Anthropic Wanted to Replace Engineers. Instead, They Shot Their Own Customers

AI labs built and marketed AI-powered software engineers to replace expensive human engineers, expecting companies to redirect engineer salaries to them—but the strategy backfired. By making AI tools cheap and accessible to everyone ($20/month), they enabled hobbyists to rapidly build free alternatives to expensive software like Adobe Photoshop, destroying the recurring revenue "toll booth" business models that were supposed to fund their AI replacements. The labs inadvertently demolished the software industry's profitability rather than capturing it.