OpenAI’s chatbot, ChatGPT, is facing a decline in its user base and increasing financial losses, according to recent reports. The company’s decision to apply for a trademark on GPT raised concerns about its sustainability, leading to predictions that users might eventually abandon the platform. Data from SimilarWeb revealed a drop in ChatGPT’s traffic in June and July compared to May, with a 9.6% decrease in July and a 9.7% decline in June. July also witnessed a significant decrease in users, dropping to 1.5 billion from June’s 1.7 billion.
One of the reasons behind this decline is believed to be API cannibalization, as companies have restricted their employees from using ChatGPT for work purposes but continue to integrate the large language model (LLM) into other workflows. Additionally, Meta’s Llama 2 chatbot, supported by Microsoft as its preferred partner, poses competition, as it is made available through the Windows operating system and follows an open-source approach.
Running ChatGPT reportedly costs OpenAI approximately $700,000 per day, with recent investors like Microsoft covering these expenses. However, the mounting losses and lack of profits raise concerns about the company’s financial sustainability. In 2023, OpenAI reported losses of $540 million, which have doubled since the development of the chatbot. The company projected $200 million in revenue for 2023 and an ambitious $1 billion in 2024. Yet, achieving these targets seems uncertain due to substantial losses. Moreover, continual Graphics Processing Unit (GPU) shortages have also hindered model development for OpenAI.
Despite these challenges, OpenAI remains dedicated to advancing in this domain, as seen through its recent trademark application for ‘GPT-5’ and ongoing model training efforts. However, the report suggests that unless additional funds are secured promptly, OpenAI might face bankruptcy by the end of 2024.
OpenAI is further confronted by the potential entry of Apple into the AI-powered chatbot space and Elon Musk’s claims about his AI company xAI being superior. Musk, a co-founder of OpenAI, criticized the company for its affiliation with Microsoft and its approach to AI development.
Once a nonprofit organization, OpenAI has transformed into a capped-profit entity, raising $10 billion from Microsoft to fuel its growth while seeking to balance its original non-profit mission. CEO Sam Altman has stated that the company currently has no immediate plans to go public, citing concerns about superintelligence-related decisions aligning with investor expectations.
As OpenAI navigates these challenges, it remains essential for the company to address its declining user base, mounting losses, and the competition it faces to secure a sustainable future in the AI chatbot landscape.
