Microsoft did not pay with money - it paid (mostly) with Azure cloud computing credits. MSOFT is then able to write this off as a loss against tax.
It is generally far more tax-efficient in the US to write a loss in this way than it is to write a loss for a cash investment.
In this case, I believe the difference was ultimately highly significant. When including MSOFT eventually writing-off the deprecating Azure hardware it had used to buy the OpenAI equity, the result was MSOFT's tax reduction being either close-to or exceeding the actual cash value of MSOFT's investment in OpenAI - IIRC.
These examples represent taxes that the US chooses not to collect - the US could choose to make investments like these less tax-efficient. Instead, by making them extremely tax-efficient, the US subsidises the transaction hugely.
Even ignoring monetary subsidies, there are the non-monetary ones: not being sued into oblivious by the government for their countless hacks of other companies and countries, the slaps on the wrist for massive piracy, the waving of environmental (and other) regulations in order to allow their data centres to be built an operated.
That's what I'm asking - which monetary subsidies?
> not being sued into oblivious by the government for their countless hacks of other companies and countries
That isn't normally how enforcement works, and it hasn't been very long since they disclosed those breaches. If the victims want to pursue legal action, they can, and they still may!
> the slaps on the wrist for massive piracy
So judges and juries are involved in the subsidization conspiracy, too?
> the waving of environmental (and other) regulations in order to allow their data centres to be built an operated
Sure, though if you think this isn't happening in China too, I have a bridge to sell you.
That's just the ones i know off the top of my head in the US. Those programs account for more than 60 billion in committed spend.
> That's what I'm asking - which monetary subsidies?
I am listing for you the non-monetary subsidies, which are just as real and equally important.
> not being sued into oblivious by the government for their countless hacks of other companies and countries
If it was one of the Chinese labs doing this hacking, the government would be stepping in. If it was European labs they'd be stepping in. If it was you or I the government would be stepping in. That is a massive subsidy (they don't have to worry about the same legal fees and exposure) and being allowed to continue doing business is in fact priceless.
> So judges and juries are involved in the subsidization conspiracy, too?
There is no conspiracy. They are objectively operating by a different set of rules than you or I could operate in this market.
> Sure, though if you think this isn't happening in China too, I have a bridge to sell you.
I never said it wasn't, I'm saying that it's happening here and it's a very real subsidy.
They really aren't. Nothing in the development of these systems, absolutely nothing, is as important as money. Stop these silly false equivalences.
All the major labs would be dead in the water if the government acted on the things I mentioned. If they treated the labs the way they would have treated us for all those hacks. Or if they enforced pollution measures (or god forbid ban on-prem turbines because of the climate damage). Or rule that training on data is not fair use, or that ingesting GPL3 code and then turning that into weights counts as a derivative work. Or. Or. Or.
Those are all just as important as cash.
The hacks are pretty bland as long as there is no mens rea and the hacked victims do not want to press charges. This isn't a "subsidy", it's just our normal legal process at work.
The pollution question is winding its way through court systems and getting a lot of pushback. I wouldn't call this a subsidy, just a slow bureaucracy. And at any rate this isn't special to the US; certainly China's environmental policy is far more lenient.
With the training data, again there's nothing specific to US corporations here. Anyone can use that dataset. It's just how our legal system works. You might not like it, but it's the accepted law right now. This doesn't meet any reasonable definition of "subsidy".
On the other hand, shoveling billions of dollars of taxpayer funds into corporations is by definition a subsidy. Full stop.
Not arbitrarily banning companies from buying a product from a supplier doesn't meet my definition of the term "subsidy".
I don't see how. Anyone can buy electricity without any intervention from the government. An intervention is an action that changes what would happen by default.
[1] Where "Bad Things" would be the typical interest, taxes, depreciation, amortisation plus the Anthropic specific employee compensation, LLM training (you know, for the LLM lab), revenue sharing agreements (which is a form of paying for infrastructure), etc.
For LLMs, marginal cost is just electricity
Assuming you meant to reply to me and not someone else are you saying under GAAP accounting standards Anthropic is a profitable business because under GAAP accounting their only expense is electricity?
(I see what happened you skimmed the conversation and didn't follow what was being discussed.)
2. The marginal cost is electricity until the hardware overflows. So it's continuous for electricity and a step function for hardware capacity.
Plus you don't address the core point. Frontier AI is capital intensive. A lot more capital intensive than regular software. The existing clouds supporting the entire internet (!!!!) were built for a fraction of the cost of AI infrastructure, and there isn't even an end in sight to this continuous hardware investment.
Let alone hardware refresh cycles.
AI is basically investment into roads.
Software used to be a magical place, closer to selling music albums but even better.
AI is a much worse business margin wise than regular software.
Non-punishment is also not a subsidy; again, words have meanings. Let's use the correct words.
Would you say you could be serious in stating this?
They have other issues as well, but among other things, I'd classify them as somewhat charitable too.