Global AI companies are engaged in a fierce price war, significantly reducing the cost of AI access and benefiting Indian startups. OpenAI, Google, and Anthropic are at the forefront, with smaller models becoming increasingly popular.

Last month, OpenAI introduced its most affordable model yet, the GPT 4o Mini, priced at just $0.15 per million input tokens. In response, Google reduced the cost of its Gemini 1.5 Flash model by 50%, pricing it at $0.075 per million input tokens. Following this, OpenAI further slashed the price of its GPT 4o model by half.

Over the past year, API access costs for closed models have dropped by 65%-90%. This reduction has enabled startups like InVideo, Yellow.ai, Haptik, Gnani.ai, and Shorthills.ai to expand their margins, invest in R&D, improve performance, hire more talent, and offer competitive pricing for their products.

These companies, among the largest paying customers of OpenAI, Google, and Anthropic, also develop their models. According to research firm Gartner, the rising competition from open-source models like Meta’s Llama series, which are free to download, is contributing to the overall price reductions in the AI ecosystem.