Comment by kkielhofner

One of the things driving this crazy spend on AI infrastructure by big tech is excess capital.

Big tech is getting increasing scrutiny by regulators, etc for monopolistic/anticompetitive practices/etc[0]. From S&P:

"Regulatory scrutiny is likely to translate into fewer mega deals, however. Adobe Inc. recently abandoned its $20 billion acquisition of Figma Inc. in the face of ongoing opposition from the UK's Competition and Markets Authority and the EU's European Commission. While Microsoft Corp. was able to close its $68.7 billion Activision Blizzard buy, it took nearly two years to complete the deal amid an intense fight with the regulators.

The harsh regulatory environment will continue to have a chilling effect on large tech M&A, but strategic buyers are likely to focus on smaller tuck-ins that do not tempt regulators to intervene."

So instead of growing further by spend on acquiring/rolling out new platforms to draw further scrutiny, they're shoveling piles of cash towards other capital expenses (with accounting tricks) that don't get further attention/scrutiny from regulators.

Meta doesn't use this infrastructure just for LLaMA - they get to use these hundreds of millions of dollars of spend to extract more value (deeper, not wider) from the users and platforms they already have.

Case in point: AI generated ads[1]. There's a not-too-distant future where the ads displayed on Facebook are an AI generated video of you in a new Toyota (or whatever). In terms of even open models Meta is much more than LLaMA. They have done a lot with speech (seamless), vision (segment anything), and much more.

That model training, inference, etc is running on these Nvidia GPUs as well.

There is also a take from Reid Hoffman saying that buying 100,000 GPUs or whatever is basically "table stakes" at this point[2]. Boards, analysts, the market, etc says "What I know for sure is this AI stuff needs Nvidia GPUs. Elon has 100k. How many do we have?".

So it's also a Cold War arms race/missile gap scenario. Plus, don't discount ego/"male anatomy measuring contest" that goes on with these guys. Consider this story where a bunch of centi-billionaires got together at Nobu to fight over Nvidia GPU shipments[3].

[0] - https://www.spglobal.com/marketintelligence/en/news-insights...

[1] - https://www.theverge.com/2024/10/8/24265065/meta-ai-edited-v...

[2] - https://www.theinformation.com/articles/openai-investor-hoff...

[3] - https://finance.yahoo.com/news/elon-musk-oracles-larry-ellis...