What you need to know
- OpenAI could reportedly bring ads to ChatGPT to generate more revenue amid bankruptcy reports.
- Sarah Friar, OpenAI CFO, says the AI firm will thoughtfully ship the ads, potentially retaining the chatbot’s minimalist UI.
- CEO Sam Altman seems to be against the idea, referring to it as a “last resort.”
In a surprising turn of events, OpenAI’s ChatGPT could feature ads in the future. While speaking to the Financial Times, CFO Sarah Friar indicated the AI firm is exploring integrating ads into the platform. The executive further stated that the firm plans to ship the new business model in a “thoughtful” manner, referring to the placement of the ads in the chatbot’s user interface.
While Friar categorically stated OpenAI had “no active plans to pursue advertising,” there’s a possibility the idea could come to fruition in the future. For context, the ChatGPT maker hired Shivakumar Venkataraman, a former Google Search Ads leader. From this premise, we could assume that the AI firm plans to leverage Venkataraman’s expertise in advertising for its own good.
I’m not saying OpenAI would never consider ads, but I don’t like them in general, and I think that ‘ads-plus-AI’ is sort of uniquely unsettling to me.
Sam Altman, OpenAI CEO, speaking at Harvard University
However, the plans might face one major roadblock. OpenAI CEO Sam Altman isn’t a big fan of integrating ads into ChatGPT. In a recent interview at Harvard Business School, Altman was asked about the possibility of OpenAI integrating ads into its business model to generate more revenue amid bankruptcy reports. While the CEO didn’t categorically shut down the idea, he indicated the move would be a “last resort.”
A much-needed last resort
Over the past few months, several reports indicated that OpenAI is on the verge of bankruptcy, with projections of a $5 billion loss in the next 12 months. However, the AI firm’s investors, including Microsoft, NVIDIA, Thrive Capital, SoftBank, and more, raised $6.6 billion through a round of funding, pushing the ChatGPT maker’s market capitalization to $157 billion and extending its lifeline.
While the round of funding seemingly alleviated OpenAI’s woes, more trouble abounds. Another report claimed OpenAI could make a $44 billion loss before seeing a profit in 2029 before seeing a profit. Market analysts and experts attributed the prediction partly to the ChatGPT maker’s Microsoft tie-up.
OpenAI has conducted a total of 8 rounds of funding since its founding. But how is OpenAI burning through wads of cash so fast? The AI firm generates $2 billion annually from ChatGPT and $1 billion from LLM access fees, translating to an approximate total revenue of between $3.5 billion and $4.5 billion annually. However, it spends $7 billion on training its AI models and $1.5 billion on staffing.
While the generative AI bubble has investors in a chokehold, digging deep into their pockets for a piece of the cake, market analysts predict it might be a fad. An alarming report claimed that 30% of AI-themed projects will be abandoned by 2025 after proof of concept. Based on this premise, investor interest in AI might fade, forcing them to channel their funds elsewhere.
At this point, startups like OpenAI could be subjected to hostile takeovers and outsider interference. Interestingly, analysts predict Microsoft could acquire OpenAI in the next 3 years.
As you may know, chasing the AI hype isn’t cheap. OpenAI spends up to $700,000 per day to keep ChatGPT running. Sam Altman painted a picture of what it would cost to bring his AI vision to fruition, constituting “$7 trillion and many years to build 36 semiconductor plants and additional data centers.”
Related: ChatGPT reigns over Microsoft Copilot on mobile
To this end, OpenAI needs an alternative source of revenue as investor interest fades and ads seem like its best bet. However, it will be interesting to see how the integration affects ChatGPT’s user experience and the general reception.
