Big companies and startups are increasingly using cheaper AI models, including some from China, to reduce costs, putting pressure on industry leaders OpenAI and Anthropic to lower their prices.

How this affects you

The growing price war threatens to widen losses for OpenAI and Anthropic, who are already spending billions annually on computing power, potentially affecting their ability to grow and disrupting their plans for initial public offerings. The shift towards more affordable, open-source AI models could significantly reduce AI costs for businesses, with some executives reporting savings of up to 95%.