Scott Galloway just explained why China doesn’t need to build better AI than America. It only needs to make American AI worthless. Galloway: “I think China is beginning to engage in what I’ll call AI dumping.” Not competing. Dumping. It’s the term economists use for flooding a foreign market... with below-cost goods until the domestic industry collapses. Galloway: “They’re going to have a series of open-weight models. About a third of corporations now are supposedly using Chinese lightweight open-weight models that are cheaper.” Not better. Cheaper. A third of corporations. Already. China isn’t trying to out-innovate Silicon Valley. It’s trying to collapse the economics beneath it. Price warfare at the infrastructure layer. Galloway: “If I were Xi, I would just dump cheap AI into the US market.” This playbook is old. China ran it with steel. Ran it with solar. Ran it with semiconductors. Flood a market with a cheaper version until the domestic industry can’t sustain itself. AI is next. Galloway: “The moment large corporations start announcing they’re disengaging these multi-million dollar site licenses with Anthropic or OpenAI, they’re using these inexpensive Chinese models…” One CFO after another decides the Chinese model at a fraction of the cost is good enough. Not better. Good enough. “Good enough” at a lower price has killed more market leaders than any superior product ever has. Galloway: “…and the market realizes that there’s no way they can justify these incredible valuations, I think the US market crashes.” Not because the technology failed. Because the business model did. American AI companies are valued on the assumption that corporations will pay premium prices for premium models. China’s whole strategy is to make that assumption false. Galloway: “40% of the S&P now is directly or tangentially related to this giant bet America’s making on AI.” 40% of the S&P. Tied to one sector. Galloway: “The majority of GDP growth over the last two years has come from AI CapEx.” The majority of GDP growth. From one source. America didn’t diversify its future. It concentrated everything into a single bet, then left that bet undefended. Galloway: “If that slows down, we are immediately in a recession.” Immediately. Not gradually. Not over quarters. The distance between AI boom and American recession is one procurement decision. America built the most advanced AI on Earth and forgot to build an economy that survives someone selling it cheaper. The threat to American AI was never that China would build something smarter. It was that China would build something cheaper, and American corporations would choose the price. China’s real weapon isn’t Chinese technology. It’s American capitalism. The same rational self-interest that built the AI industry will dismantle it the moment a cheaper alternative appears. The market has no patriotism. Only price sensitivity. The technology race was never the real race. The real race was always whether America could turn its AI dominance into something that survives being undercut. America hasn’t even started running it. China already has.show more

@mariocavolo This is a master class in self serving nonsense. The most efficient competitor is supposed to win in a free market. What he wants is socialism for billionaires who own American tech companies so they can price gouge everyone else. He’s also a big investor in Anthropic.

STFU. “OpenAI” failed in their mission. A complete scam. What is open about OpenAI? Yes, you and your ilk are going to lose a lot of money. It is absolutely maddening that a socialist country is beating us to open models. Wake up. Open the weights and we can move away from their models. Really pisses me off that everyone is so protectionist right now.

This dumb boomer mentality will lead into another war instead of working with other countries to build the best one for humanity. They just want to be billionaires.

We can dump cheap H1bs into the labor US market but God forbid!! we dump low cost LLMs into the US AI market. Make it make fuckin sense.

The problem with this, much like the economic dumping theory, is it does not match reality. This assumes people only care about price and that Chinese models are worse than Western models. Neither, of course, is true.

We should be doing the same. But China is a master at counterfeiting xpensive goods massively at low cost. We do the research, they copy the answer. Unless we are able to create low cost alternatives to the Chinese models, the rest of the world may be happy to settle for “good enough.”

Why do we trade at all with China? Why aren't they treated the way we treated the Soviet Union? We know they steal the IP of our companies. The US is subsidizing a communist state and wondering why this time communism seems to be working.

Hi Scott Galloway’s “China AI price dumping” argument sounds smart on a podcast, but it reveals a complete misunderstanding of how open-source software works. ​Economic dumping requires asymmetry. A state actor sells a proprietary commodity below cost to bankrupt domestic rivals, capture a monopoly, and then jack up prices later. ​You cannot monopoly-dump a public good. ​When China open-sources a model’s weights, they aren’t selling a closed product. They are releasing a blueprint to the entire planet for $0. ​Here is what actually happens when China drops open weights: ​China pays 100% of the training bill. They burn their capital, compute, and R&D to produce the weights. ​American developers fork it for free. We don’t become dependent on Chinese servers or Chinese infrastructure. ​We run it on US hardware. American teams take those weights, fine-tune them locally, and deploy them on NVIDIA silicon, inside U.S. clouds, governed by Western data security. ​That isn’t predatory dumping. That is China accidentally subsidizing Western software engineering. ​The idea that driving token prices to zero is a "threat" completely misses the point. We want the marginal cost of baseline intelligence to collapse. When tokens trend to zero, base intelligence becomes a utility, and the value shifts entirely to the application layer, developer creativity, and silicon performance. ​Guess who leads the world in application layer innovation, top-tier developers, creative engineers, and frontier silicon? ​America. 🇺🇸 ​The real threat isn’t a clever Chinese pricing trick; it’s our domestic infrastructure grid. China has a massive surplus of electricity; America is short on power capacity and buried in regulatory red tape. If China catches up on model quality, their surplus gigawatts allow them to train and run inference at scale while we wait for grid approvals. ​Stop falling for broken trade analogies. The answer isn't fearmongering over free code—it's building power plants, unleashing our builders, and winning the race on the field. I agree with @chamath over @profgalloway

Galloway?.......yea, that poser is where we should go for info on AI........

