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OpenAI led by Sam Altman, could be facing a financial crisis, according to a report by Analytics India Magazine. The report suggests that the company might face bankruptcy by the end of 2024.
The report from Analytics India Magazine explains that running just one of its AI services, ChatGPT, costs OpenAI around $700,000 (approximately Rs 5.80 crore) per day. Despite efforts to monetize GPT-3.5 and GPT-4, the company is struggling to generate sufficient revenue to cover its costs.
ChatGPT, which became the fastest-growing app after its November 2022 launch, experienced an initial surge in users. However, recent months have seen a gradual decrease in user engagement. Data from SimilarWeb indicates a 12% reduction in the user base from June to July 2023, dropping from 1.7 billion users to 1.5 billion users.
OpenAI’s APIs are contributing to the challenge. Several companies that previously discouraged their employees from using ChatGPT are now adopting OpenAI’s APIs to create their own AI chatbots tailored to their workflows.
The report highlights the availability of open-source LLM models that can be repurposed without licensing issues, offering customization for specific use cases. For instance, Meta’s Llama 2, developed in collaboration with Microsoft, is allowing commercial use of the model. This raises questions about why users would opt for OpenAI’s paid, proprietary, and restricted version when alternatives like Llama 2 are easily customizable and sometimes more suitable.
Despite Microsoft’s $10 billion investment keeping OpenAI afloat, the company is still not profitable. OpenAI had projected annual revenues of $200 million in 2023 and a target of $1 billion in 2024. However, mounting losses and ongoing financial challenges make these projections appear optimistic, according to the report.
