OpenAI, the AI company led by Sam Altman, is reportedly facing a potential financial crisis, as indicated in a recent report by Analytics India Magazine. The report raises concerns that OpenAI might face bankruptcy by the end of 2024 if its financial situation does not improve.
One of the main contributors to this situation is the significant daily cost of running one of OpenAI's AI services, ChatGPT. The report highlights that it costs the company approximately $700,000 (around Rs 5.80 crore) per day to operate ChatGPT alone. Despite efforts to monetise its AI models, including GPT-3.5 and GPT-4, OpenAI has struggled to generate sufficient revenue to achieve financial sustainability.
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Although ChatGPT gained massive popularity as the fastest-growing app after its launch in November 2022, recent months have seen a decline in user engagement. Data from SimilarWeb reveals that by the end of July 2023, ChatGPT's user base dropped by 12%, from 1.7 billion users in June to 1.5 billion users.
One factor contributing to OpenAI's challenges is the availability of open-source language model (LLM) models that can be customised and repurposed without licensing restrictions. Some companies, which initially discouraged their employees from using ChatGPT, have started leveraging OpenAI's APIs to develop their own AI chatbots tailored to their specific needs.
For instance, Meta's Llama 2, in partnership with Microsoft, offers a more customisable and adaptable solution, prompting a shift away from OpenAI's proprietary offering.
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The report also highlights OpenAI's financial status, noting that the company is yet to achieve profitability. Despite Microsoft's $10 billion investment in OpenAI, its losses have doubled to $540 million since the development of ChatGPT. While OpenAI projected an annual revenue of $200 million in 2023 and aims for $1 billion in 2024, the report suggests that these goals might be challenging to attain given the mounting losses.
