Nvidia in talks to acquire US 'open' model startup Reflection AI (ft.com)

That's my take, at least.

Nemotron is TERRIBLE, and purposefully so. It must be.

They cannot be THAT BAD at training AI models. I don't believe it.

NV's long-term strategic incentive in funding a semi-open model provider like Reflection.ai is to ensure competitive frontier models which fully leverage the NV proprietary stack (chips, interconnects, servers, CUDA) continue to be widely available and continue to offer performance worth a higher price to the most profitable market segments.

NV's ~75% margins on hardware(!) at >$100B/yr scale are historically unprecedented and still increasing, creating tectonic pressure on NV's largest customers (hyperscalers and frontier labs) to escape the "NV Tax" by gaining access to competitive frontier chips, servers, and/or middleware at lower margins. Why would NV help create semi-open models that threaten their best customers? Because as Jeff Bezos famously said, "Your margin is my opportunity" and that's turning NV's biggest customers into their largest existential threat.

At the moment, NV's moats to significant competition are almost unimaginably deep, but on a decadal time-scale, literal trillions of dollars are at stake. That's enough to get people thinking the unthinkable, making NV the biggest target in modern business history. It's to the point that it's almost "Everyone against NVidia" which is forcing all the big companies into playing 3D strategic chess on multiple time horizons at once, simultaneously working with, investing in and hedging against each other. It's a 'co-opetition' (https://en.wikipedia.org/wiki/Coopetition) race where the smaller players are grouping into tactical alliances and uneasy truces while the biggest players are spending billions to 'commoditize their complements' (https://gwern.net/complement) as NV is doing with Reflection.ai. This can create strange bedfellows overnight. I wouldn't be surprised to see some of NV's biggest customers, who compete fiercely against each other, pooling resources with NV's competitors to create a viable alternative to NV. This is the stuff Jensen has nightmares about, waking up in a cold sweat and soaked black leather pajamas.

NV doesn't need Reflection to be better than the best models or even be profitable. They just need to ensure a viable alternative to frontier lab's proprietary models: A. Remains widely available at low enough cost for all NV's other customers to buy, B. 'Works best on NVidia', and C. Stays close enough in price/perf to prevent any single proprietary model becoming as dominant in models as NV is in hardware. The Chinese semi-open models have been strategically convenient for NV but it'd be foolish to count on the Chinese govt continuing to subsidize them or Chinese models not getting blocked or limited by some governments. Reflection.ai remaining "good enough, for free" is a strategic hedge against long-term threats.

> The major film studios owned the theaters where their motion pictures were shown, either in partnerships or outright. Thus, specific theater chains showed only the films produced by the studio that owned them. The studios created the films, had the writers, directors, producers and actors on staff (under contract), owned the film processing and laboratories, created the prints and distributed them through the theaters that they owned: In other words, the studios were vertically integrated, creating a de facto oligopoly. [...] Ultimately, this issue of the studios' then-alleged (and later upheld) illegal trade practices led to all the major movie studios being sued in 1938 by the U.S. Department of Justice.

https://en.wikipedia.org/wiki/United_States_v._Paramount_Pic....

Nowadays it seems like "vertically integrated" is something most companies openly aim for.

Right now US economy is basically a centrally planned economy.

Did you know that 151 companies were founded by SpaceX's alumni? Compare to 5 they've acquired (not including XAI)

https://www.alumnifounders.com/stats