Is OpenAI’s ChatGPT Heading for Bankruptcy?
Facing potential financial challenges, OpenAI’s ChatGPT, released in November 2022, has become the fastest-growing app in the company’s history. However, recent reports suggest that the parent company of ChatGPT might experience bankruptcy by the end of 2024.
Concerns arise from studies indicating that due to fears of trademarking GPT, users might discontinue their usage of ChatGPT. Data from SimilarWeb reveals a consistent decline in ChatGPT traffic over the past two months, with a 9.6% decrease in July and a 9.7% decrease in June. Moreover, user count dropped by 12% from 1.7 billion to 1.5 billion in July.
One reason for these setbacks is attributed to the cannibalization of API consumption, where employers encourage the use of ChatGPT for professional purposes but integrate larger language models (LLLMs) in other workflows.
Running ChatGPT costs OpenAI approximately $700,000 per day. While recent investors like Microsoft cover these expenses, operating without revenue could prove detrimental.
OpenAI faced a loss of $540 million in 2023, and escalating losses along with GPU shortages might pose challenges in projecting optimistic revenues for 2023 and 2024.
The organization also contends with increasing competition. Elon Musk’s AI startup xAI is considered superior to OpenAI, and Apple’s entry into the AI-operated chatbot market further intensifies challenges for OpenAI.
To mitigate financial challenges, OpenAI has trademarked “GPT-5” and continued its model training initiative. However, research warns that without additional funding, OpenAI might encounter serious financial troubles by the end of 2024.