I have an alternative hypothesis for the horizontal fragmentation in AI (not just LLMs). Antitrust issues aside, the lack of horizontal integration boils down to a simple NPV argument straight from a business school curriculum. Outside of mutual fund management, cloud computing and data storage have been historically some of the highest-margin businesses, supporting a true oligopoly in those markets. So why would Big Tech dive into areas like healthcare, where margins are basically nonexistent? Instead, they prefer to invest selectively, as Alphabet has been doing through Google Ventures, for example.
So, the trillion-dollar question is: How long will Google, Microsoft, Amazon, and Meta continue to focus primarily on cloud, data centers, and (increasingly) GPU markets, without making major moves elsewhere? It could be a while, which, I suppose, aligns with your hypothesis. 😉
I have an alternative hypothesis for the horizontal fragmentation in AI (not just LLMs). Antitrust issues aside, the lack of horizontal integration boils down to a simple NPV argument straight from a business school curriculum. Outside of mutual fund management, cloud computing and data storage have been historically some of the highest-margin businesses, supporting a true oligopoly in those markets. So why would Big Tech dive into areas like healthcare, where margins are basically nonexistent? Instead, they prefer to invest selectively, as Alphabet has been doing through Google Ventures, for example.
So, the trillion-dollar question is: How long will Google, Microsoft, Amazon, and Meta continue to focus primarily on cloud, data centers, and (increasingly) GPU markets, without making major moves elsewhere? It could be a while, which, I suppose, aligns with your hypothesis. 😉