A price war between OpenAI and Anthropic would pressure margins at both companies just as they head toward public listings, testing whether their business models can sustain profitability under heavier discounting. Given the interchangeability of their products and how easily enterprise customers can switch providers, any first mover price cut could force a rapid response, accelerating a broader repricing of AI services. This comes against a backdrop of corporate pushback on AI spend, with several large companies already capping or rationing usage, suggesting demand elasticity to price could be significant if cuts materialise.
OpenAI is considering major price cuts to compete with Anthropic, anticipating similar moves from its rival, as both companies prepare for IPOs, the WSJ (gated) reports.
OpenAI may slash prices to win back ground from Anthropic ahead of going public.
Summary:
- OpenAI is considering significant price cuts for its AI services to compete with Anthropic, which it expects to make similar moves, according to the Wall Street Journal
- High AI usage costs have become a huge issue for business executives, OpenAI chief executive Sam Altman said at a recent company event
- OpenAI confidentially filed for an IPO this week, following Anthropic, and Altman told employees the company plans to go public within the next year
OpenAI is weighing drastic cuts to the prices it charges for AI tokens as it seeks to win customers from rival Anthropic, anticipating that Anthropic will make similar moves, according to people familiar with the matter.
The potential cuts come as business executives increasingly balk at high AI costs. Sam Altman said at a recent event that costs had become a huge issue, adding that the company expects to find ways to help customers get more value for less spend.
Such cuts could erode profit margins at both companies, which already lose significant sums due to the computing costs involved in running AI systems. OpenAI has been trying to catch up with Anthropic in winning enterprise customers, after Anthropic’s revenue surged on the back of its coding tool and it briefly surpassed OpenAI’s valuation.
Some corporations have begun reining in AI spending after maxing out budgets for agentic AI use, fuelling debate over so called tokenmaxxing. A price war would test both companies’ business models ahead of expected public listings, with OpenAI having confidentially filed for an IPO this week, following Anthropic, and Altman telling staff the company plans to go public within the next year.
This article was written by Eamonn Sheridan at investinglive.com.
