// Reasoning Models

Source: Stratechery by Ben Thompson

Ben Thompson's analysis identifies a critical inflection point: as AI reasoning models like OpenAI's o1 demand exponentially more compute per query, the unit economics that built Google's and Meta's advertising empires collapse. The margin compression isn't hypothetical—it's baked into the architecture. These companies face a choice: subsidize increasingly expensive inference or fragment their user base into tiered access. Raw intelligence becomes too costly to aggregate at scale, which means the business models that survive the next decade will differ materially from today's.