points by smallmancontrov 3 days ago | 0 comments
> Their war chest is not sufficiently larger
That's not the metric. The legal system is pay-for-delay, not pay-to-win. Once you have enough money to delay, it becomes a contest of who has the longer runway, and that probably goes to the frontier labs rather than the neoclouds who have little alternative revenue and comparatively airtight debt obligations.
> take-or-pay contracts are unenforceable if it would bankrupt the buyer which is the more likely resolution in this case. However, this does not mean frontier labs just get to walk away. They would settle in court for a penalty
Regardless, the terms come down to positioning and bargaining power. Runway vs obligations. This seems to dramatically favor the labs.
Which is what I said - frontier labs do not have a sufficiently larger war chest.
Respectfully, comparing the balance sheets of a frontier lab to Blackrock, Apollo, Softbank or Nvidia is laughable.
The neocloud will also easily rent out that unused compute and keep funding their war chest via Nvidia’s backstop. If Nvidia can’t pay then it’s all over and AI companies have been swallowed by credit markets.
Your hypothesis also ignores the fact that if frontier labs are not paying for compute it is because they have bad revenue, little cash available and no credit (no one is loaning money to OAI or Anthropic if they can’t pay their bills. They can barely get debt today).
> Regardless, the terms come down to positioning and bargaining power. Runway vs obligations. This seems to dramatically favor the labs.
No, the only way out is for OpenAI or Anthropic to claim in court that they would be insolvent if they are required to pay the bill in full. Otherwise this is a straight forward deal.
You are greatly overestimating their capabilities and underestimating how many substantially more well-funded and highly liquid players will be lining up to take their pound of flesh if OAI or Anthropic default on a bill.
I’d wager my life savings one of those two will go through liquidation.