OpenAI’s ChatGPT made history as the fastest-growing app; experts suggest the creator company might be bankrupt in 2024. After its launch in November 2022, the app revolutionized the artificial intelligence market. The analysis says that if Sam Altman’s OpenAI fails to get more funding, it could be filing for bankruptcy next year.
OpenAI Might be Bankrupt by 2024
The user base of ChatGPT is declining rapidly; in May 2023, there were 1.9 Billion users; in June, the number dropped to 1.7 Billion, with the final count for July 2023 at 1.5 Billion—however, some theories in the market support this decline, which goes like this.
In May 2023, the students were out of school, and as they went back, users dropped. With technological advancement, people started making bots similar to ChatGPT or rivaling the application. Also, many workplaces banned the use of the application at the workplace.
Many companies banned the use because of the premise that it would replace human creativity and disrupt job demography. Creating a presentation or writing code was much easier using the app. Further data suggests that the losses incurred by the company have doubled to around $540 Million.
Operating ChatGPT is Expensive
Also, the daily operating cost of ChatGPT comes at the eye-watering sum of $700,000 per day. Even if the company thinks of circumventing the investors and making an initial public offering (IPO) to raise funds, it might not be possible, at least not now. Also, it would be too soon for companies like, Anthropic or Inflection to have an IPO.
Experts say it takes a minimum of 10 years in operation and $100 Million in revenue for an IPO to succeed. OpenAI, Anthropic, etc., need to fill in the criteria. Even if the Microsoft-backed OpenAI projected annual revenue of $200 Millon for 2023 and around $1 Billion in 2024, the losses are weighing in hard.
Currently, OpenAI is mainly surviving on the $10 Billion Microsoft investment. ChatGPT traffic suffered consecutive drops, 9.6% in July and 9.7% in June 2023. The reasons could be that companies prohibited using ChatGPT but allowed the integration of large language models (LLM) in their workflows.
Rivals Disrupting the Market
In July 2023, Elon Musk officially launched the artificial intelligence startup xAI and plans to challenge ChatGPT openly. Musk’s team has engineers from Google, Microsoft, and OpenAI. These engineers plan to build applications that challenge ChatGPT, Bard, and Claude.
Also, Musk plans to launch TruthGPT, an AI system working on seeking maximum truth, and rival Google’s Bard, OpenAI’s ChatGPT, and Microfsoft’s BingAI. With the advancement in generative AI, the market is flooded with ChatGPT copycats, which may not provide similar performance but are either entirely free or charge less for premium facilities.
Applications like ChatGPT grow on the scarcity in the market; they leverage their uniqueness to lure in users and generate revenue. With multiple options available, OpenAI engineers must work on bringing unique features and exciting options. This development should bring new life to the dying company.
Source: https://www.thecoinrepublic.com/2023/08/14/openai-might-pack-its-bags-after-getting-bankrupt-in-2024/