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The evolution of the LLM API market - by Finbarr Timbers

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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. Artificial Fintelligence is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber. 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

The evolution of the LLM API market Finbarr Timbers Dec 13, 2023 29 13 Share Article voiceover 0:00 -7:45 Audio playback is not supported on your browser. Please upgrade. 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

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