Who Stole My Alpha?

Have you seen Alex Karp’s rant on CNBC? I fielded this question about a dozen times over the past week. If you’ve not yet watched, it’s well worth your time. In a conspiratorial diatribe against the evils of monopoly-crazed frontier labs, the founder of defense-tech giant Palantir asserts that OpenAI, Anthropic, and Google are ruining our economy by “stealing our alpha” (more on that in a second). And because he’s a founding member of the Valley’s newly emboldened MAGA elite, Karp manages to toss in a few unhinged political dog whistles, implicating both UC Berkeley and “wealth taxes” as complicit in the downfall of civilization as we know it.

Despite obviously talking his own book – Palantir sells an application layer that sits above frontier models and ensures clients will not have their “alpha” stolen – Karp makes a point that has resonated deeply across not only tech, but the entire economy. “He’s not wrong…” is how several of the emails I’ve received have begun. “He’s got a point,” they continue, “even if he is kind of toxic.”

Karp’s point has been made before. Microsoft CEO Satya Nadella laid out the same argument last month. In “A Frontier Ecosystem Without an Ecosystem Is Not Stable,” Nadella issued a call to arms to the business community: “The last thing any of us want,” he wrote, “is a world where every company across every sector is ceding value to a few models that eat everything they see.”

There’s a lot to unpack here, but let’s focus on the concept of “stealing my alpha.” What the hell does that even mean? The term is borrowed from the financial sector, where “alpha” represents the excess return or competitive edge a particular investment yields over what the market might usually return (this is where the leading finance publication Seeking Alpha got its name). In Karp’s usage, “alpha” stands in for any firm’s unique right to earn profits in any given market. According to both Karp and Nadella, AI models have unfettered access to the core data and insights driving a company’s ability to make money, and they will use those plundered assets to steal the company’s customers (the first at-scale indication of this theory was the “SaaSpocolypse” in the software sector earlier this Spring.)

Simply put, Karp and Nadella are arguing that a novel tech platform – AI models, in this case – are disintermediating entire sectors of our economy and positioning themselves as voracious monopolies who will ultimately control … well, everything.

To this notion I ask: Where have you been these past 25 years? The rise of Microsoft, Google, Facebook, Amazon, and Netflix was powered almost entirely by those firms “stealing the alpha” of entire sectors of our economy. Media, advertising, communications, retail, software applications like browsing, calendaring, and contacts – all swallowed by alpha-seeking platforms executing what Ben Thompson famously called “aggregation theory.”

AI models are simply running the most successful play in the tech industry’s playbook. Now, all of a sudden, we have a problem?! What’s new here?

To answer my own question, I think what’s new is that we finally have a constituency with the power to oppose the wholesale appropriation of data that’s been the mainstay of the tech industry these past few decades. Unlike consumers, who willingly ceded control of their data for the convenience of tech services, corporations are terrified of sharing information that might expose their strategies, competitive edge, or weaknesses. Karp and Nadella know this, and are exploiting that fear to build their own businesses. “Working directly with OpenAI or Anthropic is madness,” they’re saying. “Work with us instead. We’re on your side.”

I’ve yet to see a formal response from the AI model companies to this charge, but I’m sure one is coming. And as much as I’m enjoying watching the Karps of the world argue against their previously held dictums – wasn’t it Peter Thiel who argued that the natural state of any tech company was to be a monopoly?- I’m far more interested in how this might play out for the rest of us – we customers, consumers, and individuals whose data has always been viewed as a free resource to be exploited. In Will AI Ever Become a True Platform? Not Without Us, I wrote “Nadella’s essay is a declaration of AI independence for companies around the world. If only we’d extend that thinking to the individual, we’d have a real revolution on our hands.”

Perhaps once corporate American puts its foot down and demands agency over how its “alpha” is exploited, we’ll collectively demand the same as consumers. I want my alpha and my omega, and I want it now!

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