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Comment by kozikow | Hacker News Reader

I noticed an interesting phenomenon

Your company uses AI and it gets ahead a lot quicker. However, your competition does so as well.

Many areas of economy are zero sum game - so your $ ends up being the same as previously. However, now with a "tax" paid to AI model providers for being able to stay competetive.

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Warren Buffett once gave a great answer to a similar question, but it was about the textile industry. He said technological advances that promise to reduce waste by x% or improve efficiency by Y% or boost production by W% or reduce cost by Z% rarely actually pay off. They would get textile machines manufacturers promising them great improvements in the new line of machines, and for the most part, those improvements would be realized, but their end margins as a business wouldn’t improve. He said it’s simply because the same technological edge is given to all their competitors as well. With no moat (his famously favorite metric) all textile makers were always competing on the same grounds regardless of the technological progress.

All the gains end up in the hands of the people selling the tech, and eventually to consumers in the form of lower prices.

I guess the benefit to the companies is that they don't lose all their customers to a competitor.

Well, the net growth is taken by the AI/tool providers, who indeed bring productivity growth, so the society as a whole see improvements. I guess this is not bad?

For slightly more context, both Berkshire and Hathaway were textile companies.

Maybe moat is also just product quality? I.e. having the "taste" or knowledge of what the consumer actually wants, and the ability to apply it correctly, can also allow you to win. Because right now some of the AI industry wins on Moat (mostly hardware - both in terms of ownership and production know-how), while some wins on perceived quality being higher regardless of price (e.g. Opus 5.5 dominates from what I can see despite Deepseek Flash V4.1 existing). People will choose the best product, not just the cheapest, unless the quality loss is okay in a given context.

Yeah but if that was true we'd see better or cheaper products at least, or new competitors rising. If it increases the speed for everyone, but there's no visible change for the end user, I wonder if AI makes you really more competitive in the first place.

I think you are seeing new competitors rising, the technology has unlocked a new wave of startups growing faster than ever before

The incumbents are mostly grown up and are using it to cut costs

Exactly. Oh great we can write RFPs 8X faster. Well, so does our competition and now our customers get twice as many.

I think this is a an example of a Red Queen's Race:

https://en.wikipedia.org/wiki/Red_Queen%27s_race

I guess ditto most highly accessible SaaS tooling, eg Slack, Salesforce, 365 etc? Everyone's using it and paying big sums for it

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