Business isn’t war, but the strategies of war often make their way to business. This article highlights how companies have used the scorched-earth strategy historically and how they’re already using it in artificial intelligence today.

What’s not clear is what will be left when the flames subside.

In January 1993, Marc Andreessen and Eric Bina launched the web browser Mosaic. It may be the most important product developed in the last 40 years and built the foundation of the web browsers we know today. In 1994, Mosaic became Netscape Communications and went public, building a value of $2.9 billion just 16 months after launching.

But Mosaic and Netscape aren’t a success story in tech. They’re a cautionary tale. Netscape was ultimately acquired by AOL and eventually discontinued in 2008.

It was Microsoft that ultimately did Netscape in.

Microsoft saw Netscape as a threat and had a simple way to crush the company. The Windows operating system had a 90%+ market share in PCs and was Microsoft’s money-maker. The company could simply throw the Internet Explorer browser in with the Windows operating system and end Netscape’s business in its tracks.

Microsoft wouldn’t make money on Internet Explorer, but protecting Windows was more important. “Scorching the earth” around its core business by giving away potentially disruptive software was the winning strategy.

This strategy has been repeated over and over again in business and technology. If you have a business to protect, what better way to protect it than giving away a similar product to the competition for free, making their product uneconomical?

Google’s Scorched Earth History

In the early days of a technological shift, companies throw ideas at the wall. The 1990s and early 2000s were a perfect example of that on the internet with dozens of companies vying for each product idea I’ve outlined below. And no one knows what will win.

After a few years, some leaders emerge in businesses with promising business models.

Eventually, one business model seems to scale faster than the others, creating a juggernaut.

And what does that juggernaut do? They protect their core business from disruption by giving away any competing products for free.

Lost to the sands of time are Lotus Notes, MapQuest, Flickr, Ask Jeeves, AOL Instant Messenger, and so many more.

Artificial Intelligence’s Scorched Earth Future

AI’s future may not look exactly like the past, but it will probably rhyme.

Everywhere I look in AI there’s an existing giant ready to protect a moat by using a scorched earth strategy on the AI upstart.

Meta is already open-sourcing models that OpenAI would love to monetize.

NVIDIA dominates AI chips but massive customers like Facebook, Microsoft, Google, and Amazon are all designing their own AI chips to save cost and reduce NVIDIA’s power.

Google would rather give away AI chatbots than let ChatGPT build a viable subscription business model.

Apple, Samsung, and Google would love to move inference on-device with custom chips rather than let devices become commodities in an AI-cloud future.

Someone will emerge from this technology transformation with a viable business model. But there will be a lot of destruction along the way.

Two things can be true:

1. AI can be a transformational technology with near-limitless potential.

2. It may be years before we see viable, sustainable business models emerge as the existing players scorch the earth of upstarts.

Disclaimer: Asymmetric Investing provides analysis and research but DOES NOT provide individual financial advice. Travis Hoium may have a position in some of the stocks mentioned. All content is for informational purposes only. Asymmetric Investing is not a registered investment, legal, or tax advisor or a broker/dealer. Trading any asset involves risk and could result in significant capital losses. Please, do your own research before acquiring stocks.