[HN Gopher] OpenAI is Visa - Buttering up the government to reta...
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OpenAI is Visa - Buttering up the government to retain a monopoly
Author : gpi
Score : 87 points
Date : 2024-12-26 19:44 UTC (3 hours ago)
(HTM) web link (sherwood.news)
(TXT) w3m dump (sherwood.news)
| chvid wrote:
| Not much of a monopoly when they are being outcompeted by open
| source models done by companies with a fraction of OpenAIs
| resources.
|
| Sure - a government sanctioned monopoly might have been their
| fantasy but now it is getting obvious it is not the way things
| are going to go ...
| delichon wrote:
| And it's less likely after the election. Trump pledged to
| repeal Biden's 2023 executive order on AI. He put out a very
| different executive order in 2019 that sought to reduce
| barriers. He is an enthusiastic deregulator compared to the
| current chief. That helped more than a little to get
| Andreessen, Musk, etc., to climb on the bandwagon. It can all
| be reversed at the wave of a very transactional presidential
| hand, but the sounds coming from the incoming administration
| are more favorable to open AI than to OpenAI.
| https://www.rstreet.org/commentary/ai-policy-in-the-trump-
| administration-and-congress-after-the-2024-elections/
| https://trumpwhitehouse.archives.gov/presidential-
| actions/executive-order-maintaining-american-leadership-
| artificial-intelligence/
| behnamoh wrote:
| > by companies with a fraction of OpenAIs resources.
|
| Meta and Google are orders of magnitude greater than OpenAI and
| they're the only contenders that have challenged GPT models.
|
| > But what about Mistral et al?
|
| They are not even near GPT-4o. Good gpt-3.5-turbo alt tho.
| do_not_redeem wrote:
| You might be interested in
| https://news.ycombinator.com/item?id=42514633
|
| In fairness, OpenAI has been leading benchmarks for the most
| part, but open source is never more than 3-6 months behind.
| dylan604 wrote:
| Just because some one has a slightly better product doesn't
| mean they have a monopoly. That's like saying McDonalds has
| a monopoly because they have better fries. It's just not
| true in any part of the statement
| ipaddr wrote:
| They have a monopoly on the name McDonalds.
|
| If McDonalds had a fry machine and lobbied that making
| fries anyone other way was dangerous and only they should
| be allowed to use the fry machine that would more align
| with this situation.
|
| It's not a monopoly but trying hard to get a government
| based one.
| aprilthird2021 wrote:
| But not even near X SOTA model doesn't matter to 99% of
| people because 99% of people don't need or care about the
| difference.
|
| It's like sure Porsche / Ferrari makes a car that can hit
| insane top speeds really fast on a track, but 99% of people
| don't drive in such a manner where that matters. In that
| analogy though, everyday cars aren't free, so profit
| possibility is even less in OAI case than the supercar case
| notavalleyman wrote:
| There is no way in which the little stock price boxes helped me
| understand or appreciate this article
| philips wrote:
| The news source is owned by Robinhood. The stock boxes are to
| get you into the product buying stock.
| omolobo wrote:
| It should also be noted that those elements are dynamic and
| update in pseudo-real-time. In case my boy is still trying to
| make sense of them in the context of the article, lol.
| bko wrote:
| > What Visa did in response recently got it sued by the Justice
| Department, which accused Visa of using aggressive tactics with
| companies like CostcoCOST $956.14 (-0.29%) and AppleAAPL $258.99
| (0.35%) to guarantee that a competitive payment network would not
| develop, The Wall Street Journal reported.
|
| I don't buy the reasoning as to how Visa built a moat. From the
| WSJ article linked in the article:
|
| >> Visa offered to pay Costco $150 million. One condition of the
| deal: Costco would not do a credit-card deal with a bank that had
| its own network, according to the people familiar with the matter
| and the court filings. That shut out Chase. Visa also offered
| Costco an exclusive discount on the interchange fees the store
| pays when someone makes purchases with Visa credit cards.
