Allegedly, it is reported that OpenAI incurs operational expenses of approximately $700,000 (equivalent to around Rs 5.80 crore) per day to maintain a single AI service, specifically ChatGPT. This substantial financial burden, under the leadership of Sam Altman, is causing OpenAI to rapidly deplete its financial reserves. Despite endeavors to monetize GPT-3.5 and GPT-4, the company has not yet achieved a revenue stream that covers its expenditure.
Initially experiencing a robust launch accompanied by a record-breaking influx of users, both OpenAI and ChatGPT have recently witnessed a gradual decline in user engagement. According to data from SimilarWeb, the user base witnessed a 12 percent reduction in July 2023 compared to June, decreasing from 1.7 billion users to 1.5 billion users. It is important to note that this data specifically pertains to visitors of the ChatGPT website and excludes users utilizing OpenAI’s APIs.
The predicament is exacerbated by OpenAI’s API offerings. Several companies, once hesitant about utilizing ChatGPT, have started to gain access to OpenAI’s APIs, allowing them to create their own AI chatbots tailored to various workflows.
However, as highlighted by Analytics India Magazine, the challenge lies in the availability of numerous open-source large language model (LLM) frameworks that can be freely utilized and adapted without encountering licensing restrictions. Consequently, these frameworks can be meticulously customized to suit an organization’s highly specific use cases.
Altman acknowledged the substantial costs associated with operating the AI company and ChatGPT a few months after their launch in December 2022. This led to the implementation of monetization strategies. At present, these expenses are being covered by recent investors, including Microsoft. Nonetheless, the ongoing operational costs, coupled with OpenAI’s sluggish revenue generation, present a significant challenge unless the company can reverse this trend.
While industry giants like Google and Meta are often considered OpenAI’s primary competitors, attention should also be directed towards Elon Musk and his xAI project. Musk, long engaged with AI due to his association with Tesla, has made considerable strides in the AI field since the viral success of ChatGPT. Musk publicly announced his intention to develop a competing chatbot named “TruthGPT” with the goal of addressing biases and hallucinatory tendencies linked to OpenAI’s ChatGPT. Additionally, reports suggest Musk invested over $10 million in more than 10,000 NVIDIA GPUs for his AI initiative, along with substantial investments in human resources and data center operations to facilitate the training of xAI’s algorithms.
