AI Price War Breaks Out as Meta Tries to Buy Its Way Into the Frontier

Meta has launched Muse Spark 1.1, its most advanced AI model, with a paid API priced at roughly 25% of rival frontier models from OpenAI and Anthropic. This aggressive pricing strategy signals the AI industry is shifting from a laboratory phase to a price-based competition, potentially leading to margin compression across the sector. While agentic AI promises massive token demand growth, cheaper intelligence may make it harder for companies to justify massive capex spending and achieve returns on invested capital.