If the Markets Reject OpenAI and Anthropic, the US Should Nationalize Them - Schneier on Security

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If the Markets Reject OpenAI and Anthropic, the US Should Nationalize Them

This essay was written with Nathan E. Sanders, and originally appeared in The Guardian.

OpenAI, and then Anthropic, were each formed by AI developers who feared unrestrained corporate AI development—specifically, that companies like Google and Meta would steer the technology towards deleterious, maybe even catastrophically unsafe, outcomes for society. Their founders proclaimed that their new labs, uniquely, could be trusted to develop the technology in humanity’s best interest. But each, in turn, were themselves co-opted by the same market incentives, themselves becoming corporate behemoths zealously guarding future investor value rather than the public interest.

It was only a few weeks ago, in June, when OpenAI and Anthropic each filed for their IPOs and were met with buzz about trillion-dollar valuations. The hype around their valuations is so extreme that many worry about their potential for concentrating wealth on a global scale. In an effort to leave something for the rest of us, some observers have proposed that the federal government seize a share of these companies’ stock to create a US sovereign wealth fund, or redistribute their revenues to produce a dividend for taxpayers.

Now the headlines are about public backlash to AI datacenters and the AI chip giant Nvidia’s slumping stock. The tech and AI giant SpaceX’s newly minted stock price tanked just weeks after its IPO. There are even questions about whether the leading AI labs will ever be sustainably profitable. All of a sudden, the makers of ChatGPT and Claude face strong headwinds as they seek to generate the massive equity assets that once felt all but assured.

In fact, evidence suggests the market itself could reassess that these companies offer nothing of financial value. In that case, perhaps we can return them both to their original purposes. If these AI companies should fail in the financial markets, the US should nationalize them and convert them into national labs operated under democratic control that preserve their benefit to the public interest.

The economics of the big AI labs hardly guarantee a booming return on investment. Frontier AI models are both expensive to train and depreciate within months, when a newer model appears. This means that the payback window to extract profit from them is very narrow. Meanwhile, enterprise clients are getting smart about minimizing AI token usage. Even worse, the models are basically commodities; the best ones largely perform and behave similarly, which depresses prices. Perhaps most importantly, open-source and Chinese competitors—lagging only a few months behind the leading labs in capability—give away for free the kinds of models Anthropic and OpenAI sell.

Even setting aside the model training costs, it’s not clear whether the unit economics of AI as it’s currently conceived will ever be sustainably profitable. Many of these free and open-source models can be run locally: the large ones on private clouds and high-end servers, the smaller ones on anyone’s laptop or even cellphone, putting to question the companies’ exorbitant capital investment in datacenters.

It’s not that OpenAI and Anthropic are not valuable as organizations. They have remarkably talented AI scientists and engineers that are continuously producing innovations driving a global mania for their offerings. These leading labs might not ever be profitable, but their products are doing a lot of good in the world. You may or may not be a user of or believer in their technology, but their staggering, ongoing usage growth suggests that an awful lot of people would be disappointed if the companies simply disappeared.

The problem isn’t the people or the products, it’s the system. As constituted, OpenAI and Anthropic may not be valuable as market equities. If the market assesses they are not capable of producing a growing financial return on investment for shareholders, the companies will collapse.

Maybe private, for-profit is just not the right economic model under which to develop AI. Perhaps OpenAI should be returned to its private non-profit roots, the legacy they fought so hard to change and which Anthropic’s founders spurned. Or possibly both could be reorganized as research centers at universities, returning to academia the scores of high-profile research faculty they have poached.

But a better outcome for society would be to establish public ownership and operation of their product-oriented capabilities. Turn OpenAI and Anthropic into US government agencies producing AI as a public good.

Transitioning the big AI labs into public agencies would require some restructuring. We can separate these companies into two pieces: product innovation and compute operations. The...