Post

A hot take thread on LLMs, undercutting the market, and how their strategies are (and are not) like the Uber/Lyft market-invasion plan. The tl;dr: AI is trying to do for creative labor what Uber did for hired drivers, and it's not going to work. Disclaimer: I am not any sort of relevant expert.

First, a quick primer on what Uber did: they set up a platform better than, and rates cheaper than, local medallion taxi services. Once local taxi services lost market share to the point they couldn't compete, they raised prices. They lost money hand-over-fist on the first half of this deal.

This is not a particularly innovative strategy, and it's a standard part of the monopolist playbook. If you're big with capital reserves, you can squash competition by undercutting them longer than they can survive. Uber did it as a scrappy upstart with VC, but otherwise played the same game.

Looking at the current inflection point in client-side LLM pricing, it's not too hard to draw a parallel between Uber's cheap rideshares to undercut established taxi services, and the service providers' subsidized tokens to undercut a huge number of creative fields (most overtly coding).

This is the least convincing point because, on pure creation (i.e. fiction in any media), LLMs make superficially plausible products whose inferiority to human work is arguably a matter of taste. But when asked to make functional work (e.g. law briefs, research articles, and the all-important CODE)

they fuck up in ways which aren't purely subjective (nonexistent citations, bad statistics, bugs). LLM-adoption while tokens are cheap assumes this inferior product is worth the savings. But even if you don't think LLM product is much worse than human labor, there are big, economic problems.

This leads us to (2) "creative labor" is not already monopolized. Uber succeeded because they were targeting a business, and a highly monopolized business at that. Taxi sevices varied locally, but everywhere they were incorporated, and many places they had weird, exclusive "medallion" systems.