OpenAI might go bankrupt by end of 2024, ChatGPT costing over Rs 5.80 crore per day: Report

OpenAI, the pioneer AI studio that initiated discussions about AI among everyday individuals without technical backgrounds, is facing significant challenges. In its pursuit to establish itself as a leading entity in generative AI through its AI chatbot, ChatGPT, the AI development studio led by Sam Altman finds itself on the brink of a potential financial crisis, as outlined in a report by Analytics India Magazine.

Reportedly, the operational expenses for OpenAI to maintain just one of its AI services, namely ChatGPT, amount to around $700,000 (Rs 5.80 crore) per day. Consequently, OpenAI, under Sam Altman's leadership, is rapidly depleting its financial resources. Despite efforts to monetise GPT-3.5 and GPT-4, the company has yet to achieve a revenue level that covers its costs.

Although OpenAI and ChatGPT initially experienced a robust launch with a record-breaking influx of users during their early stages, they have observed a gradual decline in user engagement over recent months. According to SimilarWeb data, July 2023 witnessed a 12 per cent reduction in the user base compared to June, plummeting from 1.7 billion users to 1.5 billion users. Notably, this data exclusively pertains to users visiting the ChatGPT website and does not factor in users employing OpenAI's APIs.

OpenAI's APIs also contribute to the predicament. Numerous companies, previously apprehensive about their employees using ChatGPT, have now begun acquiring access to OpenAI's APIs, enabling them to construct their own AI chatbots for diverse workflows.

However, as Analytics India Magazine underscores, the issue lies in the availability of several open-source large language model (LLM) frameworks that can be utilised and repurposed freely, without encountering licensing constraints. Consequently, these frameworks can be meticulously tailored and adapted to cater to an organisation's highly specific use cases.

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In December 2022, a few months after its launch, Altman acknowledged the astronomical costs associated with operating the AI company and ChatGPT, prompting the decision to implement monetisation strategies. Presently, these expenses are being underwritten by recent investors, including Microsoft. However, the ongoing operational costs, combined with OpenAI's sluggish revenue generation, pose a formidable challenge unless the company can effect a turnaround.

While giants like Google and Meta are often considered OpenAI's primary competitors, Elon Musk and his xAI project also warrant attention. Musk, who has long been engaged with AI, particularly due to his involvement with Tesla, has made significant strides in the AI realm since the viral success of ChatGPT. Musk publicly declared his intention to develop a rival chatbot named "TruthGPT," which aims to mitigate biases and hallucinatory tendencies attributed to OpenAI's ChatGPT. Furthermore, it was reported that Musk invested over $10 million in over 10,000 NVIDIA GPUs for his AI initiative, in addition to substantial expenditures on human resources and data centre operations to facilitate the training of xAI's algorithms.

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