API users have zero loyalty: LLM market share could flip from 80-20 to 20-80 overnight

tengyanAI · x · 2026-09-17

stevehou argues OpenAI's sharp market share gains show how non-sticky the API business is: at similar capability, traffic flows quickly to the cheaper option, and share could easily swing from 80-20 to 20-80.
tengyanAI adds the irony that the main API use case—coding agents—further reduces switching costs, since a strong agent can evaluate and switch providers mid-session, setting up a bloody knife fight for market share.
He also flags an econometric point: what matters is the elasticity of aggregate demand for AI, not the substitution elasticity between models, and the two are hard to distinguish from usage data.

More from Venture