1) They are far from profitability.
2) Meta is aggressively making their top talent more expensive, and outright draining it.
3) Deepseek/Baidu/etc are dramatically undercutting them.
4) Anthropic and (to a lesser extent?) Google appear to be beating them (or, charitably, matching them) on AI's best use case so far: coding.
5) Altman is becoming less like-able with every unnecessary episode of drama; and OpenAI has most of the stink from the initial (valid) grievance of "AI-companies are stealing from artists". The endless hype and FUD cycles, going back to 2022, have worn industry people out, as well as the flip flop on "please regulate us".
6) Its original, core strategic alliance with Microsoft is extremely strained.
7) and, related to #6, its corporate structure is extremely unorthodox and likely needs to change in order to attract more investment, which it must (to train new frontier models). Microsoft would need to sign off on the new structure.
8) Musk is sniping at its heels, especially through legal actions.
Barring a major breakthrough with GPT-5, which I don't see happening, how do they prevail through all of this and become a sustainable frontier AI lab and company? Maybe the answer is they drop the frontier model aspect of their business? If we are really far from AGI and are instead in a plateau of diminishing returns that may not be a huge deal, because having a 5% better model likely doesn't matter that much to their primary bright spot:
Brand loyalty from the average person to ChatGPT is the best bright spot, and OpenAI successfully eating Google's search market. Their numbers there have been truly massive from the beginning, and are I think the most defensible. Google AI Overviews continue to be completely awful in comparison.
They have majority of the attention and market cap. They have runway. And that part is the most important thing. Others don’t have the users to grand test developments.
XAI has Elon's fortune to burn, and Spacex to fund it.
Gemini has the ad and search business of Google to fund it.
Meta has the ad revenue of IG+FB+WhatsApp+Messenger.
Whereas OpenAI $10 billion in annual revenue, but low switching costs for both consumers and developers using their APIs.
If you stay at the forefront of frontier models, you need to keep burning money like crazy, that requires raising rounds repeatedly for OpenAI, whereas the tech giants can just use their fortunes doing it.
Ok, others have more runway, and less research talent.
OpenAI has enough runway to figure things out and place themselves in a healthier position.
And come to think of it, loosing a few researchers to other companies may not be so bad. Like you said that others have cash to burn. They might spend that cash more liberally and experiment with bolder riskier products and either fail spectacularly or succeed exponentially. And OpenAI can still learn from it well enough and still benefit even though it was never their cash.
Good analysis, my counter to it is that OpenAI has one of the leading foundational models, while Meta, despite being a top paying tech company, continued to release sub par models that don't come close to the other big three.
So, what happened? Is there something fundamentally wrong with the culture and/or infra at Meta? If it was just because Zuckerburg bet on the wrong horses to lead their LLM initiatives, what makes us think he got it right this time?
> how do they prevail through all of this and become a sustainable frontier AI lab and company?
I doubt that OpenAI needs or wants to be a sustainable company right now. They can probably continue to drum up hype and investor money for many years. As long as people keep writing them blank checks, why not keep spending them? Best case they invent AGI, worst case they go bankrupt, which is irrelevant since it's not their own money they're risking.
The biggest problem OAI has is that they don't own a data source. Meta, Google, and X all have existing platforms for sourcing real time data at global scale. OAI has ChatGPT, which gives them some unique data, but it is tiny and very limited compared to what their competitors have.
LLMs trained on open data will regress because there is too much LLM generated slop polluting the corpus now. In order for models to improve and adapt to current events they need fresh human created data, which requires a mechanism to separate human from AI content, which requires owning a platform where content is created, so that you can deploy surveillance tools to correctly identify human created content.
The flip-flop on regulation sounds like: “please regulate us (in a way that builds a moat for incumbents out of fear of an imagined future doom scenario)” and “please Don’t regulate us (in a way that prevents us from stealing, and causing actual harm now).”
If they can turn ChatGPT into a free cash flow machine, they will be in a much more comfortable position. They have the lever to do so (ads) but haven't shown much interest there yet.
I can't imagine how they will compete if they need to continue burning and needing to raise capital until 2030.
The interest and actions are there now: Hiring Fidji Simo to run "applications" strongly indicates a move to an ad-based business model. Fidji's meteoric rise at Facebook was because she helped land the pivot to the monster business that is mobile ads on Facebook, and she was supposedly tapped as Instacart's CEO because their business potential was on ads for CPGs, more than it was on skimming delivery fees and marked up groceries.
1) They are far from profitability. 2) Meta is aggressively making their top talent more expensive, and outright draining it. 3) Deepseek/Baidu/etc are dramatically undercutting them. 4) Anthropic and (to a lesser extent?) Google appear to be beating them (or, charitably, matching them) on AI's best use case so far: coding. 5) Altman is becoming less like-able with every unnecessary episode of drama; and OpenAI has most of the stink from the initial (valid) grievance of "AI-companies are stealing from artists". The endless hype and FUD cycles, going back to 2022, have worn industry people out, as well as the flip flop on "please regulate us". 6) Its original, core strategic alliance with Microsoft is extremely strained. 7) and, related to #6, its corporate structure is extremely unorthodox and likely needs to change in order to attract more investment, which it must (to train new frontier models). Microsoft would need to sign off on the new structure. 8) Musk is sniping at its heels, especially through legal actions.
Barring a major breakthrough with GPT-5, which I don't see happening, how do they prevail through all of this and become a sustainable frontier AI lab and company? Maybe the answer is they drop the frontier model aspect of their business? If we are really far from AGI and are instead in a plateau of diminishing returns that may not be a huge deal, because having a 5% better model likely doesn't matter that much to their primary bright spot:
Brand loyalty from the average person to ChatGPT is the best bright spot, and OpenAI successfully eating Google's search market. Their numbers there have been truly massive from the beginning, and are I think the most defensible. Google AI Overviews continue to be completely awful in comparison.