Frontier AI faces pricing pushback from enterprises

A GROWING CHORUS of enterprise technology leaders is questioning the economics of frontier artificial intelligence (AI), arguing that soaring token-based costs are widening the gap between corporate AI spending and measurable business returns, and pushing companies towards cheaper, open-source alternatives.

- POULOMI CHATTERJEE

The latest salvo came from Palantir CEO Alex Karp, who said several CEOs he had spoken to were livid with leading AI model developers such as OpenAI and Anthropic over their usage-based pricing models. The comments underscore mounting concerns among enterprise customers that while AI adoption is accelerating, the costs of running large language models at scale are becoming increasingly difficult to justify.

Karp has questioned why AI companies charge customers for tokens instead of tying pricing to the business value their models create. “If tokens are so valuable, and let’s say they can make you a billion dollars... why are they charging for tokens?” he said, suggesting model providers should instead earn a share of the revenue generated through AI deployments.