Platformonomics TGIF is a weekly roll-up of links, comments on those links, and perhaps a little too much tugging on my favorite threads.
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I have a post in progress on recent grand AI infrastructure headlines (and the economics thereof), which explains their conspicuous absence below. Coming soon to a bit pipe near you.
News
CAPEX Clues: Manhattan Was Not Built in a Day. Nor Manhattan Sized-Data Centers.
How fast Meta can actually ramp their $600 billion (?) CAPEX plan? Hyperscale has looooooooong lead times. What do they do in the interim when every new employee has been promised their own personal cluster? The good news is 2028/9 timeframes give Meta more time to figure out how personal superintelligence might be a business. The bad news is the world will change a lot in three or four years.
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They Don’t Have the Energy
There are questions about whether they have the money. And questions about whether they have the energy. Money doesn’t solve the energy problem.
Hyperscale has looooooooong lead times. And they’re getting longer, especially on the energy side…
Utility Computing has Finally Arrived
And it looks a lot more like the traditional utilities than we might have expected, because the computing utilities are literally becoming electrical utilities.
“Meta Platforms Inc. is seeking authorization to participate in the wholesale power-trading business to manage its data centers’ electricity needs.”
“Amazon.com Inc., Google and Microsoft are already active power traders, according to filings with US regulators.”
The utility model brings all kinds of interesting lessons and implications for how we think about business models, corporate structure, regulation, and more.
The politicians, policymakers, and utilities busy scapegoating data centers for their own poor energy policy decisions might want to think a little further ahead about how this plays out.
Godwin’s Law for AI: Curing Cancer
Godwin’s Law says “As an online discussion grows longer, the probability of a comparison involving Nazis or Hitler approaches one.”
The AI equivalent is “As the promotion of AI grows, the probability of a claim to cure cancer approaches one.”
IBM of course pioneered this path (as the 21st century champion of “over-promise and under-deliver” and now quantum meme stock), claiming their robotic game show contestant Watson would cure cancer. It didn‘t quite pan out, despite having TV ads, and the business was sold for scrap.
Sam Altman, in what can only be described as a vague fundraising plea, just played the cancer card:
If AI stays on the trajectory that we think it will, then amazing things will be possible. Maybe with 10 gigawatts of compute, AI can figure out how to cure cancer.
But he didn’t put all his hyperbole eggs only in the curing cancer basket:
Our vision is simple: we want to create a factory that can produce a gigawatt of new AI infrastructure every week.
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Are Markets Efficient?: IBM Edition, The Mainframe is the Solution! What Was the Question?, ClownWatch™: IBM Q4 2024, ClownWatch™: IBM Reports Negative CAPEX, Follow the CAPEX: The Clown Car Race Checkered Flag, Introducing Platformonomics ClownWatch™, IBM is Not a Technology Company: Employees Agree, IBM is Not a Technology Company: Layoffs Are Their Specialty, IBM is Not a Technology Company: But Ecstatic to be Treated Like One, IBM is Not a Technology Company: McDonald’s Edition, This Week in Securities Fraud, IBM and the Art of Misleading Investors, Last IBM Strategic Imperative Bites the Dust, IBM’s “Cloud” Business (or Lack Thereof), Tweetstorm Digest: Reactions to Barron’s “IBM’s Reboot” Story, IBM’s Lost Decade, Follow the CAPEX: The Clown Car Race Checkered Flag, Introducing Platformonomics ClownWatch™
Attack of the Drive-By Bloggers
Everyone has an opinion on AI infrastructure (guilty!), but it is attracting tourists and some bad takes.
Tooze makes a convoluted case to support his political priors. Not everything is politics, especially the AI race. It is too easy to think you know more than you do (guilty!).
Noah Smith is usually pretty good and I like his economic lens (and subscribe to his newsletter) but the post above is two disparate pieces jammed together: a recap of AI infrastructure spend and a discussion of private credit perhaps being a systemic risk. The problem is there is minimal connection between the two today (not for lack of trying on the part of private credit, aka recurring Platformonomics antagonist private equity).
Noah’s follow up piece “Who will actually profit from the AI boom?” is better. Even better is Jerry Neumann’s “AI Will Not Make You Rich“, which argues the benefits of AI will diffuse across the economy like the containerization of shipping, as opposed to being captured by new (or existing) tech titans. He leans heavily on The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger, a Platformonomics favorite.
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The Cookie Continent Capitulates?
It takes a lot of courage to revisit your biggest (only?) accomplishment of the last twenty years. But before celebrating, remember one of the greatest chasms in the world lies between EU talk and EU action.
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GDPR Deathwatch? Or More Empty Words?, EU Insanity: Peak EU AI Regulation?, Existential Corner: EU Agrees It Faces ‘Existential Crisis’, EU and What Army?, EU Insanity: Thierry’s Termination Tizzy, EU Insanity: Experts Agree, EU Insanity: EU Goes Too Far, Even for EU, Move Fast and Regulate Things: Welcome to the Morning After, Move Fast and Regulate Things (You Don’t Understand), When “Move Fast and Regulate Things” Breaks Down, AI Regulation: Move Fast and Regulate Things, EU Insanity: Regulating Blue Checks, EU Tweets While Ukraine Burns, EU Insanity: AI Regulatory Suicide, EU Insanity: Mistral Edition, The EU Will Continue to Fiddle While Rome Burns, EU Insanity: AI Energy Suicide, EU Insanity: AI Energy Suicide (Part Deux), The European Union is STILL an Advanced Persistent Threat, BREAKING: European Union Designated an Advanced Persistent Threat, ClownWatch™: The European Union, Attack of the EuroStack, The Fate of the European Economy: Cloud Edition, Bonsai AI
Related:
Apple demands EU scrap landmark digital rules, Apple, Google tell Europe its Digital Markets Act isn’t working for them – or consumers, Why is the AI Act so hard to kill?
Private Equity in Action: Narrative Collapse?
As someone has said, private equity has too much money, chasing too few real opportunities, in a rising interest rate environment, with an exaggerated claim they know how to improve businesses. What could go wrong?
Hence the urgency to find new investors by stuffing private equity into retail investment accounts.
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Perfidious Private Equity, Private Equity in Action: The Great Garage Door Service Wars, Private Equity in Action: Unlocking “AI Database Company” Value, Private Equity in Action: CareerBuilder + Monster, Private Equity in Action: Having to Show Their Math is New Experience, Private Equity in Action: Underperforming, Private Equity in Action: Trying to Eat the World, Private Equity in Action: Fast Casual Restaurant Edition, Private Equity in Action: WP Engine, Perfidious Private Equity, Private Equity in Action: Thrasio, Private Equity in Action: “How PE Keeps Planes in the Air”, Private Equity in Action: OtterTune,Private Equity in Action: PluralSight, Software Migration Alerts, Private Equity Will Buy and Ruin More Software Companies
Software Migration Alerts: Vimeo
As someone has said, when private equity comes amalgamating, it is time to start migrating.
Hat tip to the Platformomanic who alerted me to the need for this alert! Keep the alerts coming (and feel free to suggest alternative names for the small yet mighty Platformonomics readership community).
Inflationary Impulses: New York Times Edition
A 22% price increase!
