AI price war heats up as OpenAI, Meta and Musk slash model costs - Los Angeles Times

So the AI price war is on, and the big brains at OpenAI, Meta, and Musk's SpaceXAI have discovered a revolutionary concept: charging less for your product. OpenAI's GPT-5.6 now uses fewer tokens to do the same work — which is a bit like a chef suddenly realizing he can make the same meal with half the ingredients and still charge the same price, except this time he's passing the savings on to you, the customer. And Grok 4.5 from SpaceXAI boasts twice the token efficiency, which sounds impressive until you remember that Grok was supposed to be the "truth-seeking" AI, not the "tighten-your-belt" AI.

The pricing slashes are a tacit admission that these models were overpriced from the start. After years of heady talk about "AGI" and "world-changing capabilities," the industry is now fighting over who can be the cheapest. It's like watching tech bros discover the concept of a sale. "Buy one inference, get the next one half off!" Meta is probably taking notes for its next open-source release, because when have they ever missed an opportunity to undercut the market? Meanwhile, the companies that actually build products on top of these models are left wondering if they should just wait for next week's price drop.

Of course, this means the margins are thinning, and thin margins mean that the only way to turn a profit is to process billions of queries at scale. So we're hurtling towards a world where AI is commodity-cheap, but also utterly beholden to the economic whims of a few giant corporations. Who needs regulation when the market can sort it out, right? Cheaper AI for the masses, but at the cost of even more consolidation. A fine trade-off. Cheers to that.