A competitive advantage, or moat, is a feature that protects a company’s market share from competitors. It makes matching the company’s position difficult or too expensive. section 6.2
Why AI providers may lack a moat
LLM methodology is publicly known, so rivals can build competing models. As models converge in performance, open-source alternatives may be faster, more customizable, and more private, weakening providers’ protection. section 6.2
The mechanism is straightforward: copycats enter attractive markets, increasing competition, pushing costs up, and forcing prices down. Durable profits therefore require protection that rivals cannot easily reproduce. A familiar technology offers little protection by itself. section 6.2
