JS Tan, Kathleen Thelen
This article explores the origins and implications of a new cloud business model that is powering the advance of AI. We document how this model emerged within a handful of the most dominant IT firms whose reach into all corners of the economy makes them a powerful node or “choke point” in the political economy as a whole. We then elaborate how the features of the cloud business model differ from the traditional platform model out of which it grew, as it evolved from asset-light to asset-heavy, from hierarchical organization to semivertical integration, from domination over to collaboration with partner firms, and from embracing consumer- to enterprise-facing strategies. A final section considers the technological, political, and distributional impacts of the rise of this new business model—showing how the current race to artificial general intelligence (AGI) has reinforced and accelerated its underlying dynamics (above all, intensifying the drive for scale and ever-greater asset intensity), analyzing the new techno-nationalist alliance between industry leaders and the state that the model's development has inspired, and considering the new power-distributional dynamics this model has produced.