Their moat is >1B people are already using ChatGPT monthly.
They aren't going to switch unless something is substantially better.
Unlike a social network, network effects won't help them - their users don't care how many other users they have, only about the AI output quality.
> They aren't going to switch unless something is substantially better.
Or approximately as good but cheaper.
You're fooling yourself if you think OpenAI is going to pass up implementing the same strategies to get a ~27x cheaper model.
> Unlike a social network, network effects won't help them - their users don't care how many other users they have, only about the AI output quality.
Google Search doesn't have a network effect. Everyone on HN has been saying Google Search is complete garbage for a decade. It still has the same market share (roughly) as it did a decade ago.
But that would mean a 27x lower valuation.
It absolutely does. People use Google for search -> Websites optimise for Google -> People get “better” results when searching with Google.
The fact that it’s market share is sticky and not responding quickly to change in quality is sort of indicative of the network effect.
I wonder what the direct user counts are.
« The thing I noticed right away when Claude came out is how little lock-in ChatGPT had established. This was very different to my experience when I first ran a search on Google, sometime in the year 2000. After the first time I used Google, I literally never used another search engine again; it was just light years ahead of its competitors in terms of the quality of its results, and the clarity of its presentation. This week I added a third chatbot to the mix: DeepSeek »
Follow up: https://x.com/TheStalwart/status/1884606421225848889
This is why OpenAI is so deep in the product development phase right now. They have to become the OS to be successful but I don't see that happening
Tell that to Friendster/MySpace and Facebook.
Try again.
MySpace and Friendster both spent significant time as the #1 social sites. Facebook unseated them rapidly. The same is possible for OpenAI.
There are different moats [1]. You’re describing incumbency, an intangible moat. It’s nice, but it’s fickle. Particularly with something with low switching costs.
OpenAI could argue, before, that it had a natural monopoly. More people use OpenAI so it gets more revenue and more data which lets it raise more capital to train these expensive models. That may not be true, which means it only has that first, shallow moat. It’s Nike. Not Google.
Google has a low switching cost, and hardly anyone switches.
ChatGPT is quite similar to Google in this way.
Google has massive network effects on its ad business and a natural monopoly on its search index. Crawling the web is expensive. It’s why Kagi has to pay Google (versus being able to pay them once and then stop).
iOS has 70% market share in the US
1B MAUs doesn't look great if half of them come from one source that can easily change to a competitor.
Except one product is 100% free and the other is mostly locked behind paid subscriptions
It’s already unable to keep up with demand, it will never be the default on mobile devices and businesses in the US will never trust it.
The important question is "will this and similar optimizations to come permit local LLM use, cutting OpenAI out of the equation entirely?"
moat noun a deep, wide ditch surrounding a castle, fort, or town, typically filled with water and intended as a defense against attack.
Second place just needs a catapult and a diseased cow.
