Time they cut the cackle about the AI boom

Has everybody gone nuts? Don’t they notice that AI is not actually making any money? The Wall Street Journal explains – Spending on AI Is at Epic Levels. Will It Ever Pay Off? Tech companies pour hundreds of billions into data centers, taking on heavy debt, but current revenue is relatively tiny; echoes of dot-com bubble.

The big AI tech boys cover up their financial failure with wonderful and confusing wizardry. For example, Cory Doctorow shows how they can adjust their operating income to make it appear profitable for a second consecutive quarter. Adjusted Operating Income (AOI) is an accounting technique that strips out non-recurring costs, giving backers a very specific look under a company’s hood. Posting a profit on AOI is very different from posting a profit on net income, otherwise known as the “bottom line,” under which Anthropic remains billions of dollars in the red.

Cory Doctorow goes on to explain that this business model pursued by OpenAI, Anthropic, Google, Meta and others of spending billions on chips and data centres in the hope of recouping it through subscriptions is delusional because of its gigantic expenditures and negative unit economics (the companies lose money with every new customer and every new use, and they lose more money with each generation of their products).

Despite their hype about AI’s future, and despite the surging share prices, the financial facts for these  AI behemoths  tell the harsh truth. For example – about Open AI’s increasing losses – OpenAI losses increased by Nearly 8X in 2025, with spending hitting $34 billion.

BUT THAT’S NOT ALL. Indeed, the financial worries pale into insignificance beside what the AI companies are doing to our civil institutions, and indeed to democracy.

This is how it works: Competition is intrinsic to these companies’ very being – they are competing with each other. As a result, each of them is able to do harm, hack in, to another’s system, while at the same time, living in fear of being hacked  themselves. This sort of thing has already happened – ‘Skynet Day’: The Day an OpenAI Agent Went Rogue and Hacked Hugging Face. And there’s China and perhaps others, to worry about, too. 

The tech boys found a solution. Attacks at this scale require a coordinated response across the AI industry, cloud providers, and policymakers. Sounds OK doesn’t it? But this solution boils down to what we call a cartel. It’s planned to be A comprehensive federal AI framework (licensing regimes, compute thresholds, liability standards, legislated “responsible scaling” commitments, etc.) that is built and administered with heavy input from the frontier labs, ostensibly to contain them. This in reality means that these tech companies, the “hyperscalers” would gain from government the legal permission to collude with each other.

Cory Doctorow has explained this beautifully – Once the government stipulates that “superintelligence risk” is an existential crisis, it must grant the hyperscalers a consent decree absolving them from any violations of antitrust law stemming from a conspiracy to halt direct competition with one another.

The US giants would love to stop battling each other and be protected from China – and they might have hit on just the narrative to make that possible

When an industry that is eating itself alive through hyperscaling demands that the government bless a conspiracy to halt competition and ban open-source alternatives, you should be suspicious. When that industry is pursuing a venture that has lost more money than any other venture in human history, you should be very suspicious, especially when its “rogue AI hacking” story turns out to be a story about how a hacking tool did exactly what it was designed to do.

While I have been drawn to Cory Doctorow for much of this, I did have my own underlying thoughts on the role of Ai in our world – in environment, politics, workers’ rights. For one thing, surely it’s obvious that the guzzling AI needs for water and energy are a high price for us to pay. But underneath it all, why on earth should we trust the hyperscalers to come up with solutions?

People like Peter Thiel, Sam Altman, Elon Musk, have already shown us not only their contempt for the concerns of us, the peasantry, but their dangerous super-macho values of greed, aggressiveness and environmental unawareness, the AI systems themselves have no values – they are impartial machines. But those who design the AI systems would impart their values into the systems, even if almost by osmosis. Just like the way, in organisations, the values of those at the top inevitable filter down into the whole.