Only tech giants like Meta and Nvidia can sustain the massive computing costs needed to develop competitive open-source models.
And even then Zuck acknowledged last year that the company will only continue open-sourcing “as long as it’s helping us.”
2. In the private market, revenue and investment gaps threaten open-source model developers’ viability
High compute costs, limited moats, and big tech competition have created a market ripe for a shake-up as we highlighted last week.
This is especially true for open-source players, which have more limited paths to revenue and VC funding.
We predict a wave of smaller foundation model players will move away from frontier model development.
3. Smaller models drive open-source adoption
CB Insights buyer interviews highlight the potential of open models to reduce costs and address security concerns.
Meanwhile, Microsoft CEO Satya Nadella called out in a recent earnings call the increasing enterprise interest in small language models (SLMs) that can run efficiently on local devices while delivering strong performance:
