Since late 2022, AI assistants like OpenAI’s ChatGPT, Anthropic’s Claude, and Google’s Gemini have dominated the artificial intelligence landscape, backed by billions in investment. However, China-based DeepSeek has disrupted the market with an affordable yet high-performance model, challenging the supremacy of industry leaders.
DeepSeek’s R1 model, launched earlier this year, has sparked discussions about the commoditization of generative AI. Unlike competitors that rely on costly, cutting-edge chips, DeepSeek claims its model was built for just $6 million using less-advanced technology. While analysts believe the actual cost may be higher, the breakthrough highlights how innovation and market forces are making AI models more accessible.
“The first company invests heavily to build a model, but the second mover can achieve the same results faster and at a lower cost,” said CFRA senior analyst Angelo Zino.
At the HumanX AI conference in Las Vegas, experts noted that AI model development is becoming cheaper and more flexible, making the choice of model less significant for users.
Despite the increasing competition, OpenAI’s Chief Product Officer, Kevin Weil, insists that not all AI models are equal.
“The era of a 12-month advantage is over, but we still have a three-to-six-month lead, and that’s valuable,” Weil said.
With over 400 million users, OpenAI benefits from a vast amount of user data, allowing continuous model improvement. Analysts compare OpenAI’s position to Google’s dominance in search, making it the go-to brand for AI users.
While some experts believe OpenAI will remain ahead in advanced AI applications, others argue that the gap between AI models is closing. Digits AI startup CEO Jeff Seibert suggests businesses should design flexible technology that allows switching between AI models as the market evolves.
Advancements in chip technology and model optimization have significantly reduced the cost of developing large language models (LLMs). Open-source AI has also accelerated innovation, allowing developers worldwide to refine and improve AI models.
However, the financial strain on AI companies is immense. OpenAI reportedly spends $1 billion monthly to maintain its dominance. In February 2025, SoftBank invested $40 billion in OpenAI, nearly doubling its valuation to $300 billion. Similarly, Anthropic raised $3.5 billion in March, pushing its valuation to $61.5 billion.
“If you’re burning a billion dollars a month, you have to keep raising money,” said Jai Das of Sapphire Ventures, questioning the long-term profitability of AI giants.
As competition heats up, the AI industry faces a pivotal moment—whether cost-effective innovation will reshape the market or big-tech dominance will continue to prevail.
AFP
