Chapter 1: What is the main topic discussed in this episode?
Hello, and welcome to Decoder. I'm Neil Apatow, editor-in-chief of The Verge, and Decoder is my show about big ideas and other problems. Today, let's talk about the looming AI monetization cliff, and whether some of the biggest companies in the space can become real profitable businesses before they careen right off it.
My guest today is Hayden Field, who's our senior AI reporter here at The Verge, and she's been keeping close tabs on both Anthropic and OpenAI, and how those two companies in particular tell us a whole lot about the AI industry as a whole in 2026. You've certainly heard a version of the monetization cliff story before.
Anthropic, OpenAI, and all the other big AI startups are built off the back of hundreds of billions in capital investment. And they're linked to even greater amounts of forward-looking investment in data center build-out, chips, and other infrastructure spend. At some point, that return has to pay off, the profits have to materialize, or the bubble pops.
Chapter 2: What is the looming AI monetization cliff?
Maybe AGI arrives, maybe the economy crashes, who knows? If you've been listening to The Coder, you've heard me talk about this with tons of CEOs right here on the show, and a majority of them have hinted towards the bubble popping. They think some companies will fail in spectacular fashion and others will succeed, but that the opportunities, and especially the money, are simply too big to ignore.
The AI industry is going to do this, whether we want it to or not. The market depends on it. And so these last few weeks have felt like a very important inflection point, as both Anthropic and OpenAI have started to react to the reality of needing to go public to make money.
The catalyst for all this change is the rise of AI agents, products like Cloud Code and Cowork, the open source OpenClaw, and OpenAI's Codex. They've all radically changed how these companies are thinking about their resources.
And that's starting to affect how they behave, the products they support or suddenly kill, the restrictions they impose on customers, and the money they're willing to burn on the way towards your next big milestone. That's because agents are valuable to customers right now, but agents also use far more compute.
And so the way people are using agents is burning tokens at a rate way faster than these companies anticipated. and that's causing them to make hard decisions. We saw this most evidently last month when OpenAI abruptly killed its video generation app, Sora, ditching a $1 billion Disney deal in the process. Why? Well, it costs too much to run, and OpenAI needs to compute for codecs.
And we saw it again just last week when Anthropic decided it would no longer let cloud users burn through compute resources using the OpenCloud agent framework through a standard subscription plan, instead forcing those users onto a pay-as-you-go plan, which costs substantially more.
As you'll hear Hayden explain, these are glimmers of a make-or-break moment for the AI industry, as both Anthropic and OpenAI barrel towards two of the biggest IPOs in history. And the pressure on these companies to make money has never been this intense.
The projection these companies have made, which just this week leaked to the Wall Street Journal, tell a story of mind-boggling growth, to the tune of hundreds of billions in revenue and profitability by the end of the decade. But the most important questions now are, can these companies pull all this off? And what compromises will they make to reach that goal and avoid crashing and burning?
Before we start, a quick reminder that you can listen to this episode or any episode of Decoder completely ad-free by subscribing to The Verge. Just go to theverge.com slash subscribe. Okay, The Verge senior policy reporter Hayden Field and the AI monetization cliff in the race to profitability. Here we go. Hayden Field, your senior AI reporter here at The Verge. Welcome back to Decoder. Thanks.
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Chapter 3: How are Anthropic and OpenAI preparing for IPOs?
And that is Anthropic started raising its rates for people using tools like OpenClaw. They really want you in their system, on their subscription plans, using the tools and their pricing their way. And if you want to use Claw to power other systems like OpenClaw, you're going to have to pay in a different rate structure that to me feels like they don't want you to do it at all.
And then next to that, OpenAI killed Sora, which was their very buzzy video generation product that was basically a deep fake nightmare, but they also had a deal with Disney for a billion dollars, which always seemed confusing, but they canceled that deal too. Let's start with OpenAI. You're saying they're killing off all these side projects.
They're trying to focus on Codex, which is fundamentally enterprise software, right? It is a tool for software developers to make software. Why did they kill Sora and where did this sense of focus come from?
I think the sense of focus honestly just comes from the competition and the fact that pressure is building on them to generate more revenue than ever. They've never had more eyes on them in their balance sheet and their whole company history because they're preparing to go public. And because they just raised so many billions of dollars, their post-money valuation right now is $852 billion.
So yeah, I mean, investors are saying, okay, like what's the plan here? What's the plan for returning our money? So- In order to deliver on those promises, they are having to not only devote their time and money and staff to the projects that are going to make the most money, but also their compute. So that's something that we saw execs at OpenAI talk about when they killed Sora.
We saw a couple internal memos go out. One of them was from Fiji Simo, the CEO of AGI Deployment. And she said... that basically the company needed to stop focusing on side quests and just really dive fully into enterprise and coding. And yeah, I mean, compute is super limited.