|
| So basically Visa offered Costco a discount if it allowed their
| cards exclusively. The thing with credit cards is that you can
| have more than one. I have a Visa and a Mastercard and when I
| shop at Costco I use Visa. I don't see this reason stopping
| someone wanting to compete as though if they can't get the Costco
| dollars, they have no product.
|
| That's not to say that Visa doesn't use lobbying and legal system
| to erect barriers to entry. But that really has to do with
| ridiculous regulations and things like KYC, but we're not ready
| to have that conversation yet.
| ToucanLoucan wrote:
| > The thing with credit cards is that you can have more than
| one. I have a Visa and a Mastercard and when I shop at Costco I
| use Visa.
|
| Well... yeah. No shit. Because you couldn't use the Mastercard
| if you wanted to. That's what this article is complaining
| about. And in their most recent quarter Costco posted a handy
| 80 billion in net sales, I'm betting those processing fees
| added up to a tidy sum for Visa, corroborated in the fact that
| they plunked down 150 million to keep it exclusive to them.
|
| > I don't see this reason stopping someone wanting to compete
| as though if they can't get the Costco dollars, they have no
| product.
|
| It's literally textbook pay for play. It's purchasing an
| advantage in an open market. Mastercard will receive no
| transaction fees from Costco this or any year unless this
| agreement is revisited, and not because people don't want to
| use Mastercards there, but because Visa paid Costco to not let
| them. How is that anything but anti-competitive?
| bko wrote:
| Is it any different from a movie theatre or restaurant
| selling only Pepsi products due to exclusive agreement?
|
| Or Playstation paying for a game to be distributed only on
| their platform?
|
| How about a sports team only allowing Reebok or Nike or
| Adidas or whatever?
|
| Don't get me started on Netflix only movies!
| ToucanLoucan wrote:
| 1) Whataboutism is not a counterpoint
|
| 2) Half of these are completely nonsensical and apples and
| oranges to the topic.
| bko wrote:
| It's not whataboutism. Whataboutism would be 'what about
| children dying in Darfur?'
|
| This is an explanation that this practice is normal in a
| competitive environment and trying to prevent exclusive
| deals is silly if you extrapolate it to other domains
|
| In other words, create a rule or principal that's clear
| and not specific to this situation. Because right now the
| principal seems to be exclusive deals between businesses
| should be illegal and I explained a handful of cases
| where this would obviously apply
| lesuorac wrote:
| The fact that monopolistic agreements are common place
| doesn't make them competitive.
| dangerwill wrote:
| > thing with credit cards is that you can have more than one. I
| have a Visa and a Mastercard and when I shop at Costco I use
| Visa. I don't see this reason stopping someone wanting to
| compete as though if they can't get the Costco dollars, they
| have no product.
|
| I'm sorry, are we really saying that it's acceptable for the
| market to begin preferring one completely compatible payment
| network vs another? This is clearly an undue influence in the
| market due to monopolistic power being used as leverage. No one
| should have to open an account with visa just to shop at a
| retailer. Anti competitive and anti consumer to the core.
|
| > But that really has to do with ridiculous regulations and
| things like KYC, but we're not ready to have that conversation
| yet.
|
| Ahhh, fearmongering about KYC. Know your customer is an
| obviously good regulation for banks to know the type of
| business they are partnering with for both risk assessment and
| anti fraud protections. So, what scams are you in favor of
| allowing by removing KYC regulations?
| bko wrote:
| > No one should have to open an account with visa just to
| shop at a retailer.
|
| You know you have to pay just to enter Costco right? What's
| the difference if they want to force customers to use cash or
| Visa. Do you feel the same way about businesses that reject
| Discover?
|
| I really don't understand the outrage.
|
| > Ahhh, fearmongering about KYC. Know your customer is an
| obviously good regulation for banks to know the type of
| business they are partnering with for both risk assessment
| and anti fraud protections. So, what scams are you in favor
| of allowing by removing KYC regulations?
|
| KYC and AML measures have a limited impact on stopping fraud
| and terrorism financing. Current efforts intercept only an
| estimated 0.1 to 0.2 percent of laundered money. A 2018 study
| suggested that the overall impact of AML policy intervention
| on criminal finances is less than 0.1 percent, which is
| considered negligible. This aligns with a 2011 UNODC report
| indicating that "much less than one percent (probably around
| 0.2 percent)" of the proceeds of crime laundered via the
| global financial system are seized and frozen.
|
| Regulations should not be judged by intentions but rather
| results
|
| https://www.gisreportsonline.com/r/why-anti-money-
| laundering...
| dangerwill wrote:
| > What's the difference if they want to force customers to
| use cash or Visa.
|
| I'll leave the cash option aside because the provider of
| cash is the US treasury. But yes, I do think it is wrong
| for a merchant to only allow mastercard or visa or
| discover. I understand merchants not taking Amex because
| their fees are significantly higher on the merchant side,
| but discover, mastercard, and visa are all similar for the
| merchant. I work in payment processing for a multi billion
| dollar company and we gladly accept all of these card
| types. My issue is with visa providing Costco with a
| kickback, so that Costco then pressures you to have an
| account with visa. It should be totally fine if someone
| just happens to have only mastercard cards and wants to
| shop at costco. I'm against kickback schemes.
|
| As for the AML/KYC ineffectiveness argument, I'm reading
| through that 2018 study now.
| nottorp wrote:
| Interesting that here in Europe I have never seen a store
| accept Visa or Mastercard exclusively.
|
| Since neither company is above such tactics, I can only guess
| that it's a bit illegal.
| matthewdgreen wrote:
| You can have a Mastercard, but now if you want to shop at
| Costco with credit you have to have a Visa. Not having a Visa
| card is much less of an option for many individual customers,
| and not accepting Visa is much less of an option for other
| merchants.
| aleph_minus_one wrote:
| > You can have a Mastercard, but now if you want to shop at
| Costco with credit you have to have a Visa.
|
| Or you simply shop at Costco _without_ a credit card, and pay
| cash instead. :-)
| pton_xd wrote:
| And simply pay 1-2% more than everyone else using a Visa
| card.
| insane_dreamer wrote:
| Doesn't explain what regulations Visa pushed for and got which
| helped it maintain its monopoly. Would be helpful to have some
| concrete examples of what it did and what OpenAI is trying to do.
|
| The point of the article sounds plausible, but doesn't really
| present any evidence to support it.
|
| Also OpenAI in no way has a monopoly of the kind that Visa/MC
| has.
| cute_boi wrote:
| Idk why government can't even regulate variable pricing that
| Visa/MC charges...
| Kwpolska wrote:
| European governments can. The US government could, but the
| Visa/MC lobbyists are so nice and friendly.
| ADeerAppeared wrote:
| > Also OpenAI in no way has a monopoly of the kind that Visa/MC
| has.
|
| I think this is misreading how literal the comparison is meant
| to be; Sherwood's running a bunch of "OpenAI is X" articles
| today. This is not about the massive duopoly which has been
| catastrophic for US payments, but about the way companies
| entrench themselves.
|
| > Doesn't explain what regulations Visa pushed for and got
| which helped it maintain its monopoly.
|
| Those details are in the linked WSJ article;
| https://www.wsj.com/finance/banking/visa-wanted-a-vast-empir...
|
| > but doesn't really present any evidence to support it.
|
| The main points of concern are mentioned; OpenAI is pushing for
| "AI regulation" that focusses on the nebulous "doomsday"/skynet
| scenarios, rather than any of the material harms of AI. The
| subtext of that is a straightforward "you should ban anyone
| else building AI because only we can do it safely".
|
| Similarly, OpenAI demanding it's investors not fund competitors
| is pretty ridiculous and explicitly trying to establish a
| monopoly.
