OpenAI Finally Learns How to Do Business

OpenAI, the research company that morphed into a tech startup, is finally understanding how to make it work. After incurring losses of over $540 million towards building ChatGPT, the company is now trying to make it work, and earn some revenue. 

In the most recent report from The Information, OpenAI believes that it is now on pace to generate revenue of $1 billion over the next 12 months. All of now, it would be done by selling their ChatGPT to enterprises, an offering long-awaited by companies given all the concerns about data privacy. There seems to be no other way left for the company.

OpenAI has announced ChatGPT Enterprise, which will allow businesses to use the most-famous chatbot, with enterprise-level security and privacy, and unlimited high-speed access to GPT-4. ChatGPT Enterprise removed all usage caps, and now performs up to two times faster. It  includes 32k context in Enterprise, allowing users to process four times longer inputs or files, making it even better than ChatGPT Plus. 

Do the numbers add up?

The billion-dollar revenue that the company is projecting is a little off from what it had said before. OpenAI projected an annual revenue of $200 million in 2023, and was expected to reach $1 billion in 2024. Not too far off, but a person with direct knowledge of the situation said that the expectation is far ahead. 

Microsoft is teaching OpenAI how to do business and earn some money. After all, the tech-giant has invested huge sums of money to turn the research organisation into a tech startup. If the predictions are right, then OpenAI would generate north of $80 million per month, which is too high when compared to just $28 million revenue it generated last year.

Furthermore, though the revenue might flow, to turn into profitability, the company would have to account for the $700,000 it spends everyday to run ChatGPT. That is just for running inference, and does not include the company’s plan to make its models better and offer it for enterprise. There must be a lot of costs that OpenAI is possibly not taking into account. 

On the other hand, Microsoft has stopped depending on OpenAI for its services. It possibly realised that the ChatGPT company is not providing it with smaller models and also jeopardising its image with so many people being concerned over data privacy. Thus, Microsoft partnered with Meta to release Llama 2 on its platform.

It silently also released Azure ChatGPT, something very similar to what OpenAI has released now. The GitHub repository also took a jab at OpenAI saying that people are scared of ChatGPT’s privacy issues. But just two days later, Microsoft took it down, hinting at some tussle between the two companies, since OpenAI was also planning to release exactly the same thing and possibly raised the red flag.

Is OpenAI now waking up to Microsoft’s exploitation?

In May, OpenAI had announced that it would be launching ChatGPT Business in the coming months, promising enterprises more control over their data. It looked like Microsoft wanted OpenAI to do the dirty work of discovering enterprise use cases, driving generative AI adoption, fixing safety flaws, and replicate the process for customers. 

But since then, Microsoft has been trying to push OpenAI’s APIs on its cloud for its services. Now, with ChatGPT Enterprise, OpenAI’s shift towards a profit-driven company is finally taking shape. OpenAI launching its own enterprise offerings while its biggest backer is doing so too would simply not align well in the future. 

Despite that, people were sceptical about using the platform. CEO Sam Altman recently posted on X to clarify that OpenAI does not use a company’s data to train its model, unless the company opts-in.

On the other hand, just like the GPT-4 multimodal announcement that never actually happened, OpenAI’s ChatGPT Enterprise announcement still is in its infancy. The company hasn’t revealed any pricing details and how it would finally be able to make money through the platform. Moreover, if companies are already able to leverage open source models with their data, would this new announcement actually bring them back to GPT?

Maybe, OpenAI should have thought about releasing this long back and been a little quicker. This release might kill a lot of other startups that are coming up as just wrappers around ChatGPT, but to make money for OpenAI again, it might take a lot more convincing soon to bring back the customers. But for sure, the company has learnt how to do business. 

Would enterprises be willing to pay for the paid version of ChatGPT if there is already a free version available for everyone with data control features or will OpenAI pull the plug on ChatGPT entirely to make ChatGPT Enterprise work? And probably also cut ties with Microsoft along the way?

Either way, ChatGPT is not getting any smarter.