Powerful AI models are being given away for free. It was inevitable.: They aren’t a security threat — they’re what competition looks like. (Bill Gurley, July 20, 2026, Washington Post)
There is a name for what those challengers did. Economist Michael E. Porter called it cost leadership and placed it among a handful of fundamental business strategies. Cost leadership, he argued, is the surest route to a market position a rival cannot easily attack. Walmart, Dell, Southwest — none of them won by building the fanciest product. They won by delivering a comparable one at a structurally lower cost, and letting price do the rest. Open-source software is the purest form of software cost leadership ever devised.
The classical economists Adam Smith and David Ricardo would not have found any of this surprising. In a competitive market, they observed, price is driven toward the cost of producing one more unit. For most goods, such as steel, wheat or labor, that floor is stubbornly high. For software, it is almost nothing: Once the first copy exists, the millionth costs essentially zero to make. A price that falls toward zero is therefore not a market failing. It is a market working exactly as the classical economists said it would.