In a competitive market, there would be no reason to invest hundreds of billions of dollars into LLMs which are unprofitable, inaccurate, and have very limited use cases.

That’s not how capitalism works at all. Companies are spending money on AI because they need to compete against other companies. In the absence of competition, companies do not spend money chasing risky new revenue streams but milk their existing base.

If there was only Microsoft, and no other software company on the planet, Microsoft would not spend money on AI because they wouldn’t need to.

A big part of Marx’s criticism of capitalism is the waste it creates through duplication of effort.