (X’X)^-1X’y— whenever I close my eyes, I derived it so many times). My research area was antitrust theory, and in particular, vertical integration. That gives me a unique perspective: how will the LLM API market evolve as more companies enter the space? The market began, famously, with OpenAI releasing ChatGPT and rapidly hitting $1.3B in revenue. At this time last year, however, there was basically no competition in the LLM API market. Bard was yet to be released, let alone Claude, and Gemini was a mere twinkle in Sundar’s eyes. OpenAI had a monopoly in the market, letting them capture basically all of the value. In the year since, what we’ve seen is that there doesn’t appear to be a moat in LLMs except at the highest end. GPT-4 is the onl

The evolution of the LLM API market Finbarr Timbers Dec 12, 2023 ∙ Paid 6 Share Upgrade to paid to play voiceover Note: if you’re coming to this post online, this is the same as the free post, I ran into issues opening this article up on Substack. Continue reading this post for free, courtesy of Finbarr Timbers. Claim my free post Or purchase a paid subscription.

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