Last week I compared LLM providers to electricity providers.

Capital intensive, but commodity.

But actually LLMs are a worse business than electricity providers^[ako].

Electricity providers typically have a geographic monopoly; end consumers only have one option to pick from, which gives some pricing power.

But LLMs providers don't have that, it's super easy for someone to swap providers in a second.

It's even the same basic API (prompt -> response).