The next battle in AI will have less to do with model quality and more to do with customer lock-in.
Over the past few years, OpenAI and Anthropic have been in constant competition over model performance. But the economic landscape is changing, according to Samuel Colvin, CEO of AI startup Pydantic.
“A year ago, all they cared about was revenue,” Colvin told me recently. “Now, assuming both companies are aiming for an IPO, profit margins are going to be very important.”
The problem is that competing solely on model quality is costly. Frontier Research Institute needs to spend billions of dollars training even better models that will soon be emulated. That’s not a great recipe for creating lasting profits.
Instead, Colvin believes OpenAI and Anthropic are increasingly focused on building products that customers find difficult to abandon.
“They’re doing their best to find ways to lock people in regardless of the quality of the model,” he said. “I think that’s where the Claude Code and Codex and all the work comes from.”
AI coding services already look like a better business than chatbots. Developers can quickly spend large amounts of tokens while running Claude Code or Codex on complex projects, generating much more usage (and revenue) than a typical chat session.
These tools can also be very sticky. Claude Code and Codex help companies generate software at unprecedented rates and create codebases that grow beyond what human developers can realistically manage. Companies may find themselves relying on the same AI tools to maintain, update, and understand the software those tools helped create.
This may help explain why Anthropic and OpenAI are racing to turn Claude Code and Codex into broader AI-powered work platforms rather than standalone coding products. Anthropic is working with Cowork to push in this direction, and OpenAI plans to integrate Codex into ChatGPT.
The problem is that customers are moving in a different direction.
Consider Code Puppy, Walmart’s homegrown coding assistant. It is designed to avoid dependence on a single AI provider and give the retail giant more control over its codebase. The system can switch between models such as OpenAI, Anthropic, and Google, helping Walmart control costs and reduce vendor lock-in.
That’s the tension shaping the AI market. OpenAI and Anthropic want sticky, high-margin products that keep customers within their ecosystem. Enterprise buyers want flexibility, portability, and lower token charges.
The winners of the next phase of AI may be the companies that successfully navigate this conflict.
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