In spite of attempts to generate income from GPT-3.5 and GPT-4, OpenAI has not managed to reach a financial threshold that offsets its expenditures.
OpenAI, the trailblazing AI organization that triggered conversations about AI among non-experts, is grappling with significant hurdles. As it strives to solidify its position as a prominent player in generative AI through its AI chatbot, ChatGPT, the AI development studio led by Sam Altman is facing the potential precipice of a financial predicament, as detailed in a report by Analytics India Magazine.
According to reports, the operational outlays to sustain just one of OpenAI's AI services, specifically ChatGPT, accumulate to approximately $700,000 (Rs 5.80 crore) per day. As a result, under Sam Altman's guidance, OpenAI is swiftly diminishing its fiscal reservoir. Despite endeavors to monetize GPT-3.5 and GPT-4, the company has yet to attain a revenue level that offsets its expenses.
While OpenAI and ChatGPT initially enjoyed a strong debut with a remarkable influx of users during their early phases, they have recently witnessed a gradual decline in user engagement. According to data from SimilarWeb, the user base in July 2023 experienced a 12 percent decrease compared to June, dropping from 1.7 billion users to 1.5 billion users. Notably, this data is specific to visitors of the ChatGPT website and does not encompass users utilizing OpenAI's APIs.
OpenAI's APIs also contribute to this situation. Many companies, who were initially concerned about their employees using ChatGPT, have now started gaining access to OpenAI's APIs, enabling them to create their own AI chatbots for various workflows.
Nonetheless, as highlighted by Analytics India Magazine, the challenge lies in the existence of various open-source frameworks for large language models (LLMs) that can be freely utilized and adapted, without being hindered by licensing limitations. Consequently, these frameworks can be intricately customized and adjusted to suit an organization's highly specific requirements.
In December 2022, a few months subsequent to its launch, Altman acknowledged the substantial costs linked to running the AI company and ChatGPT, which led to the decision of implementing strategies for monetization. Currently, these expenditures are being supported by recent investors, including Microsoft. Nevertheless, the ongoing operational expenses, coupled with OpenAI's gradual revenue generation, present a formidable challenge unless the company manages to turn the situation around.
While industry giants like Google and Meta are frequently seen as OpenAI's main competitors, attention should also be directed towards Elon Musk and his xAI project. Musk, who has had a prolonged involvement with AI, particularly due to his association with Tesla, has achieved notable advancements in the AI domain following the viral success of ChatGPT. Musk openly announced his ambition to create a rival chatbot named "TruthGPT," aimed at mitigating biases and fantastical tendencies often associated with OpenAI's ChatGPT. Additionally, reports indicate that Musk allocated over $10 million for acquiring more than 10,000 NVIDIA GPUs for his AI initiative. This is in addition to substantial investments in human resources and data center operations to facilitate the training of xAI's algorithms.
