Interesting. Is it because they can or is it really more expensive for them to process bigger context?

Attention is, at its core, quadratic wrt context length. So I'd believe that to be the case, yeah.

I've read that compute costs for LLMs go up O(n^2) with context window size. But I think it is also a combination of limited compute availability, users preference for Anthropic models and Anthropic planning to go IPO.