tech
China's 'open' AI is a terrible business, and nothing like open-source software
China's AI models are impressing developers but losing investors. The problem? Open-weight AI is a much worse business than open-source software.
TL;DR
- Open-weight AI models are distinct from open-source software and are proving to be a weak business model.
- Chinese AI labs like Zhipu and MiniMax are experiencing significant financial losses and stock plunges despite releasing advanced open-weight models.
- The core economic difference lies in AI's high operational costs (chips, electricity, data centers) for each use, unlike software's near-zero marginal cost.
- When AI models are 'open-weight,' their trained parameters are released, and inference (running the model) is often handled by third-party cloud providers, who capture the revenue.
- Companies that release open-weight models may receive little to no ongoing revenue, despite investing heavily in training.
- This strategy might be a deliberate attempt by China to challenge US AI leaders like OpenAI by making advanced AI a commodity and forcing price reductions.
- The Chinese government, under President Xi Jinping, is encouraging 'openness' in AI strategy, potentially prioritizing strategic advantages over immediate financial gains for domestic companies.