AI's Brokenomics

AI's Brokenomics

Ed Zitron Jun 15, 2026 29 min read

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Last Friday, I published the first of a two-part series where I explore the many bubbles that form the basis of the AI bubble — including the tokenomics bubble, and the cult of personality bubbles surrounding Sam Altman and Dario Amodei.

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Soundtrack — Local H — Manifest Destiny (Part 2)

We live in a time of deep uncertainty. On Friday, Anthropic was forced to shut off access to its Mythos and Fable models after the US government imposed an export control ban barring any non-US citizens both inside and outside of the country from accessing them.

To explain, Fable is basically Anthropic’s supposedly “too dangerous to release” Mythos model with guardrails forbidding you from what appears to be anything biological weapons and cybersecurity, except it was jailbroken within days by Amazon researchers, leading to Amazon CEO Andy Jassy (and other unnamed companies) reporting it to the US commerce department which gave Anthropic 90 minutes to roll back Fable and Mythos due to “national security risks.” Semafor also reports that this all might have happened because China got access to Mythos.

This situation is a complete mess. PCast co-chair and podcaster David Sacks claimed that Anthropic refused to fix the issue, claiming it wasn’t serious, per Business Insider:

During the calls, Amodei tried to clear up what he assumed was a misunderstanding. He pushed back on the administration's concerns, defended the guardrails, and argued that the type of bypass that occurred, which he believed to be specific, did not pose the same risk as a broader "jailbreak" that would allow it to be used without any of the guardrails put in place by Anthropic.

In a blog post after the export controls were put in place, Anthropic said that "no testers have yet been able to find a universal jailbreak — a jailbreak method that can very broadly bypass the model's safeguards, unblocking a wide range of cyber capabilities," and that total avoidance of any jailbreaks isn't now possible for them or any other companies. They defended their systems, which they said "are so strong that many users have complained that they are overly broad."

A White House official told Business Insider that “export controls were a last resort after begging them for hours to work with us”:

Shortly after the call, the Trump administration imposed its export control on the Fable 5 and Mythos 5 models, citing national security authority and banning their use by foreign nationals, according to Anthropic. The company said the "net effect" of the order was to "abruptly disable" the models for all customers "to ensure compliance."

Anthropic claims no begging occurred, and all it got was (as noted above) 90 minutes. According to Axios, the company has dispatched some of its senior technical staff to D.C to negotiate with the Trump Administration, after virtual meetings with White House officials failed to bear fruit.

In any case, this is a reaping/sowing for the ages. Dario Amodei has spent years selling AI models based on completely fantastical scaremongering about the “rapid advancements” of large language models, cresting the hill in April when he announced Claude Mythos, an LLM that was “too powerful to release” until June 2, when it was released to 150 organizations in 15 countries, and June 9, when it was released with said guardrails under the name “Fable.”

Fable is, of course, just another large language model that’s an indeterminate amount of “better” than the last one. Having talked to multiple people that claim to have used Mythos and deeply enjoyed Davi Ottenheimer’s takedown of its system card, it appears to be much the same model but with security protocols flimsy enough to last only a few days before anonymous researcher Pliny The Liberator broke them. Anthropic has not created recursive self-improvement, nor has it done much more than create a very large language model that gets higher benchmarks in tests built for large language models, wrapped in a veneer of mysticism and panic-hype built to scare organizations in paying them to use it.

The problem with this kind of hype is that you can only use it for so long before somebody believes you. The outright mythology of Mythos existed to scare people and help Anthropic raise at a $965 billion valuation, and because the tech industry has existed fairly divorced from reality, scrutiny, and regulation, Dario Amodei continued to inflate the “Anthropic is too powerful” bubble, believing that all that would happen would that he’d create a new enterprise API business.

Some are attempting to read this story as bullish for Anthropic — that the government will work with it to bring the models back online, creating a proxy marketing campaign for its models — and while I think that’s possible, if not likely, I think there’re many other possibilities.

On Sunday, slopaganidst and Microsoft CEO Satya Nadella posted a mealy-mouthed blog on Twitter that didn’t really say very much of anything, but had two interesting comments:

The last thing any of us want is a world where every company across every sector is ceding value to a few models that eat everything they see. If all the value is accrued by only a few models, the political economy will simply not tolerate it. There is no societal permission for an AI future that hollows out entire industries.

…

In my view, our priority has to be building a frontier ecosystem, not just a frontier model, so value flows broadly across every company, every industry, and every country. One where every organization can own the learning loop that encodes its institutional knowledge, compounding its human and token capital.