OpenAI is always, always talking about how they don't have enough compute to fulfill what they want to do or to scale appropriately. Sam Altman at DevDay and SF in October said,
said to reporters, I've just never seen him so stressed when he was talking about this, about how the compute constraints were stopping them from scaling appropriately and how they couldn't really deliver what clients wanted unless they just could somehow get their hands on more compute. I've never seen him more stressed out. And so, yeah, that's playing out now months later.
Sora took up a bunch of compute and there wasn't really a big return there. And so they abruptly decided to cancel it, apparently 30 minutes after working with Disney on a related project, and then just suddenly pulled the plug with no notice. So, you know, things over there, it seemed like are in kind of a tailspin.
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Chapter 4: What changes are being made to AI product offerings?
But OpenAI is spending a ton and then just hoping that's going to lead to a return on investment, which kind of tracks with the way that companies have been operating for the past couple of years.
Yeah, Anthropic seems to be much slower and more focused and constantly worried that it's going to kill everyone in the world with every successive model. Opening eyes, just pedal the metal all the time.
Yeah, but Anthropic isn't worried enough that it'll stop because they just took out their frontier safety pledge and said, oh, actually, we're going to stay competitive even if we think it's a little dangerous. Sorry.
The race to an IPO makes a lot of people rethink a lot of their values, apparently. We need to take a quick break. We'll be right back.
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We're back with the Verge's senior AI reporter, Hayden Fields, talking about Anthropic and AI's race to profitability. The other piece of news, right, this is, again, pricing, compute usage. Anthropic changed its pricing structure to make using Claude with OpenClaude much more expensive in different ways.
So if you have a Claude Pro or Mac subscription, you can't just hook it up to OpenClaude and go. You've got to buy tokens on top of that subscription. That, in some ways, felt inevitable. In other ways, obviously made a lot of people very upset. It made the developers of OpenClaw upset. They said they could only delay the decision by a week. What's going on there?
So when I talked to an economist about this this morning, he said that agents have just changed everything. And I talked to another couple of tech leaders about this, and they said agents are consuming hundreds of thousands more tokens than basic chat models have been.
So it does make sense, even if it's frustrating, because it seems like, you know, the way Anthropic put it was, hey, you know, our infrastructure isn't built for this. Like, we didn't plan for this. And yeah, I mean, if you're using OpenClaw with Claude...
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Chapter 5: How does the competition between OpenAI and Anthropic affect their strategies?
So, I mean, you know, no AI leader is doing comms entirely right. But it is interesting to see kind of, yeah, the difference between the general public's perception versus people in tech.
We have to take another quick break. We'll be back in just a minute. We're back with Verge Senior AI Reporter Hayden Field, discussing the AI industry's make-or-break year and what might happen next. This kind of brings us to the make-or-break moment, right? These companies are both headed towards IPOs. Both of their financials have all leaked. We can see their cap tables.
We can see their revenue projections. And it feels a little bit like tortoise and the hare, right? You've got Anthropic committing to being an enterprise company, being a solution for software development that has – kind of changed the entire nature of software development.
You have OpenAI with Codex that thinks that it can eat a piece of that market as well, shutting down consumer applications that aren't working. Maybe it will figure out ads. Maybe it will actually buy off a piece of Google search. Who knows? But they're still just hopping all over the place. It's just pedal to the metal at OpenAI all the time, and Anthropic just continues moving along its roadmap.
How do you think that plays out, not over the course of the IPO timeline, but in the short term? Do you think OpenAI can recapture a sense of focus?
I think it's going to try very hard, and I think it will be able to. The question is just, can it hold on to that focus? I mean, I've seen them change their strategy just like this in the past, and usually it just falls by the wayside a couple months later or a year later. So what I'm wondering is how long they can hold on to this.
Anthropic has committed to one thing, stuck with it for the most part. OpenAI, whenever they commit to something, like a year later, things shift. Teams will be disbanded. They'll have a reorg. Anthropic's also seen a ton of change, but it's always had this one goal and kind of stuck with it. And I've been tracking both these companies for years.
so long that it's like, you know, you can kind of see the trends there. So maybe this is a big step change for open AI and they're really going to pivot. And maybe that's why we're seeing all this executive restructuring and the side projects being killed and trying to really like, force them to commit.
But it is interesting because I don't know the rate at which they'll be able to catch up with Anthropic when it comes to enterprise encoding, because I've even seen anecdotally, like a bunch of startup founders switching entirely over to Anthropic when they used to be, you know, testing both. You know, we did a piece a couple months ago about how Cloud Code was having a moment.
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Chapter 6: What are the implications of AI pricing changes for users?
This episode was edited by Xander Adams. Our editorial director is Kevin McShane. The Decoder music is by Breakmaster Cylinder. We'll see you next time.