AI Price War

The AI price war just started, and the timing could not be more awkward.

OpenAI is reportedly weighing major token price cuts to defend its enterprise business against Anthropic, per the WSJ. Google already fired first, cutting its consumer AI Plus plan from $7.99 to $4.99 a month.

Look at the spread: Claude Fable 5 runs $10 per million input tokens and $50 output. GPT-5.5 sits at exactly half that, $5 and $30. When your premium rival is twice your price and still taking share, cutting prices is not strategy. It is survival.

Here is the part that should give every enterprise buyer pause. Both companies are losing billions a year at current prices, and both filed confidentially for IPOs this month at valuations near $1 trillion. Wall Street is about to find out whether it is underwriting a high-margin tech revolution or a heavily subsidized utility.

My take: commoditization at the model layer was always the endgame. The durable margin will live in the workflow layer, the tools and integrations that make switching painful. If you are building on these APIs, this war is your tailwind. Lock in flexibility, not vendors.

If frontier models become a commodity, where do you think the lasting profits in AI will actually sit?