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  • Mal McCallion

OpenAI's ChatGPT: A Financial Tug-of-War?

Updated: Dec 11, 2023

OpenAI, the company behind the revolutionary AI chatbot, ChatGPT, is reportedly burning through a whopping $700,000 per day (around Rs. 5.8 crore) to keep the bot running.

This financial burden is currently shouldered by Microsoft and other investors, who are digging deep into their pockets to cover these costs.

However, there's a ticking clock on this generosity. If OpenAI, led by CEO Sam Altman, doesn't start turning a profit soon, it could face bankruptcy by the end of 2024, according to a report from Analytics India Magazine.

Despite the hefty daily expenditure, OpenAI has ambitious revenue projections. The company predicts an annual revenue of $200 million in 2023, escalating to a staggering $1 billion in 2024. But with losses currently doubling to $540 million since the development of ChatGPT, these targets seem like a distant dream.

Notably, user visits to the ChatGPT website have been on a steady decline, dropping from a record high of 1.9 billion visits in May to 1.5 billion in July. Some speculate this could be due to API cannibalisation, where companies restrict use of the chatbot for work but utilise the API in other workflows.

However, OpenAI is also facing stiff competition from open-source Large Language Models (LLMs) like Meta's Llama 2, which offers a modifiable model for commercial use. Why pay for a restricted version when you can modify an open-source one?

Adding to OpenAI's woes is the current shortage of Graphics Processing Units (GPUs), a key component in developing and improving new models. Yet, the company seems undeterred, filing for a trademark application for 'GPT-5', indicating plans to continue training models.

Elon Musk, too, is throwing his hat into the ring, developing a rival chatbot, 'TruthGPT', and purchasing 10,000 NVIDIA GPUs to gain an edge.

Despite the challenges, OpenAI's shift to a paid version of ChatGPT may be a silver lining. The financial outcome of this move remains unclear, but if OpenAI goes public, it could be an attractive acquisition for larger companies.

In the high-stakes game of AI development, it seems OpenAI is all in. But will the gamble pay off? Only time will tell.

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