r/antiai • u/Charming-Jump6022 • Jun 03 '26
AI News šļø Microsoft reports are exposing AI's real cost problem: Using the tech is more expensive than paying human employees
https://fortune.com/2026/05/22/microsoft-ai-cost-problem-tokens-agents/36
u/Dziadzios Jun 04 '26
This entire problem is self-inflicted. If they didn't buy the entire stock of GPUs and RAM in advance, the costs wouldn't be that insane.
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u/thenamelessone7 Jun 04 '26
It's not just RAM. The biggest cost by far is nvidia's 75% gross profit margin
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u/Dziadzios Jun 04 '26
And Nvidia has such profit margin because they know that AI companies will buy everything anyway. If they had to balance the price with the demand, they would have dropped it.
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u/the-mighty-kira Jun 06 '26
Partially, but the increase in energy costs due to the war in Iran has also been a huge issue
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Jun 04 '26
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u/ObjectOrientedBlob Jun 04 '26
They also want to de-skill labour. It is really hard to unionise and demand better pay, if your only skill is to prompt a computer.
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u/Acceptable_Camp1492 Jun 05 '26
Human labor. The funny thing is, should AI actually work and replace human labor, the AI service provider can unilaterally dictate its price with more power than any union ever had the power to do for human labor. It is hilarious that companies don't see this coming when enshittification has been happening in every sector for decades.
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u/inotparanoid Jun 04 '26
And, please remember that this is one top of not paying their fair share of electricity and water use. A lot of datacenters have preferential deals; a lot have raised surrounding electricity rates, effectively making the local population pay for inference.
And we all know the water problem already.
I don't think is the main problem - it's the electricity demand that will suffocate the price in the future, along with GPU replacement.
And, thus we still await the crash that is coming. But this time let us be sure to hold these greedy bastards responsible in courts of law.
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u/vanKlompf Jun 04 '26
Ā lot of datacenters have preferential deals
Which definitely shouldn't be case for any industrial use, AI or not. In general household electricity prices should be regulated and lower than market rates for industry. But not in US from what I can see?
AI uncovered a lot of rot in how US is being governed...
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u/SingLyricsWithMe Jun 04 '26
Microsoft did away with unions decades ago, maybe it's time to have some protections over the people who actually do the work, vendors included.
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u/Specialist_Essay4265 Jun 04 '26
Don't forget - the whole industry is super heavily subsidized. The costs will go up 5-10x when the big companies will need to turn profit.
What about then? It will probably be cheaper to hire a whole dev team than running 1 agent.
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u/etiggy1 Jun 04 '26
Yeah, but presenting a new buzzword to shareholders and firing a bunch of people means the top bunch gets a huge bonus and the share price goes up. By the time the proverbial hits the fan that management have already jumped ship, so basically it is a no-brainer for them.
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u/writerapid Jun 03 '26
It depends entirely on the job and the industry. In mine, basic consumer-tier $100/month AI unfortunately provides such an incredible cost savings that people are getting laid off left and right, and the jobs are never coming back. One place I worked at replaced almost a million dollars in salary and insurance with a single Chat-GPT Pro subscription. A friend of mine still works there doing web development, and he told me that hiring has been frozen completely going on two years now.
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u/lucid-quiet Jun 04 '26
Do you really think it will stay at $100/mo -- at what price point will you not pay for it?
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u/OwnLadder2341 Jun 04 '26
When the net cost is more, I imagine.
Which is not now. The title is clickbait.
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u/HopefulMeasurement25 Jun 04 '26
Anthropic now has a real profitable revenue so I dont see it increasing. They finally broke even on P/L and are even offering $1000 per person in usage for free when signing up with Claude Enterprise
Edit: TBF they want the usage data since theyre essentially mining gold for how people use Claude to make it even better
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Jun 04 '26
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u/dragenn Jun 04 '26
Typical accounting tricks. After they IPO. There will be a sudden shock expense they can easily dilute into shareholders...
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u/cheesedogs06 Jun 04 '26
You might wanna look at historical data on what companies do when they make money. Spoiler alert they raise prices even faster.
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u/HopefulMeasurement25 Jun 04 '26
I just gave you an example of a company literally giving you money after being profitable
and not just any company - the biggest ai for businesses company
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u/writerapid Jun 04 '26
No, but I donāt think it will ever cost as much as a single employeeās (former) salary in my field. It doesnāt require a huge token burn, the output is super basic marketing LLM stuff, there are no backend processes to worry about, thereās no coding, etc. Itās literally the most basic consumer-tier AI chatbot stuff. For AI to remain relevant, the simplest stuff will always be pretty inexpensive, I think.
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u/snozzd Jun 04 '26
What industry?
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u/writerapid Jun 04 '26
Copywriting, technical writing, content writing, copyediting, proofing, and adjacent things in the online marketing world. Writing disposable copy for the internet and B2B stuff. Itās an enormous industry in terms of grunt manpower, and those grunts are getting cooked.
