June 12 (Reuters) - Anthropic said on Friday it will "abruptly disable" its most advanced AI models for all users after the U.S. government ordered it to suspend access to the models for foreign nationals, citing national security concerns.
The company received the export control directive to suspend access to Fable 5 and Mythos 5 for all foreign nationals, without being given specific details of its national security concern, Anthropic said in a statement.
This is a bizarre story with all sorts of strange details and unexpected implications. Boyle's video overview is characteristically informative and thoughtful, too much so to summarize in a blog post, but there are a couple of points I should single out.
As previously mentioned, claiming that their models can have horrifying, even cataclysmic effects has long been a key branding component of companies like Anthropic and OpenAI. Therefore, it's not surprising that the CEOs saw this announcement as a marketing opportunity.
But while President Macron and the other middle-power leaders were busy panicking about their tech subservience and drafting a G7 communiqué pledging to discuss the risks, the tech executives themselves were busy doing something entirely different. They were using the panic to explain how incredibly dangerous—and therefore how incredibly valuable—their technology actually is.
Dario Amodei urged the room to resist the temptation to splinter, while Sam Altman and Demis Hassabis warned the world leaders about the imminent perils of AI-powered bioterrorism and cyberwarfare.
There's a distinct style of marketing in Silicon Valley where the best way to convince investors that your company is worth a trillion dollars is to tell the president of the United States that your product is so terrifying that it might accidentally end all human life.
If you tell Wall Street that you've made a very efficient spreadsheet tool, you get a tech multiple. If you tell them that you've built a digital nuke, you get an intergalactic multiple.
Perhaps the most important part of Boyle's video essay comes near the end when he draws a line through some dots that have been obvious for a while now but which most analysts have failed to connect.
If AI is not a natural monopoly and foreign competitors are offering models that are good enough, immune to US kill switches, and 60 times cheaper, then we end up with a highly competitive market.
And in a highly competitive market, profit margins collapse. The economic benefits of all this AI productivity would instead flow to the people using the models rather than the companies spending billions of dollars to build them.
This might be great news for businesses looking to automate their coding. It's terrible news for anyone buying shares at a $965 billion valuation.
So where does all of this leave the frontier AI industry?
Well, the lesson is simpler than Wall Street would like. For years, the theory was that building artificial intelligence required Silicon Valley genius, billions in venture capital, and an exclusive relationship with a cloud computing giant—ideally one whose CEO won't report you to the federal government as a hobby.
It turns out that there is no monopoly on math. The open-source models are good enough. They're 60 times cheaper, and nobody in Washington can switch them off on a Friday afternoon.
The productivity gains everyone was promised will still happen. They'll just flow to the businesses running the code on their own machines rather than to the investors who paid almost a trillion dollars for a global monopoly on math.
If the industry spends the money it has promised to over the next four years, something it has to do in order to keep the plates spinning, the capital expenditure in real terms will exceed that associated with the railroad boom of the 19th century, the dot-com boom, and the real estate boom of 2007 and 2008 combined. A collapse in the sector would leave an unprecedented hole in the markets.
In order to avoid disaster, things have to play out in a precise way. Large language models will need to become unimaginably profitable by the end of the decade, and they will need to support the spectacular profit margins that almost always require monopolies. If the current generation of models and infrastructure can't start bringing in unprecedented cash very soon, or if we see highly competitive markets based largely on smaller, cheaper models, things are going to get really ugly really fast.
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