Sam Altman-led OpenAI, the inventor of the generative AI tool ChatGPT, may go bankrupt by the 2024 end as its investors could turn off the ‘Money Tap’ if the tech venture doesn’t return to the path of profit.
As per Analytics India Magazine report, the roughly USD 700,000 per day costs the Open AI incurs on running ChatGPT and Microsoft have been borne by the investors from their own pocket.
It is to be noted here that in May 2023, OpenAI’s losses doubled to USD 540 million ever since it started developing ChatGPT.
“Microsoft’s USD 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 USD 200 million in 2023, and expects to reach USD 1 billion in 2024, which seems to be a long shot since the losses are only mounting,” the report further stated.
According to the report, shrinking user visits to the ChatGPT website and the recently-released data of Similar Web 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, followed by only 1.5 billion in July.
A user on social media platform X (rebranded Twitter) has pitched a major reason for the decline in the ChatGPT website’s visitors count due to the process called ‘API Cannibalisation,’ where companies globally are prohibiting their employees from using the chatbot for work, but are allowing them to use the API to leverage the AI tool’s large language model (LLM) in other workflows.
However, countering this claim, the Analytics India report remarked, “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 over 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.”
Despite CEO Sam Altman not owning equity in OpenAI, the San Francisco-based tech company shifted from being a non-profit to a profitable one way back. However, OpenAI is reportedly burning through cash at the moment. Furthermore, despite their attempt to monetise GPT-3.5 and GPT-4, OpenAI has not been able to generate enough revenue to break even as of August 2023.
OpenAI is also pumping money to make their GPT large language models more powerful and clever, despite Sam Altman making public statements about the potential dangers of AI, if being unregulated by the authorities.
As per a Firstpost article, if OpenAI goes for an IPO (Initial Public Offering), it might be acquired by a large tech company or a conglomerate, which might serve as a “great exit strategy” for the tech venture’s current investors.
“OpenAI is currently going through a period of high attraction rates. They are not laying off people like the rest of the tech industry, per see. However, they are bleeding employees, or rather some top talent, as their staff keep getting poached by their competitors,” the report commented further.