“They're going to treat it like any other expense. You don't pay more for paper than you have to. So if one company's offering you paper for 10, 20% less than the other company, you switch to the one that's offering you cheaper paper and AI is going to be the same sort of deal.”
The Tech Report · October 2026
Context
The host relayed another guest's prediction that AI will go the way of airlines, with no customer loyalty and thin margins. Baker agrees, noting companies that once rewarded employees for using more AI are now asking what they get for the bills.
Transcript
…sophisticated models that are competing with the Chinese AI. And, you know, again, the Chinese AI is very cheap. So again, maybe they won't be as cheap as the Chinese AI. But, you know, if they're in that ballpark, if that's their reference point, they're not going to be making huge sums of money.
…loyalty and it's just razor-thin margins for everybody. And it's, yeah, based on what's the cheapest I can get for the time I'm going to use it right now. And that's his prediction of where AI will be going. Does that sound about right to you, or do is there something you would address to that?
I think that's very much on the mark. I mean, companies, you know, there's still at the point a lot of them don't know what they're doing with it. And at least originally, and we don't have ancient history, so we're just going back six months or something. You had a lot of companies that were saying, AI is great. We're going to use as much as we can. And there were literally stories of that. You know, I'm sure you've heard these, you know, that people were giving employees rewards for using more AI. It's like, oh, waste more paper. I mean, I wouldn't think a serious company would do that, but they were doing that. Big companies were doing that. They're not doing that anymore. So they realize, okay, we have these big AI bills. What are we getting for it? And they're asking, can we use cheaper AI? And, you know, I think Gary Marcus is exactly right on that. They're going to treat it like any other expense. You know, you don't pay more for paper than you have to. So if one company's offering you paper for 10, 20% less than the other company, you switch to the one…
I know, obviously, the Western markets and the Chinese markets are very, very separate. And there's a lot to be said about sort of the export controls that were placed on China being a part of what's happened here. But I mean, something I've wondered is why didn't the sell-off that's happening…
It's a very interesting question. And I think the markets are still largely segregated. I think there's, you know, too little, in my view, appreciation of, you know, what China is doing in this sense. So you're getting, you know, people should know better. I'll put it this way, who seem ignorant of…
I mean, the ripple effect of what has happened in China is essentially hitting everything at least a little bit. It doesn't seem, like you say, I think it comes down to the fact that the industry is quite a bit smaller, even though, like you say, they're kind of keeping up, that it's not taken out…
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