The economic inevitability of AI

Renting shovels during the AI goldrush

This week, our Apropos episode is on Thursday. We invite Peter Strömberg to the show!

The Clojure/conj CFP is open! If you’re looking to speak, go apply! I’ll be there giving a workshop on domain modeling in Clojure.

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The economic inevitability of AI

The current hype around AI triggers our cognitive biases and makes it hard to take an objective look. It’s just hard to be certain about anything. On what timeline will AI take our jobs? What threats does AI pose to culture and civilization? Will AI help us manage and mitigate climate change or will it exacerbate it? There are a lot of difficult questions. But there’s one thing I’m fairly confident about, and I think it’s worth taking the time to clear the air about it. I’m certain of the economic inevitability of the AI industry.

The future is clear. It has replayed itself many times in the history of business, and certainly in the history of the computing industry. The future is this: Some company (probably OpenAI but we can’t be sure) will capture a significant percentage of the revenue of white-collar labor. Just like Amazon now captures a significant portion of online commerce, just like AWS takes a cut of most startup’s revenue, the winner of the AI race will extract a fee from most every white collar worker. Like licenses for Microsoft Office or Windows, companies will pay for access to AIs they believe will make their employees more productive.

Companies will gladly ask their employees to use AI if it speeds up their work. Businesses want to be competitive, so as other companies gain efficiencies from their use of AI, they’ll need to do it, too, to keep up. It’s a rational choice. I’d ask my company to do it, too, if I were the CTO. Eventually, most employees doing knowledge work will be using AI. And the employers will be paying licenses to OpenAI (or whoever wins).

We live in a world where winner-takes-all is the natural course of things. Slight advantages compound. The big company can acquire, undercut, or outlast the small company. Eventually, the market sorts out the winner with ~80% market share. The rest of the companies fight over the remaining 20%.

In short, one company will have 80% market share, and the market is AI accelerators for knowledge work. Microsoft had “A computer on every desk.” OpenAI will have “An AI on every desk.”

Once the 80% winner is found, the enshittification can begin. These companies are fueled by massive investments. They can sell services well below cost for years. OpenAI forecasts losing $44 billion in the next four years. But in 2029, they can start experimenting with how to turn all those customers, now dependent on their services, into profitable clients, likely by raising prices, degrading service, or inserting ads. OpenAI will create a few trillionaires, many billionaires, and uncountable millionaires on their ascent.

If you’re looking to make money, hitch yourself to the rise of these AI giants. You could be one of the millionaires by being one of the companies renting the shovels during this gold rush.

History is repeating. Personal computers were supposed to liberate us. But what we didn’t realize when the digital dream of personal freedom was still alive was that the companies who amassed more computers and more data would be more free than others. The computer giants donated computers to school.

Similarly, AI is currently sold as a liberating force. It is “democratizing” programming. It’s giving everyone a cheap therapist. They are more reliable companions. But we know that the productivity gains and the huge profits will accrue to the employers and to the AI companies most of all. OpenAI and the others are making products that are sure to become the next essential tool for thought work. Employers will demand that we use them. OpenAI will take rent on all of the work we do. And it will become enshittified. With that inevitability out of the way, we can talk about the more nuanced ideas in the next emails, including some positive ones!