When OpenAI released ChatGPT in late 2022, it quickly broke records as the fastest growing technology product in history. AI model providers such as OpenAI, Anthropic, and Google initially used artificially low flat-rate pricing to drive adoption and capture market share, trusting that they could burn investor capital to manufacture dependency and then monetize a captive user base. But compared to the other consumer-facing platforms that had run this playbook since the 2000s, such as Facebook, Uber, or Instagram, generative AI differs in two critical respects.

First, each additional user generates a huge ongoing cost per query at a scale no social network has ever approached. Specifically, the chatbots consume an immense amount of computational power, which relies on electricity, water for server cooling, land for data centers, and billions of dollars in hardware investment. Second, as the models get more advanced, they also become more expensive to run. In that sense, they are closer to cloud-computing technologies such as Amazon Web Services.