OpenAI's Altman declares ‘code red’ to improve ChatGPT as Google threatens AI lead

Altman said OpenAI had more work to do on the day-to-day experience of its chatbot, including improving personalization features for users, increasing its speed and reliability, and allowing it to answer a wider range of questions.

The companywide memo is the most decisive indication yet of the pressure OpenAI is facing from competitors who have narrowed the startup’s lead in the AI race. Of particular concern to Altman is Google, which released a new version of its Gemini AI model last month that surpassed OpenAI on industry benchmark tests and sent the search giant’s stock soaring.

Gemini’s user base has been climbing since the August release of an image generator, Nano Banana, and Google said monthly active users grew from 450 million in July to 650 million in October. OpenAI is also facing pressure from Anthropic, which is becoming popular among business customers.

With OpenAI committed to hundreds of billions of dollars in future data-center investments, concerns about its timeline for turning those investments into meaningful revenues have sent tremors through the stock market in recent weeks. While the company remains private—Chief Financial Officer Sarah Friar said at a Wall Street Journal event in November that an IPO is not on the immediate horizon—its fortunes are closely bound with those of Nvidia, Microsoft and Oracle, among others.

Altman said that OpenAI would be pushing back work on other initiatives such as advertising, AI agents for health and shopping, and a personal assistant called Pulse. He encouraged temporary team transfers and said the company would have a daily call for those responsible for improving ChatGPT. On Monday evening, OpenAI’s head of ChatGPT, Nick Turley, said on X that the company was now focused on growing its chatbot while also making it feel “even more intuitive and personal."

OpenAI isn’t profitable and has to raise funding at a near-constant pace to survive—putting it at a financial disadvantage against Google and other tech firms that can fund investments out of revenues. The company is also spending more aggressively than its main startup rival, Anthropic, and will need to grow its revenue to roughly $200 billion to turn a profit in 2030, according to its own financial projections.

Altman has managed to dispel concerns about OpenAI’s finances largely due to ChatGPT’s massive and growing user base of more than 800 million weekly users, as well as OpenAI’s lead in cutting-edge AI research. In the internal memo, he said that a new reasoning model that OpenAI is planning to release next week is ahead of Google’s latest Gemini model and that the company is still performing well on various other fronts.

The Information earlier reported on some of the memo’s contents.

In recent months, OpenAI has struggled in particular with balancing concerns about its chatbot’s safety with making it more engaging for users. Its GPT-5 model released in August fell flat among some users, who complained about its colder tone and difficulty answering simple math and geography questions. Last month, OpenAI upgraded the model to make it warmer and better able to follow user instructions.

OpenAI earlier declared a “code orange" in its effort to improve ChatGPT, the memo said. The company uses three different color codes—yellow, orange, and red—to describe the varying levels of urgency needed to tackle problems, according to people familiar with the matter.

News Corp, owner of The Wall Street Journal, has a content-licensing partnership with OpenAI.

Write to Berber Jin at berber.jin@wsj.com