Twitter/X

The loops a firm sees as sovereignty are the next training frontier for leading…

Brief

The loops a firm sees as sovereignty are the next training frontier for leading labs: they will ingest firms' daily verification signals into model evals, commoditizing models (invoking The Bitter Lesson). Microsoft sells verification 'picks and shovels' and wants firms on its rails, but Catalini warns AGI would swallow that work and capture firms' 'token capital'; only verification the model can't yet perform remains firm-owned.

Source evidence

The loops a firm sees as sovereignty are the loops the leading labs see as their next training frontier.

Easy to dismiss @satyanadella as simply talking his book: Microsoft sells the picks and shovels for verification loops. It profits from a world where value accrues one level up from the model: in the context, evaluation, workflows, and institutional memory that make models useful inside a firm.

But notice the stakes: if a lab reaches AGI, the model swallows the work. The company selling you the harness is disintermediated the same day you are.

Microsoft wants you to own your loop, on its rails. Frontier labs need the opposite. The Bitter Lesson commoditizes the models, so they extend into the only defensible layer: yours.

They will bundle the verification signal your operation emits every day into their evals... for your benefit, of course.

Accept it, and the token capital you thought you were building turns out to be theirs.

The moat isn't the model. It is not even the learning loop.

It's the ability to perform verification, for a specific set of jobs, better than anyone in the world.

The same logic that puts Microsoft at risk runs all the way down to... you.

What is still yours is the verification the model cannot do without you. Yet.