This is probably true in a smaller way for OpenAI

When you have a lot of free users the business demands that you serve them with the best cheap model you can build

And time spent building that may provide dividends (eg OpenAI has very good RL and reasoning) but it might take resources away from the larger model training

(I have no inside knowledge, so please consider this to all be speculation)

No I think you misunderstood GP’s comment. The idea (which I personally don’t agree with) was that Google didn’t have to have the best models; it just needed to have the best compute infrastructure, i.e. having TPUs and the software stack to use TPUs. It was a better use of money to develop compute infrastructure than to develop better models. Perhaps Gemini itself was resource-starved because Google liked to rent out TPUs to Anthropic instead. (Second-hand information: I heard that Mythos/Fable were trained on Google TPUs.)

I agree that other organizations can compete with few resources, but my hypothesis is that Gemini training specifically is being given nearly 0 resources, despite Google obviously having lots of resources. The hypothesis is based on an assumption that Google profits more by selling ALL their compute to others training models instead of using it themselves for training.

They already have good models, so “better” isn’t as profitable.

Google does not have to compete at the frontier, they already own a lot of Anthropic. It's not an "issue" for them because it's not one of their goals.