AI got too expensive, so companies are moving to cheaper models October 6th 2026

Curated by Alexis Dufresne

This Applied AI edition looks at what organizations actually did with AI over the past three weeks. Three patterns stand out: companies switching models to control cost, large deployments that are now in daily use, and a growing list of places where AI was restricted or removed.

The AI bill became a management problem

Harvey's margins went negative, so it switched models

Harvey sells AI tools to law firms. It built them on models from OpenAI and Anthropic, which charge for every piece of text the model reads and writes. These pieces are called tokens.

Bloomberg reported that Harvey's gross margins fell from about 50% to minus 50% by June as its token usage grew 20 times. In August Harvey launched its own model, built on Moonshot's open-weight Kimi K3, and its margins turned positive again. Bloomberg named Abridge and Ramp among the other startups moving the same way.

An open-weight model is one a company can download and run on its own servers. It pays for computing power instead of paying another company for every token.

Open models now carry a large share of AT&T's AI work

The Financial Times reported that open models now handle 40% of AT&T's AI workloads.

Proprietary models from the large labs still take most of the money companies spend on AI. The change is that big buyers now treat the model as something they can swap when the price is wrong.

Anthropic ends discounts when customers hit their limit

Pricing is moving on the seller's side too. The Information reported that Anthropic ends its enterprise discounts, usually around 15%, once a customer uses up its contracted volume. The customer then has to renegotiate or pay list price.

For anyone running AI at work, the practical lesson is to measure cost per completed task. Teams that know that number can negotiate, or move work to a cheaper model when quality allows.

Where AI is now in daily use

McDonald's sets prices with an algorithm

Reuters reported that McDonald's uses machine learning to suggest an "optimal price" for menu items at nearly 14,000 US restaurants. The system analyzes millions of daily transactions.

In Fresno, one company-run store sells a Big Mac for $5.69 and another two miles away charges $6.89. Some franchisees told Reuters the tool has widened price gaps between nearby stores, and some said they were pressured to use it. McDonald's describes the tool as a recommendation, not a mandate.

A medical search tool used by roughly 40% of US doctors

OpenEvidence lets doctors ask clinical questions and get answers drawn from medical research. Business Insider reported that roughly 40% of US physicians now use it.

DraftKings used AI to target its promotions

The New York Times reported that DraftKings built a model in 2023 that scores customers by how much they are expected to lose after receiving a free bet. Executives credited AI-driven promotions with a roughly 13% improvement in sportsbook margins in 2025.

Former employees told the Times that similar work to flag problem gambling was stalled. DraftKings says its promotions target sustained, engaged users.

Coding agents reach large companies

Bloomberg reported that Cognition, maker of the Devin coding agent, is on track for $1 billion in annualized revenue, up from $492 million in May. Customers include Nvidia, Citigroup and Mercedes-Benz.

What got restricted or pulled back

Walmart banned AI-made store signs. A Walmart memo reported by Business Insider says "Stores should not display signing created by AI tools." Stores now order signs through approved corporate channels.

Three companies limited Anthropic's Fable over data retention. The Information reported that Nvidia, Palantir and Booz Allen restricted their use of the model after Anthropic began keeping usage logs for 30 days. Booz Allen barred employees from using it for proprietary cybersecurity software work.

Los Angeles schools blocked AI on student devices. LAUSD temporarily blocked generative AI on students' school-issued devices. Teachers kept access.

A Dutch optician chain stopped selling camera glasses. Hans Anders stopped selling Ray-Ban Meta glasses in the Netherlands and Belgium, citing the public and political debate over smart glasses.

An open-source project refused AI-written code. System76 now bars content generated by any LLM from issues and pull requests on its Pop!_OS projects, which include its COSMIC desktop. The rule covers code, comments and descriptions.

NHS AI scribes dropped a word that reversed a diagnosis. A Healthwatch England review found that a scribe turned a test result reading "null demyelination" into one suggesting the opposite, because it dropped the word "null."

From the filings

Companies also describe AI in documents they file with the US Securities and Exchange Commission. Four recent examples:

Paychex launched an AI recruiting tool. Its quarterly results announce WISE Hire, an "agentic recruiting solution", and cite "compelling early adopter results" without giving numbers. Paychex serves about 840,000 customers.
Guidewire says customers may build their own software with AI. The insurance software maker's annual report warns that customers could use AI to build tools "that could reduce or eliminate the need for our solutions."
AMC lists AI films as a business risk. The cinema chain names "audience acceptance of movies made utilizing AI technology" among its risks.
People Inc counts AI licensing as revenue. The publisher lists use of its content "in large-language models" as a source of licensing royalties, next to its Apple News+ deal.

Wait, What?

500,000 faces scanned, zero arrests. British Transport Police tested live facial recognition cameras at London railway stations. The cameras scanned more than 500,000 faces. They produced one alert, which was a false match, and led to no arrests.

Explore more examples

Our AI Use-Case Library holds more than 600 sourced deployments like these, which you can filter by industry, job function and status. Our EDGAR AI Radar tracks what companies tell the SEC about AI.