The AI industry isn't competing anymore - it's consolidating into what veteran tech journalist Steven Levy calls 'The Blob.' A massive interconnected web of partnerships, investments, and deals now binds Nvidia, Microsoft, Google, and OpenAI into a single money-and-compute machine that's reshaping how artificial intelligence gets built and deployed worldwide.
Ten years ago, Elon Musk helped create OpenAI specifically to prevent AI from falling under corporate control. Today, that same OpenAI is worth half a trillion dollars, and the entire AI industry has morphed into what WIRED's Steven Levy calls 'The Blob' - a single, interconnected machine of partnerships that makes traditional competition look quaint.
This week's blockbuster deal between Microsoft, Nvidia, and Anthropic perfectly illustrates how the Blob operates. Microsoft pumps at least $5 billion into Anthropic - a direct rival to its key partner OpenAI - while Anthropic commits to spending $30 billion on Microsoft's cloud services. Meanwhile, Nvidia invests in Anthropic, which agrees to build on Nvidia chips. The result? Anthropic's valuation rockets from $183 billion to $350 billion in just two months.
'We are increasingly going to be customers of each other,' Microsoft CEO Satya Nadella explained during the deal announcement, practically coining the Blob's unofficial slogan. The three CEOs didn't even bother meeting in person - these mega-deals have become so routine they're announced via video call.
But the Blob extends far beyond this trio. The Stargate initiative binds OpenAI, Oracle, Nvidia, SoftBank, and an Abu Dhabi investment firm with US government backing. Google maintains compute deals across multiple cloud providers while developing its own Gemini models. Even asking an AI to map these connections proved dizzying - it took GPT-5 over two minutes to process what Levy calls 'one giant circular money-and-compute machine.'
The driving force isn't conspiracy but necessity. 'I don't think any of us realized how real the scaling laws would end up being, and therefore how much compute these things would require,' one AI executive told Levy. Training and running large language models demands such massive infrastructure that even tech giants can't go it alone. 'We've all turned into infrastructure and construction companies,' the executive admitted.
This isn't your typical cartel - the competition between AI models remains fierce. Google just rolled out an improved Gemini that briefly took the lead, while ChatGPT, Claude, and Grok continue their model wars. Nvidia's motivations are equally understandable: locking in customers prevents commoditization of its chips.
What's changed is the government's response. Instead of unleashing antitrust regulators, the current administration is cheering on the consolidation. The focus has shifted from 'How might this harm the public?' to 'How can we get a piece?' Nvidia now gets to sell chips to China, kicking back profits to the US government. Saudi Arabia funds American AI efforts while building their own competitive Blob.
The implications run deeper than market concentration. As Google CEO Sundar Pichai warned this week, 'no company is going to be immune' if the AI bubble deflates. When everything's interconnected, systemic risk becomes the norm. The same partnerships that enable breakthrough AI development also ensure that if one major player stumbles, the entire ecosystem feels the impact.
The irony isn't lost on industry watchers. What began as Musk's quest to democratize AI has evolved into the most concentrated tech ecosystem ever created. The original vision of competing labs pushing each other toward artificial general intelligence has given way to a single, money-seeking behemoth that spans continents and incorporates foreign sovereign wealth.
Yet this consolidation might be inevitable given AI's resource demands. Building the data centers required for next-generation models costs hundreds of billions. Training runs consume entire power grids. The scale has grown beyond what any single company, regardless of size, can manage independently.
The AI industry's transformation into The Blob represents a fundamental shift from the competitive landscape Musk envisioned just a decade ago. While individual companies still race to build better models, they're increasingly dependent on each other's infrastructure, funding, and partnerships. This interconnected web might be the only way to achieve the massive scale AI development demands, but it also creates unprecedented concentration of power and systemic risk. As these partnerships deepen and foreign investment flows in, the question isn't whether The Blob will continue growing - it's whether anyone can still meaningfully compete outside of it.
