How Did Apple Gain by Skipping Frontier Models?

Ezra Klein says Apple decided not to compete in making a frontier model, unlike Alphabet, Google, and Meta. OpenAI and Anthropic are AI companies. Microsoft, an OpenAI investor, is trying to make a frontier model of its own. Oracle is heavily invested and now sits just above junk bond status. Competitors are spending $100 billion to $300 billion in capital spending every year, while Apple is spending about $15 billion a year. Ezra Klein says Apple stock this year has performed better than any of the other companies' stocks, and he asks Azeem Azhar first.

Azeem Azhar says Apple's business model means Apple does not need to run a frontier model. People buy the phones and the laptops, and a movie subscription is an extra, so Apple makes money regardless of the AI. Azeem Azhar says Apple cares about detail and control, and he remembers Steve Jobs, during the iPhone rollout, blasting a Google senior vice president over the wrong color yellow on the Google logo. Large language models are powerful in many ways, but they are not about control, and they get hapless. Apple has the device and the privacy to be the personal agent, yet Azeem Azhar says Apple held back because a model used by a billion people would deliver a mess.

Azeem Azhar also says Apple was not very smart, mostly screwed it up, and got lucky. Apple had teams, disbanded teams, went back and forth on integrating the work with Siri, and never got anywhere. By inaction, Apple was a free rider on everyone else's gigantic expenditures, came out smelling like roses, and can use what others build and sit on top of it.