---
title: "The Unsustainable Subsidy"
source: rss
source_url: https://tomtunguz.com/ai-model-inflation/
sha256: 224f7f6325d8
review_value: 7
review_confidence: 8
review_stars: 4
review_recommendation: strong
ingested: 2026-05-22
---

# The Unsustainable Subsidy


Published Time: 2026-05-20T00:00:00Z

Markdown Content:
Google’s AI triples in price each year.

[![Image 1: Google Gemini: Flash and Pro Pricing](https://res.cloudinary.com/dzawgnnlr/image/upload/w_1512,h_850,c_fill,g_auto,q_auto,f_auto/uhmruf896ftdcbh6wf8i)](https://res.cloudinary.com/dzawgnnlr/image/upload/q_auto,f_auto/uhmruf896ftdcbh6wf8i)

OpenAI’s flagship model was seemingly subsidized for a while, before rising again.

[![Image 2: OpenAI API Prices: Flagship Falling, Then Rising Again](https://res.cloudinary.com/dzawgnnlr/image/upload/w_1512,h_850,c_fill,g_auto,q_auto,f_auto/xwyhnjwzt5xeh5gnswnp)](https://res.cloudinary.com/dzawgnnlr/image/upload/q_auto,f_auto/xwyhnjwzt5xeh5gnswnp)

Anthropic’s AI has been the same price for a little bit & decreased for the most powerful models.

[![Image 3: Anthropic API Prices: Opus, Sonnet, Haiku](https://res.cloudinary.com/dzawgnnlr/image/upload/w_1512,h_850,c_fill,g_auto,q_auto,f_auto/vdjjlu7siakf8b9qklqo)](https://res.cloudinary.com/dzawgnnlr/image/upload/q_auto,f_auto/vdjjlu7siakf8b9qklqo)

Those are three very different pricing strategies. If we compare the absolutes, the data completes the picture.

| Vendor | Model | Input ($/1M) | Output ($/1M) |
| --- | --- | --- | --- |
| Google | Gemini 3.1 Pro | $2.00 | $12.00 |
| Anthropic | Claude Opus 4.7 | $5.00 | $25.00 |
| OpenAI | GPT-5.5 | $5.00 | $30.00 |

Google remains the low-cost player, increasing the price on all its models but still less than half of the competition. Anthropic had maintained a luxe pricing until late last year.

The pricing changes indicate changes in strategy : cuts when cash is plentiful & share matters. Increases when cash is tight & margins matter. The latter is the case for all three vendors now when capex spending continues to set records.

The 1-minute read that turns tech data into strategic advantage.

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GP at Theory Ventures. Former Google PM. Sharing data-driven insights on AI, web3, & venture capital.

[Bloomberg](https://www.bloomberg.com/news/articles/2025-04-30/google-places-ads-inside-chatbot-conversations-with-ai-startups "Quoted on AI monetization strategies") • [WSJ](https://www.wsj.com/tech/tech-media-telecom-roundup-market-talk-f8f0355a "Featured in tech market analysis") • [Economist](https://www.economist.com/business/2023/07/25/next-generation-googles-run-a-tighter-ship "Quoted on next-generation tech leadership")