Cheaper AI models from Chinese and Western rivals are eroding OpenAI and Anthropic's pricing power, raising questions about their sky-high IPO valuations.

Anthropic and OpenAI now capture 89 percent of revenue among top AI startups, according to an analysis by The Information.

Some developers have told me that the rising costs of frontier AI models from Anthropic and other firms could prompt them to shift to cheaper open-source AI. After all, when…