I mean I would still expect them to currently lose money ? Their tiers aren't as generous but they're still free free (i.e no revenue generation whatsoever, google search is free but they're still generating revenue per user via ads and such).

I think the authors point isn't that inference is so cheap that they can be profitable without changing anything but that inference is now cheap enough for say ads (however that might be implemented for an LLM provider) to be a viable business model. It's an important distinction because a lot of people still think LLMs are so expensive that subscriptions are the only way profit can be made.

> Their tiers aren't as generous but they're still free free

Certainly Claude's free tier is not generous, I basically ended up subscribing the first day I used it.

But, assuming that the losses are from the free tier, it's odd to me that Anthropic wouldn't be showing some kind of cash generation at this point.

Granted training is super expensive and they're hiring loads of people ahead of revenue, but if they were unit-cost profitable, one would have expected this to be leaked during one of (the many) funding rounds they've engaged in.

I'm mostly unconvinced by the author's analysis because of the above, but it's certainly food for thought to shift my prior that LLM modelling and service providing is a bad business.