The beginning of the end for ChatGPT ?

ChatGPT demands a huge amount of money from OpenAI to operate, as the company struggles to generate enough revenue to offset expenses. The losses are abysmal, and the future of OpenAI is even questioned.

Is OpenAI in danger ? The company behind the GPT language models and the development of the popular chatbot ChatGPT could soon run into cash flow problems, and even head for bankruptcy by the end of 2024.

Colossal expenses

How is this possible when Microsoft invested $10 billion in the company in early 2023? Between the intensive training of language models, the use of ChatGPT by users and the huge salaries paid to engineers, OpenAI is a money pit. Running ChatGPT would cost around $700,000 a day on average, enough to quickly swallow up the money provided by Microsoft.

OpenAI has its own sources of revenue, but these are still far from making the firm profitable. The sale of licenses for the use of its APIs and its paid formulas allowing access to GPT-4 with ChatGPT Plus or to Dall-E are not enough to compensate for the losses, and the prospects for a substantial increase in income are for the less pessimistic.

Microsoft didn't spend $10 billion on charity. This investment allowed it to exploit OpenAI technologies in its own products : the Bing search engine, its office suite, etc. As a result, Microsoft cannibalizes ChatGPT, which no longer manages to win new users. Worse, ChatGPT usage has been on a downward trend since the start of the summer. It will be interesting to see if an increase is to be seen from the start of the school year.

ChatGPT is no longer alone

OpenAI also faces increasingly fierce competition. A pioneer with ChatGPT and DALL-E, it has seen new players arrive on the market. Among them are open source language models, which other companies can use for free for commercial purposes within their own products. These reduce the attractiveness of the paid APIs offered by OpenAI.

One of these models is Llama 2, developed by Meta. According to Santiago, an AI and machine learning specialist, startups are already migrating from a paid proprietary solution to Llama 2.

If OpenAI does not find a solution to generate more income, it will have to rely on a new financial contribution from investors, knowing that it is undoubtedly less attractive than it was still a few months ago and that at this stage, a IPO is ruled out.