Industry capture of AI development creates new competitive dynamics
Ken Priore
Associate General Counsel at Docusign - Product and Partners - Strategic Legal Advisor | AI & Product Counsel | Driving Ethical Innovation at Scale
Stanford's 2025 AI Index shows industry now produces 90% of notable AI models while training costs hit $170M per model, fundamentally reshaping competitive landscape.
Maslej, Nestor, et al. "The AI Index 2025 Annual Report." AI Index Steering Committee, Institute for Human-Centered AI, Stanford University, April 2025.
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I think the 2025 AI Index reveals how rapidly the economics of AI development are reshaping competitive dynamics in ways that traditional legal frameworks haven't anticipated, creating both unprecedented opportunities for scale advantages and new categories of regulatory and operational risk.
The most striking trend in this Stanford report is the complete industry capture of cutting-edge AI development. Nearly 90% of notable AI models in 2024 originated from industry, up from just 60% in 2023. Meanwhile, academia contributed zero notable models in 2024 according to Epoch AI's classification. This isn't just a shift in research leadership—it represents a fundamental change in how AI innovation happens and who controls it.
The implications for product strategy are immediate and profound. Academic research traditionally provided a commons of shared knowledge that companies could build upon. That commons is disappearing at the frontier. Google produced 6 notable models in 2024, OpenAI produced 7, but the gap between what industry can achieve and what academia can afford has become insurmountable. When training a single frontier model like Llama 3.1-405B costs an estimated $170 million, academic institutions simply can't compete.
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