| naniwaduni wrote:
| > I think this is misreading how literal the comparison is
| meant to be; Sherwood's running a bunch of "OpenAI is X"
| articles today.
|
| This is ... a useful piece of information with which to
| update our credulity of the narrative these articles are
| trying to present.
| nottorp wrote:
| > Also OpenAI in no way has a monopoly of the kind that Visa/MC
| has.
|
| They've been working very hard on getting one for at least a
| year though.
|
| Every time Altman whines about the dangers of AI, he's lobbying
| for government regulation that would raise barriers to entry
| into the market.
|
| And please no, god forbid there are any free solutions. Let's
| drown them in regulation worth a few hundred million per year.
| doctorpangloss wrote:
| All he'd have to do is get interest rates to rise 25bps and
| then poof, his competitors would evaporate.
| pixl97 wrote:
| Saying we should replicate the Russian economy then?
| mdasen wrote:
| Yea, I don't want to defend Visa, but a lot of their dominance
| came from network effects. Merchants want to accept Visa
| because it's what people have in their wallet. Customers want
| Visa because it's what merchants accept. That cycle keeps
| reinforcing itself.
|
| That's not to say that Visa hasn't worked toward favorable
| regulations, but the biggest problem with alternative payment
| networks (to Visa/MC/Discover/AMEX) is that most retailers
| don't take them which means most customers don't want to set
| them up. If most customers don't have those payment methods,
| there's little incentive for a merchant to setup those payment
| methods.
|
| With OpenAI, there isn't the same network effect. I don't care
| what LLM you're using or what LLM Walmart or anyone else is
| using. If Anthropic or Google start offering better/cheaper
| LLMs, companies can simply switch over. Maybe some integrations
| will need to be rewritten, but that's a lot easier than getting
| hundreds of millions of customers to sign up for something new.
| Plus, companies like Google are simply implementing the OpenAI
| API so that integrations don't have to be rewritten.
|
| By contrast, if another company launches a payment network, it
| isn't enough just to convince a company to switch. You need to
| convince millions of consumers to switch - which would require
| convincing enough companies to switch.
| lesuorac wrote:
| > but the biggest problem with alternative payment networks
| (to Visa/MC/Discover/AMEX) is that most retailers don't take
| them
|
| Who?
|
| I thought it was just like Costco that didn't take
| Discover/Amex/MC due to Visa contract. Aren't all the credit
| card terminals pretty much from 3p vendors who support
| everything including Apple Pay + Square + etc?
| paxys wrote:
| Visa makes $20B a year in profit. OpenAI and every other large
| tech company in the space is burning through billions of dollars
| every year just to stay competitive. It is idiotic to crown a
| company as a "monopoly" in AI when the business case hasn't even
| been defined yet. Give it a decade or two then maybe we can have
| this conversation.
| jo6gwb wrote:
| So Taylor Lorenz is working for Robinhood now. Says a lot about
| the brand.
| johndhi wrote:
| It was a great marketing strategy, imo, to say AI is so scary and
| impressive and awful it needs to be regulated immediately. Helps
| them look impressive and good willed & kills all competitors.
| dylan604 wrote:
| So you're saying there's no competitors to ClosedAI? How do you
| arrive at that conclusion?
| johndhi wrote:
| Not saying there are zero, but I think Sam's publicity tour
| bolstered the EU AI Act and the white house exec order, both
| of which have really hurt EU AI and small AI companies
| respectively
| devindotcom wrote:
| ICYMI this is part of a year-end "OpenAI is..." series from a
| bunch of writers
|
| https://sherwood.news/tech/what-companys-past-reveals-the-fu...
| arisAlexis wrote:
| This is now impossible since the government (musk) is in war with
| openai. If that was the case, it's not anymore
| matthewdgreen wrote:
| Yes, but Musk has his own AI company so it's entirely
| reasonable to be concerned that he'll try the same strategy.
| (No, I'm not particularly worried about X.ai, yes I think Musk
| absolutely would use his influence over the new administration
| to benefit himself.)
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