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Comment by dwaltrip | Hacker News Reader

What makes it predatory?

The Claude subscription (i.e. the pro and max plans, not the API) is sold at what appears to be well below cost in what appears to be a blatant attempt to preserve/create market dominance for claude code, destroying competitors by making it impossible to compete without also having a war chest of money to give away.

You’re making a big assumption. LLM providers aren’t necessarily taking a loss on the marginal cost of inference. It’s when you include R&D and training costs that it requires the capital inputs. They’ve come out and said as much.

The Claude Code plans may not be operating at a loss either. Most people don’t use up 100% of their plan. Few people do. A lot of it goes idle.

If you check the actual tokens consumption and compare it to the API you will find a factor 10.

Training models cost tens of millions, their revenues from sub + api are well above hundreds of millions.

If you look at minimax IPO data, you can see that they spent 3x their revenue on "cloud bills".

So yes, it's probable that they do subsidize inference through subscriptions in order to capture market.

No inferrence provider is profitable, and most run on VC money to serve customers.

Now dig into copilot plus and how they price the premium requests. The math is not mathing, they are aggressively trying to capture the market.

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