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OpenAI made $13 billion in 2025 and lost $21 billion doing it (www.techspot.com)
submitted 4 months ago by to c/technology@lemmy.world
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[–] 18 points 4 months ago (8 children)

Except that, over those 10+ years, iheartradio accumulated less than half of the debt that OpenAI already has.

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  • [–] 8 points 4 months ago (5 children)

    Both of these companies are an example of a new kind of capitalist trick where they simply take advantage of the fact that they can use an infinite amount of money to invade a market and make it completely unprofitable for any competition by losing money for years.

    They can then acquire all of these companies' market share and then squeeze everyone with their new monopoly powers.

    It's blatant market manipulation that any country with a functioning government would have regulated out of existence.

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  • [–] 1 point 4 months ago (4 children)

    This is another incorrect take. OpenAI is not the only one hemorraging money. All of these LLM companies are offering a heavily subsidized product. Once the money runs out, which it will, the bubble wil pop or deflate. It's not a matter of "if", just "when". It's simply not an economically viable product. My guess is that the only reason they're doing this, is because they're hoping for some wild technological breakthrough that will massively lower costs.

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  • [–] 2 points 4 months ago (3 children)

    An incorrect take?

    This isn't a business strategy unique to tech companies, it's used across multiple different industries.

    Source: work in finance.

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  • [–] 0 points 4 months ago* (2 children)

    Yes, an incorrect take.

    While the strategy is not new, the scale and speed is. Also, there wasn't an existing market that they're trying to capture (as opposed to services like Amazon or Uber).

    The entire industry is doing the same thing and they're all losing. It's a race to the bottom and that is most certainly new (and stupid).

    Not to mention that the cost of the unsubsidized product is insane. Hence, it's not an economically viable product.

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  • [–] 1 point 4 months ago (1 child)

    So, you're saying it's a new kind of capitalist trick where they lose money by subsidizing the product in order to make it completely unprofitable for all of the other companies?

    I have it on good authority that this is an incorrect take.

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  • [–] 1 point 4 months ago

    Nope. They subsidize the product so that people are more willing to pay, and they're betting that they have deeper pockets than the competition (hence, a race to the bottom). Once they can no longer subsidize the product, the idea is that you're so addicted to it (or you've integrated it so much to your product) that you'll pay the full price.

    Except that no one will, because they're already increasing prices and people and companies are waking up to the fact the cost does not outweigh the benefits.

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  • [–] 1 point 4 months ago (1 child)

    Talking total debt is somewhat meaningless.

    The important number is the ratio between their loss and their revenue.

    i.e. the convenience store down the street could operate at a loss before turning profitable, and accumulate far less than half the debt of iHeartRadio, but that doesn't mean the convenience store is the better long term investment. When it turns a profit, it's potential profit is far smaller than iHeartRadio's was.

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