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Business News/ Ai / Artificial Intelligence/  OpenAI likely to go bankrupt by the end of 2024: Report

OpenAI likely to go bankrupt by the end of 2024: Report

OpenAI's ChatGPT, the fastest-growing app, may go bankrupt by end of 2024, says report. Decline in users and mounting losses are cited as reasons.

This picture taken on January 23, 2023 in Toulouse, southwestern France, shows screens displaying the logos of OpenAI and ChatGPT. - ChatGPT is a conversational artificial intelligence software application developed by OpenAI. (Photo: AFP)

OpenAI's ChatGPT became the fastest-growing app in history after its launch in November 2022. Since its launch, it created both excitement and alarm to replace human in jobs. Now a report by Analytics India Magazine has stated that the company might go bankrupt by the end of 2024.

As per the report, when OpenAI applied for a trademark on GPT, it was seen as the downfall for the company and was also predicted that many users would eventually stop using the technology.

The report also showed data where ChatGPT website witnessed a user decline in the month of June and July as compared to May. On 3 August, SimilarWeb said that the ChatGPT traffic dipped for the second month in a row. A 9.6 percent drop was seen in the month of July while June recorded 9.7 percent decline. Speaking of users, July saw a 12 percent decline with 1.5 billion users as compared to June's 1.7 billion users.

The report also cited a user on X which said a major reason for this decline could be API cannibalisation wherein most companies have been prohibiting their employees from using it for work. However, are free to use the API to integrate the large language model (LLM) into other workflows.

Another reason as stated by Analytics India Magazine could be Mark Zuckerberg’s Meta which recently unveiled its Llama 2 chatbot. Microsoft appointed as Meta’s preferred partner on Llama 2, will be available through the Windows operating system. Meta’s Llama 2 has made its product open source which means that the original code is freely available, allowing it to be researched and modified.

Also read: ChatGPT Plus subscription introduced: All you need to know on price and features

Media reports have also stated that the OpenAI spends roughly $700,000 per day to run ChatGPT. As per Analytics India Magazine, Microsoft and other recent investors are covering these costs out of their own pockets, which could eventually drain them if it does not see profits soon.

Earlier in May, the company's losses doubled to $540 million since it started developing the Ai chatbot. Moreover, for 2023, the company has projected an annual revenue of $200 million and expects to reach $1 billion in 2024. This looks blur as the losses are only mounting, the report said.

Another reason could be persistent Graphics processing unit (GPU) shortage. Altman had pointed out that the lack of GPUs on the market affected the company's capacity to improve and develop new models. Earlier on 3 August, media reports had also stated that the company had filed for trademark application for 'GPT-5' which further indicates that the company wants to keep on training models.

Given these facts, OpenAI might find itself in a situation where declaring bankruptcy by the end of 2024 becomes necessary unless it quickly finds more funds, the report said.

Also read: OpenAI CEO Sam Altman's Worldcoin to ‘build infrastructure, allow third parties to use the technology’

Earlier on 19 July, Bloomberg had reported that Apple is working on its own artificial intelligence powered chatbot that could challenge those of OpenAI and others, however, the company has yet to devise a clear strategy for releasing the technology to consumers. Elon Musk too, had claims claims his new AI company xAI is better than Google and OpenAI in understanding the universe. He had criticized OpenAI for being controlled by Microsoft. Musk is training xAI to be 'maximally curious' and align with human values. Musk has been critical of OpenAI, a company he helped co-found in 2015. The billionaire claimed that OpenAI is “training AI to be woke" and that the company was “effectively controlled by Microsoft."

Also Read: Elon Musk explains why xAI will be more trustworthy than OpenAI, Google

Meanwhile, in June, Chief Executive Sam Altman had said that the Microsoft-backed OpenAI has no plans to go public any time soon. "When we develop super intelligence, we are likely to make some decisions that most investors would look at very strangely," Altman said as reported by Reuters. "I don't want to be sued by ... public market, Wall Street etc, so no, not that interested," he said in response to a question on whether he will take OpenAI public. The company has so far raised $10 billion from Microsoft at a valuation of almost $30 billion as it invests more on building computing capacity. The company started off as a non-profit organisation but later created a hybrid "capped-profit" company, that allowed it to raise external funds with a promise that the original non-profit operation still benefits.

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