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High daily costs for ChatGPT could endanger OpenAI by 2024

Highlights

  • Despite its popularity, ChatGPT has led to a USD 540 million loss for OpenAI.
  • Running ChatGPT costs OpenAI USD 700,000 daily.

In April this year, it was reported that it costs OpenAI a huge amount of USD 700,000 (around Rs 5 crore) daily to run ChatGPT. Not just that, there were also reports that the company led by Sam Altman had lost twice as much as USD 540 million since they launched ChatGPT. Even though lots of people around the world use this popular AI chatbot, which started in November 2022, the company behind it is facing some problems. A recent report suggests that because of the very high costs of keeping ChatGPT running and other reasons, OpenAI might go broke by 2024.

According to a report by Analytics India Magazine, ChatGPT experienced a decline in its user base during June, and this trend continued into the following month. In June, the AI chatbot had a user count of 1.7 billion, but by July, this number had decreased by 12 percent to 1.5 billion active users. The report highlights a Twitter user who suggested that a factor contributing to this decline could be ‘API cannibalisation’. Many workplaces are now preventing direct usage of ChatGPT by their employees, opting instead to employ ChatGPT’s API to create their own language models for internal use.

Potential Bankruptcy 

The report also brings attention to Microsoft’s substantial investment of USD 10 billion, which is currently shoring up OpenAI’s financial position. However, OpenAI is struggling to achieve its targeted USD 1 billion revenue by the close of 2024. This challenge stems from mounting losses and the company’s reliance on investor funding. OpenAI is actively in the process of hiring for a variety of roles, offering competitive salaries, and expanding its London offices, all of which contribute to the company’s operational costs.

As previously mentioned, the daily operation of OpenAI incurs costs of around USD 700,000, with the majority of this funding coming from Microsoft and other investors. Consequently, unless OpenAI can swiftly turn profitable, there is a looming risk of potential bankruptcy.

Also Read: ChatGPT Android app is now available now, here’s how to chat

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Ankita Chakraborty

Ankita holds a post-graduate degree in political science and balances various roles every day. She works as a copywriter, and a news writer, and takes on freelance writing projects while nurturing her love for animals. With a keen interest in unbiased journalism, she finds enjoyment in Woody Allen's movies and rock music. Ankita appreciates a wide range of perspectives, especially those that align with the left of centre.