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Scott Galloway just explained why China doesnโ€™t need to build better AI than America. It only needs to make American AI worthless. Galloway: โ€œI think China is beginning to engage in what Iโ€™ll call AI dumping.โ€ Not competing. Dumping. Itโ€™s the term economists use for flooding a foreign market with below-cost goods until the domestic industry collapses. Galloway: โ€œTheyโ€™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.โ€ Not better. Cheaper. A third of corporations. Already. China isnโ€™t trying to out-innovate Silicon Valley. Itโ€™s trying to collapse the economics beneath it. Price warfare at the infrastructure layer. Galloway: โ€œIf I were Xi, I would just dump cheap AI into the US market.โ€ 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 canโ€™t sustain itself. AI is next. Galloway: โ€œThe moment large corporations start announcing theyโ€™re disengaging these multi-million dollar site licenses with Anthropic or OpenAI, theyโ€™re using these inexpensive Chinese modelsโ€ฆโ€ One CFO after another decides the Chinese model at a fraction of the cost is good enough. Not better. Good enough. โ€œGood enoughโ€ at a lower price has killed more market leaders than any superior product ever has. Galloway: โ€œโ€ฆand the market realizes that thereโ€™s no way they can justify these incredible valuations, I think the US market crashes.โ€ 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. Chinaโ€™s whole strategy is to make that assumption false. Galloway: โ€œ40% of the S&P now is directly or tangentially related to this giant bet Americaโ€™s making on AI.โ€ 40% of the S&P. Tied to one sector. Galloway: โ€œThe majority of GDP growth over the last two years has come from AI CapEx.โ€ The majority of GDP growth. From one source. America didnโ€™t diversify its future. It concentrated everything into a single bet, then left that bet undefended. Galloway: โ€œIf that slows down, we are immediately in a recession.โ€ 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. Chinaโ€™s real weapon isnโ€™t Chinese technology. Itโ€™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 hasnโ€™t even started running it. China already has.

Dustin

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