This, combined with Microsoft AI CEO Mustafa Suleyman saying Anthropic’s models were too expensive and Andy Jassy likely being part of the reason that Anthropic got banned makes me think that hyperscalers might be trying to cast doubt on the inevitability of AI labs. While Nadella’s piece has clearly gone through 8 PR people and 16 lawyers, it seems to smell of a company saying that no one model actually matters, and given that it was posted on a Sunday, I’m going to guess it’s about the current Anthropic situation.

It’s hard to see how everything goes back to normal from here. Even if Anthropic gets its models greenlit for availability, it’s clear the government has some animus against it after Q1’s battle with the Department of Defense, and may or may not have been waiting for an opportunity to rattle Dario Amodei’s cage.

And, according to Axios, there’s a real animus between the US government and Anthropic, caused in part because of its “inability to communicate effectively,” with one source saying that “Anthropic has not done a great job at trying to speak to the administration and appreciate the ideological differences."

Alternatively, the government has taken Anthropic’s (nonsensical) marketing seriously, and thus decided to take the kind of blunt-force authoritarian position you’d expect — shut the whole thing down, as China might use Mythos to uh, do something!

The other problem is that this is terrible, terrible timing for an AI industry in the throes of a cost crisis. Anthropic and OpenAI’s IPOs depend on myth, hype, and certainty that their growth will never slow. The government’s ability to cut off access at random based on genuine concerns or politicking isn’t a great advertisement at a time when everybody is struggling to find the ROI of AI.

This isn’t a Too Big To Fail or nationalization situation. Amazon and Microsoft are far more scared of the White House than they are of killing their golden goose, and may honestly be relieved to find a reason to bring this era to an end.

You see, Anthropic and OpenAI have much bigger problems than regulation or pissing off Pete Hegseth.

Their business models don’t fucking work.

Can We Wrap This Up Already?

I’ve been saying for years that the underlying economics of AI don’t make sense — that AI labs were intentionally obfuscating the costs of subscriptions and heavily subsidizing users’ compute, and that the moment that that changed, everything would begin to fall apart, and god damn has it finally begun.

As I discussed in last week’s premium newsletter, the AI Tokenomics Bubble is the simplest and most consequential of them all, because it comes back to something I’ve been saying for years: that the majority of users will refuse to pay the actual cost of AI.

Said bubble inflated through the combined failure of the tech and business media to question AI’s economics and the unprecedented subsidy con perpetuated by Anthropic and OpenAI. Those who dared to suggest that OpenAI burning $5 billion was some sort of problem were dismissed as haters and skeptics that “didn’t care about the future,” with the vast majority of the media completely ignoring the economics until the latter half of 2025.

The Tokenomics Bubble inflated because everybody aggressively ignored the AI industry’s greatest weakness, choosing instead to repeat tired mythologies about how Uber lost a lot of money (which I’ve refuted here) or Amazon Web Services cost a lot of money (Amazon’s total capex between 2003 and 2017 was $52 billion normalized for inflation) instead of being skeptical of…well, anything.

And now it’s bursting because Anthropic and OpenAI’s customers are in revolt, to the point that they’re planning “drastic” price cuts.

How The Tokenomics Bubble Burst

Alright, let’s do this one last time.

Sometime early in Q1 2026, Anthropic and OpenAI moved all of their enterprise customers to token-based billing, meaning that instead of using subsidized subscriptions with varying (and ridiculous, as I’ll get into) rate limits, big businesses suddenly had to pay for their AI usage based on the actual tokens they used.

Many hailed this as a masterful gambit, assuming that organizations would have near-infinite budgets for AI services that had yet to prove themselves useful.

It only took a few months for OpenAI and Anthropic’s customers to start sweating.

In the middle of April, The Information’s Laura Bratton likely burst the AI bubble with a piece about how Uber had burned through its entire annual token budget in a single quarter.

This kicked off an industry-wide anxiety about the mounting costs of AI, with multiple other companies burning millions of dollars in the space of a few months, including Zillow, which destroyed its annual Cursor budget by the end of May. What really began the downfall was a comment by Uber COO Andrew Macdonald:

"That link is not there yet, right?" he said. "I think maybe implicitly there is more that is getting shipped, but it's very hard to draw a line between one of those stats and, 'Okay, now we're actually producing 25% more useful consumer features."

He said that the trade-off costs from AI are harder to justify because he can't draw a direct link. Earlier this month, CEO Dara Khosrowshahi said in an earnings call that Uber was slowing hiring to counter its investments in AI.

In a single podcast, Andrew Macdonald gave the entire tech industry permission to say the truth: that nobody was actually able to show any ROI despite its massive costs.

This was always going to be a problem. By s

[truncated for AI cost control]