OpenAI, Anthropic feud could help Google
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Google is quietly expanding its Pentagon work — and growing users faster than its rivals — while Anthropic and OpenAI publicly spar over conditions for Defense Department work.
Why it matters: Winning the AI race may depend on knowing when to stay out of scuffles.
What they're saying: "When you have two major companies fighting each other, it is a good distraction for another company to come in and learn from their mistakes and just go all the way to the top," PitchBook's Harrison Rolfes tells Axios.
State of play: Google is set to provide AI agents to the Pentagon's 3-million-person workforce for unclassified work, Bloomberg reported Tuesday.
- The news came just one day after rival AI lab Anthropic sued the Pentagon for classifying the firm as a "supply chain risk" after negotiations broke down over parameters for using Anthropic's Claude.
- Over 30 employees from OpenAI and Google signed an amicus brief supporting Anthropic.
Between the lines: Google largely stayed out of that tête-à-tête.
- "OpenAI looked opportunistic. Anthropic got blacklisted. Google gained the most ground and nobody's talking about it," Patrick Moorhead, CEO of Moor Insights & Strategy, told Axios.
- This comes after Google has already been steadily gaining AI mojo.
Yes, but: Google DeepMind's chief scientist, Jeff Dean, signed the brief supporting Anthropic, and employees wrote letters to executives asking for broader support for Anthropic's safety goals.
- So Google isn't immune to the internal dynamics pressuring its rivals.
The difference: Google has the cash reserves to take bigger hits than OpenAI or Anthropic.
- Defense AI is "immaterial" to Alphabet's over $400 billion annual revenue base. But Moorhead also said the company needs to diversify its revenue away from consumer advertising to "balance the business."
- Anthropic is projected to break even by 2028, OpenAI by 2030, according to The Information. PitchBook's Rolfes adds that OpenAI doesn't offer much detail on how to achieve that.
Flashback: Netscape and Microsoft defined the browser wars of the 1990s while Google was building a search business that would become ubiquitous.
What we're watching: Claude grew paid subscribers by over 200% year over year, Gemini 258%, with roughly 20% of weekly ChatGPT web users also using Gemini in a given week, according to January Yipit data compiled by a16z.
- OpenAI and Anthropic are "essentially cannibalizing each other," keeping prices low to take market share from one another, Rolfes said.
- While many enterprises are paying for subscriptions at both AI labs, neither is profitable.
- Google is "most lined up to take that top spot" as the infighting continues.