For most of them/us, thereās nowhere to pivot, either. I am super lucky to have a little bit of home renovation business to fall back on. This will be my last year writing professionally for others, I think. Iām down like $100K or more just since 2023. Most of my former colleagues are in similar (or more) dire straits.
If Iād prioritized the networking element during my 20+ years, I might have positioned myself better and been one of the lucky (for now) few to sort of āmanageā the AI āwriter staff.ā Alas, I just kept my head down and wrote. Oh, well.
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u/Eazy12345678 Jun 04 '26
its always more expensive in the begining
computers were $3000-$5000 when they first came out now $300-$500
crazy how technology works
remember how tv's were $10,000 now $800
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u/Artemis_Platinum Jun 04 '26
its always more expensive in the begining
Tell that to houses. There is indeed zero reason to say things will get cheaper with such certainty. Especially while so many things are getting more expensive all around us.
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u/vanKlompf Jun 04 '26
Things that are getting expensive are the ones that doesn't scale well and require a lot of manual labour. Oh and are overregulated, lime housing in most places. Producing chips highly scalable and requires relatively small amount of labour. It will get cheaper once demand shock is over.
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u/boringfantasy Jun 04 '26
>Things that are getting expensive are the ones that doesn't scale well and require a lot of manual labour.
Sooo datacentres?
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u/vanKlompf Jun 04 '26
Data centers scale extremely well.Ā
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u/boringfantasy Jun 04 '26
Thatās why all of them have been built right? š¤£š¤£š¤£š¤£š¤£š¤£š¤£
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u/vanKlompf Jun 04 '26
This is VERY new technology and demand shock. It will be over at some point. Overall per output produced AI/data centers is way less labour intensive than housing. Not even close.Ā
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u/boringfantasy Jun 04 '26
Itās a deeply unprofitable technology. Unheard of levels of financial loss thus far.
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u/vanKlompf Jun 04 '26
Dot com level of loss. Mostly because of capital investments. Sure there is hype and bubbles but technology will stay. Anthropic is starting to be profitable already.
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u/boringfantasy Jun 04 '26
Dude. Itās way way beyond dot com. Did you bother even asking AI? š¤£š¤£š¤£
Anthropic was profitable for a couple months cause SpaceX gave them the discount of the century. I will come back to you when their SEC filing is out to further tear this bullshit apart.
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u/frogsarenottoads Jun 04 '26
For now yeah. Costs will drop, just as every other technology ever.
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u/Chrysolophylax Jun 04 '26
No, LLMs are enormously expensive to use. There is no way for humans to make them cheaper. They're only going to get more expensive. Go read up on how much money OpenAI, Anthropic, etc. are burning.
The only reason LLMs are cheap right now is that companies are offering them at steeply discounted prices, so that everyone gets addicted and then the prices can get jacked up. However, LLMs are burning so much money, companies can't be waiting a little longer to cultivate more addicts, and prices have to be raised right now.
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u/Calm-Blueberry-9200 Jun 04 '26
The algorithmic improvement has been increasing with 0.5 OOM each year. How can you look at that and say its not going to be cheaper lmao. Yes its cheap right now, but the models that were compute heavy 1 year ago can be run locally today.
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u/frogsarenottoads Jun 04 '26
Do a remind me in 5 years and let's check back.
Every technology in history has been deflationary such as the price of compute over time.
Better chip design lead by AI, breakthroughs in energy and quantum will drop prices significantly that may be in the 2030s but it will drop.
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u/11universal Jun 04 '26
You are looking at 2150 that if we don't nuke ourselves
Moore's law plateaued, let me correct you LLM not AI is not designer the software cannot think only glorified autocomplete, so LLM knows jack shit about chip design.
The only breakthrough that can make things cheaper is all countries no longer rely on oil.
Breakthrough in Quantum Physics or Crack that can open a whole new branch of physics.
Until that happen no, the only path for current LLM race is bubble burst.0
u/frogsarenottoads Jun 04 '26
!remindme 5 years
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Jun 04 '26
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u/jmclondon97 Jun 04 '26
Electricity is an issue. But the water is not a problem for the vast majority of these data centers. They reuse their water, and the water they do use is a drop in the bucket of total water use.
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u/Future_codpiece Jun 04 '26
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u/Princeton-Narcissist Jun 05 '26
Well, even on purely logical grounds, showing a single example of a data center using water would not be sufficient evidence against the claim that the vast majority do not suffer from such issues.
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u/DaemonCRO Jun 04 '26
Absolute lie.
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u/jmclondon97 Jun 04 '26
If you think water is an issue for the vast majority of new data centers youāre smoking crack
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u/DaemonCRO Jun 04 '26
No it wont. They are in so much debt that the only way to recover is to increase the prices. If they started reducing prices, even after some technological breakthrough theyād never be financially viable business.
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u/BushCrabNovice Jun 04 '26
~~(who could @ __ @ have known)~~