US - China: Different Roads Re AI

What do I know about AI? Well, I know it stands for Artificial Intelligence. That’s about it. Oh, I also know that Trump is planning on making it his signature initiative—more so even than peace in our time, or I’m greatly mistaken. Which is possible. Still, Arnaud Bertrand offers what seems to me to be an intelligent tweet for the generalist, in which he compares the Chinese approach to the approach Trump is putting forward—dueling philosophies of development:

Arnaud Bertrand @RnaudBertrand

Really interesting how the US and China are taking such different roads on AI.

Beyond the PR that this "Stargate Project" is to "create cancer vaccines", what it really seems to be about is doubling down on OpenAI's strategy of building a "money moat" through massive infrastructure investment and centralizing AI on its servers - $500B is an astronomical sum for data centers.

The contrast with China's approach couldn't be starker: DeepSeek just demonstrated they matched OpenAI's performance with a fraction of their resources and, more importantly, they're releasing their model in a way that illustrates a much more democratizing vision for AI - AI as a commodity with extremely affordable models (just 3% of OpenAI's cost!) that anyone can use however they want.

It's like watching two fundamentally different philosophies collide: one betting that AI's future lies in massive centralized infrastructure controlled by a few players, the other pushing toward a decentralized future where AI becomes a basic utility that anyone can deploy.

In a way it's a bit reminiscent of the Apple v Microsoft battle of the 80s and 90s. On one side, Apple's vision of premium, controlled, vertically integrated computing. On the other, Microsoft's strategy of commoditizing the OS and letting anyone build PCs. We know how that played out: Microsoft eventually dominated the market (with Apple carving out a smaller but profitable niche for itself).

Perhaps a more provocative comparison might be between the Soviet model of state driven industrial development and the old American idea of entrepeneurial innovation and development. Or, extending the OS simile, the way that Linux now runs the world.

A fundamental question remains though: what will OpenAI customers be paying for exactly if much cheaper Deepseek matches their latest models' performance? Having spent an indecent amount of money on data centers isn't a customer benefit in and of itself.

OpenAI seems to be betting that massive compute infrastructure will enable them to build significantly better models in the future. But that's far from guaranteed - if anything, recent history suggests the opposite and that's why the announcement's timing is particularly ironic, the same day DeepSeek announced they matched OpenAI state-of-the-art performance for a tiny fraction of the cost... This suggests that innovation matters more than raw computing power and that this $500B bet on infrastructure may be OpenAI fighting the last war.

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Tsarathustra @tsarnick

Larry Ellison says the Stargate Project will construct the largest computer ever built which will enable AI to create cancer vaccines, personalized medicine and pandemic prevention

It may also help Larry Ellison create the largest bank account ever.