They are not dumping . Dumping means selling below cost. The Chinese companies are making a healthy profit. The AI engineers there are making more money than in another professions, they are just not making billions of dollars like the Americans, which is obscene.

logic doesnt make sense lol. cause low cost product if poor in quality will not be embraced. Japanese cars were both cheap n reliable as well as fuel saving as good quality that defeated US cars. did US once made up similar propaganda against Japanese cars? Yes.

"China isn’t trying to out-innovate Silicon Valley" .. sorely underestimating the tech R&D that is happening there.

Funny, you didn't say the real reason behind this predicament. That is the excessive greed to make money out of a nascent technology to the point when investment looks like playing casino games.

@theallinpod y'all need to deep dive on this "flood the market with good enough AI" theory - it actually sounds like a reasonable argument to me - @Jason pls put it on the docket

That would make 100% sense….. if it wasn’t for the very simple fact that the AI they “dump” is worth money… can be distilled by any American frontier LLM company… because it’s #OpenSource …. And it is saving American businesses, millions possibly billions of dollars annually….. these companies need to stop whining and produce better AI systems…. And. #newsflash subscription used case models cost too much money up to 100 times more money than these American companies hosting their own LLM on their own servers and keeping their data safe and off of cloud computing systems that they do not own or control…. And where their data becomes part of the training data and possibly saved within the very AI systems that frontier LLM companies own…..

You’re just a sour-grapes protectionist. There are a few questions you need to address here: 1) Why can’t America and other countries build comparable frontier models at a much lower cost? If it were so easy, everyone would have done it already. 2) Capitalism, not patriotism, meaning sufficient market competition in this context, is the very thing that has allowed Western civilization to thrive up to this point. Are you now advocating patriotism over capitalism? 3) Why would any rational person pay for significantly overpriced models and buy into the AI fearmongering pushed by Dario God and Scam Altman, along with their condescension toward the general public?

american is paying for its greed. Deepseek looks for 6x profit, so happy with small profit and do not exploit its user. american hyperscaler look to dominate market and kill competitors so can squeeze for 100x profit. But can't survive without being exploitative. Greed

I think that's a fair assessment of what the Chinese are up to. Truth is all bets will be off once AGI achieved and there is simultaneous leadership in the physical layers - chips, energy (a real US bottle-neck), robotics - it really is a race..

Bullshit. On what hardware is this “cheap” AI gonna run?

US Ai is snake-oil. China spends a fraction, and treats it like a really fast search engine; appropriate & useful. meanwhile; US tech gets 100s of billions in public money to float their animatronic demi-gods that prove wrong on simple facts

The key is making things that have a direct business utility and not pumping money into inflated developer salaries, based on unreal market valuations

The challenge with your analysis of comparing it to steel is by creating open ai models China is not making revenue. In fact Musk wanted American models to be open in the first place, that's why he funded openai.

WRONG, open source models immensely benefits NVDIA , that's why NVDA itself has releases tons of open source models and gives llm access for free. That means more companies running ai on the NVDA hardware. The only onces in trouble is anthropic and 'openai'

Except compute is not fungible. They are losing money, and Kimi already had to shut down new subs. They can 'dump' compute until they all go out of business. There is no winning by being a loss leader.

how is making 6x profits is called dumping, instead of blaming our own reckless, bloated, and corrupt financial system? get over yourself, narcissistic America!

He's right just often enough for dumb opinions like this to be considered seriously. There are,any American models "dumping"...

China offers 90% of what the West offers but at half the price. It sounds unfair until you remember there is a world out there crying out for cheaper products. Africa, Latin America, Asia would be lost without competitively priced Chinese goods

Price isn't the real issue here - it's quality. Western models are deteriorating by the day. They're becoming so over-regulated that they feel less like tools and more like servants of governments and elite interests.

I agree with this guy for once. sort of. Inference is on US machines in US so they are not dumping that. Any US lab can do the same and some are - Laguna 2.1 is great. It is game over for closed weights I think.

But American AI is ALREADY worthless. Everywhere but on the stock market. That's why there's a bubble

People still fail to understand Jevons Paradox... If the models get cheaper they become more attractive to use and therefore the demand for compute increases.

I know there's one thing you'll find really hard to admit - China's production efficiency, China's efficiency is much higher than yours, and that's the real reason.

Right! China is playing the communist playbook: Steel or take from those who have. If you can’t, undermine them. This works until there is no one else to take from. Then everyone is doomed and equally poor and unchallenged. Look at every country run by a communist country and that is what you have seen.

The mistake was thinking you can rent seek and things don't fall the necessary cost of production. It's not a national market but a global market. Real Estate, health care aren't global markets so you can have full regulatory capture to prevent that.

I’m shocked at the number of people who “blame China” for doing what capitalism invented: undercutting the competition with a better cheaper product!” Tough shit lose4d