ChatGPT Maker Might Turn Bankrupt For This Reason: Details Inside

OpenAI, the AI studio led by Sam Altman is undergoing a major financial crisis as he has failed to generate enough revenue from one of its AI services-ChatGPT. According to a report by Analytics India Magazine, OpenAI bears $700,000 (Rs 5.80 crore) every day to run ChatGPT.

However, despite several attempts to monetise GPT-3.5 and GPT-4, the company is not able to generate enough revenue to break even at this point. And hence, the report said that the company might go bankrupt by the end of 2024.

ChatGPT became the fastest-growing app in history after its launch in November 2022. But after a record-breaking influx of users during their early stages, the company is seeing a gradual decline in user engagement over recent months.

July 2023 witnessed a 12 percent reduction in the user base compared to June, plummeting from 1.7 billion users to 1.5 billion users, SimilarWeb data said.

The company's APIs are also part of the problem. The report says that several companies previously discouraged their employees from using ChatGPT, have now begun acquiring access to OpenAI's APIs, enabling them to create their own AI chatbots for diverse workflows.

According to the reports, Meta's Llama 2, in partnership with Microsoft, is allowing people to use the model for commercial purposes. So, instead of going for what OpenAI offers, which is a paid, proprietary, and restricted version, people opt for an easily modifiable Llama 2.

The report further says that OpenAI has incurred $540 million loss in May ever since it started developing ChatGPT. Microsoft's $10 billion investment in OpenAI is possibly keeping the company afloat at the moment. But on the other hand, OpenAI projected an annual revenue of $200 million in 2023, and expects to reach $1 billion in 2024, which seems to be a long shot since the losses are only mounting, the report stated.