Battlelines are Being Drawn in the AI Industry

The AI industry is witnessing a significant shift as major AI labs and popular applications that rely on them are drawing battlelines. This week, both Anthropic and OpenAI took shots at two leading AI apps: Windsurf, a popular vibe coding tool, and Granola, a buzzy AI app for taking meeting notes.

The Tension Between AI Labs and Their API Customers

Windsurf CEO Varun Mohan wrote on X that Anthropic had cut off nearly all of its first-party capacity to all Claude 3.x models with less than five days’ notice. Mohan noted that Windsurf wanted to pay for the full capacity, but Anthropic’s conduct will harm many in the industry, not just Windsurf. This move is seen as a result of Anthropic’s rivalry with OpenAI, which has reportedly been in talks to acquire Windsurf for about $3 billion.

The Impact on AI Apps

Meanwhile, OpenAI sent its own warning shot to the budding AI app ecosystem by announcing a "record mode" for ChatGPT, which transcribes calls and generates meeting notes. This is the core use case of Granola, one of the most popular AI tools that recently raised $43 million in additional funding and released a mobile app. The move by OpenAI will make it harder for Granola to grow, as hundreds of millions of ChatGPT users will eventually have access to its main functionality.

The Delicate Balance Between AI Labs and Their Customers

Anthropic’s chief product officer, Mike Krieger, acknowledged that the company is navigating a delicate question: how to compete with its API customers. AI investor Zak Kukoff pointed out that at some point, model providers will need to decide if they want to be stable platforms or compete for every vertical. This week’s events served as a wake-up call for startups building businesses on the backs of AI models, as they may run the risk of being copied by their model provider if they are successful enough.

A Different Take on AI and Job Loss

Sundar Pichai, CEO of Google, and Sridhar Ramaswamy, CEO of Snowflake, recently contradicted the growing fear that AI will destroy jobs en masse, at least when it comes to engineering roles. Pichai downplayed the idea that AI will lead to significant job loss, while Ramaswamy argued that it’s the middle of the workforce that is most in danger of near-term displacement. Ramaswamy noted that companies tend to accrete middle management, and there’s a push to get more people who are doing, rather than managing.

Recent Moves and Appointments in the AI Industry

There have been several recent moves and appointments in the AI industry. Ryan Roslansky, CEO of LinkedIn, is now also leading the Office portfolio of products at Microsoft. Rohan Anil is leaving Meta to join Anthropic, while Richard Fontaine is joining the board of Anthropic’s controlling trust. Tesla’s head of Optimus, Milan Kovac, is leaving to spend time with family, and Christian Szegedy, a co-founder of xAI, is leaving to be the chief scientist of an AI startup called Morph.

Quotes from Industry Leaders

Several industry leaders have made notable comments recently. OpenAI’s Greg Brockman spoke about the possibility of having multiple domain-specific AI agents, rather than a single AI in the sky. Perplexity CEO Aravind Srinivas predicted that the company will be doing a billion queries a week if it can sustain its current growth rate. Substack CEO Chris Best noted that the company was accidentally cash flow positive in Q1.

Conclusion

The battlelines being drawn between major AI labs and popular applications that rely on them are a significant development in the AI industry. As AI labs navigate the delicate balance between competing with their API customers and providing stable platforms, startups building businesses on the backs of AI models must be aware of the risks and opportunities. While there are concerns about AI leading to job loss, some industry leaders argue that it will actually enable companies to do more and create new opportunities. As the AI industry continues to evolve, it will be interesting to see how these tensions play out and how companies adapt to the changing landscape.