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OpenAI could go bankrupt by 2024 due to ChatGPT

It was only a few months ago that OpenAI made it to the headlines for offering ChatGPT, a highly impressive AI-based chatbot, to the public at large. ChatGPT harnessed the power of AI and gave us a chatbot that could reply to queries in the form of a natural conversation that’s more acceptable to humans. The entire world couldn’t contain its excitement and predictions of ChatGPT taking over the world and nabbing our jobs started doing the rounds. Hence, it’s rather surprising to learn about its maker, OpenAI, being predicted to go bankrupt before 2024 ends.

Based on a new report that looks at OpenAI’s earnings, it is being reported that ChatGPT is draining OpenAI’s banks faster than the chatbot’s pace of generating revenue. This may not fare well for the company and there’s a high possibility of OpenAI actually going bankrupt in the near future. This is contrary to what the company has declared in its projections.

Does this development mean we could be seeing the end of ChatGPT in 2024? Well, let’s take a closer look at all the predictions for OpenAI and its future.

OpenAI’s bankruptcy: What does the data say?

Based on a report from Analytics India Magazine, it is estimated that OpenAI won’t be able to cover the costs of maintaining ChatGPT’s daily operations and as a result, the company could declare bankruptcy by the end of 2024.

openai bankrupt
Image credit: Jonathan Kemper/Unsplash

For the uninitiated, ChatGPT is an extensive set of AI algorithms that require lots of computing resources to stay alive and keep delivering high-quality responses to its users and customers. Considering all the computing hardware and the software components needed, it costs OpenAI a sum of approximately USD 700,000 daily to keep ChatGPT running. That’s a large sum for any software firm to lose daily and all of the paid subscription plans for GPT 4 are just not bringing enough income to overcome the losses.

The report also states that OpenAI’s total losses incurred by May 2023 amounted to USD 540 million. At the same time, its userbase has been declining rapidly and several clients are shying away from its chatbot service. For context, the recent findings in a SimilarWeb report state that ChatGPT saw its user base decline from 1.7 billion to 1.5 billion. This is contrary to the rapid gains in users it saw when the ChatGPT service went live in the early months of 2023.

OpenAI’s business models are not helping ChatGPT

One of the key reasons why ChatGPT is witnessing a sudden drop in its user base has to do with OpenAI’s business model. OpenAI’s offering is a paid, proprietary and restricted platform that doesn’t cut it for all kinds of clients. Businesses and individuals now prefer moving over to an open-source Large Language Model (LLM) that offers them the freedom to modify the code to better suit their needs.

For example, Meta’s Llama 2 is an open-source platform that is more suited to businesses and their needs. Created in conjunction with Microsoft, the Llama 2 is often claimed to be a better option for businesses as it offers more freedom to customise the model and get better outputs. Additionally, the ChatGPT API plugin has also encouraged businesses and individuals to build their own bots instead of using the original offering.

Does ChatGPT have a future?

openai bankrupt
Image Credits: Courtesy Levart_Photographer / Unsplash

OpenAI, however, is keen on improving the product and has already filed a trademark for ‘GPT 5’.

While it will likely feature next-generation improvements to ChatGPT, the GPT 5 model is yet to be trained and improved. This is largely due to a shortage of GPUs that is required to run these AI models. OpenAI’s Sam Altman has also confirmed the lack of available NVIDIA GPUs to train these next-gen models and get them ready for the world.

If OpenAI files for bankruptcy, it could bring in more moolah for the firm to secure more GPUs and accelerate the development of the next-gen GPT models. At the moment, Microsoft’s USD 10 billion investment keeps OpenAI afloat and allows it to use existing hardware to train the newer AI models. This, unfortunately, comes at a cost – lower-quality responses that take more time to be generated. That’s not a good thing considering the onslaught of rivals with equally effective, if not better, products.

Hero and Featured Image: Courtesy RolfVan Root/Unsplash

This story first appeared on Augustman India.

OpenAI could go bankrupt by 2024 due to ChatGPT

Amritanshu lives and breathes tech, cars, Formula 1, space stuff and everything that delivers an adrenaline rush. Since 2016, he converted his favorite hobby of going all gaga over iPhones and Lamborghinis into his profession; hence, you aren’t likely to be surprised upon checking his browser history. In his spare time, he loves to drive and explore food joints, but will somehow end up with a plate of Chicken Biryani and a big smile. He has previously written for Hindustan Times, India Today, BGR.in, and Deccan Chronicle.

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