OpenAI spends approximately $700,000 daily to operate ChatGPT. Microsoft and other recent investors cover these costs, but they could cease if the Sam Altman-led company doesn’t become profitable soon. According to a report in Analytics India Magazine, the company may go bankrupt by the end of 2024.
“Microsoft’s $10 billion investment in OpenAI is possibly keeping the company afloat at the moment. But on the other hand, OpenAI projected an annual revenue of $200 million in 2023, and expects to reach $1 billion in 2024, which seems like a long shot since the losses are only mounting,” the report said, noting that in May this year, OpenAI’s losses doubled to $540 million ever since it started developing ChatGPT.
The report noted that even though CEO Sam Altman does not own equity in OpenAI, the company shifted from being a non-profit to a profit way back.
The report also highlighted the shrinking user visits to the ChatGPT website and referred to SimilarWeb’s data which showed that after hitting a record high of 1.9 billion user visits in May 2023, the generative AI chatbot witnessed 1.7 billion user visits in June and only 1.5 billion in July.
Read also: ChatGPT launches Android version in the US, Brazil and India, other countries in view
More on the report on ChatGPT
The report also referred to a user on X (formerly Twitter) who argued that a major reason for the decline in visits to the ChatGPT website could be API cannibalization. This is a situation wherein most companies are prohibiting employees from using the generative AI chatbot for work, but are allowing them to use the API to leverage the large language model (LLM) in other workflows.
But Analytics India Magazine further stated that: “It is rather presumptuous of OpenAI to assume that the decline in users is just because people have started using the API to build their own products. Interestingly, the twist here is the rise of open-source LLM models. Meta’s Llama 2, in partnership with Microsoft, is allowing people to use the model for commercial purposes.
“So, instead of going for what OpenAI offers, which is a paid, proprietary, and restricted version, why would people not go for an easily modifiable Llama 2?”
Another challenge for the company is the graphics processing unit (GPU) shortage. Altman earlier underscored that the lack of GPUs on the market affected the company’s capacity to improve and develop new models. Earlier, media reports stated that the company had filed a trademark application for ‘GPT-5’ which further indicates that the company wants to keep on training models.
ChatGPT would also face a challenge from Elon Musk who is building a rival chatbot. “Interestingly, his idea of building a ‘TruthGPT’, which is not as politically biased as ChatGPT, was found interesting by a lot of people,” the report said.
Elon Musk even bought 10,000 NVIDIA GPUs to get ahead. On the brighter side, OpenAI’s shift to a paid version may have raked in a lot of moolah but “the financial numbers on this are still hazy”.
Even then, if this LLM-focused company goes public, it may be bought out by bigger companies. Arguably, this might be one of the exit strategies for the investors, the report added, according to Business Standard.
Read also: OpenAI under investigation for data privacy violation and false ChatGPT responses
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