OpenAI may be in the midst of a potential financial crisis. According to a report from Analytics India Magazine, the company may go bankrupt by the end of 2024.
According to the report, OpenAI will spend about $700,000 a day just to run its artificial intelligence service ChatGPT (Currently about RMB 5.068 million). OpenAI is currently burning through cash, and while the company is trying to turn a profit with GPT-3.5 and GPT-4, it has not yet been able to generate enough revenue to break even.
Launched in November 2022, ChatGPT is the fastest-growing app ever. But after starting out with record numbers of users, the company has seen user engagement decline in recent months. According to SimilarWeb, ChatGPT’s user base declined further by the end of July. The user base in July 2023 is reduced by 12% compared to June, from 1.7 billion users to 1.5 billion users.
Furthermore, the report states that there are some open source Large Language Models (LLMs) that are freely available and allowed to be modified for any purpose without any licensing issues. As such, they can be appropriately tailored and tuned according to the specific use case scenarios an organization may have. For example, Llama 2, a collaboration between Meta and Microsoft, allows people to use the model for commercial purposes. So why don’t people use a free Llama 2 that is easily modifiable, instead of the paid, proprietary and restricted version of OpenAI? And in some use cases, Llama 2 is even better than GPT.
The shortage of GPUs has made OpenAI even worse. CEO Altman has said that a shortage of GPUs on the market prevented the company from training further models and improving them. Now that the company has applied for a trademark for GPT-5, it’s clear that the company wants to train it, which in turn has resulted in a significant drop in the quality of ChatGPT’s output.
OpenAI is not yet profitable, the report said. Since it started developing ChatGPT, its losses have doubled to $540 million in May. Microsoft’s $10 billion investment in OpenAI may be what’s keeping the company afloat for now. But the report says that if OpenAI doesn’t secure more funding soon, the company may have to file for bankruptcy by the end of 2024 to buy more NVIDIA GPUs due in the second quarter of this year and start training their models. At that time, the competition will become more and more fierce, the losses will increase, and the number of users will decrease.
