ChatGPT’s Daily Operating Costs Threaten OpenAI’s 2024 Viability.

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In April of this year, startling reports surfaced, shedding light on the financial strain ChatGPT was imposing on OpenAI. The viral AI chatbot, which has taken the world by storm since its November 2022 launch, was found to be costing OpenAI a staggering USD 700,000 (approximately Rs 5 crore) every single day. These astronomical costs have put the company’s financial stability under scrutiny, prompting concerns about its future.

It’s not just the operational costs that are plaguing OpenAI; reports also revealed a significant setback in the form of mounting losses. Since the debut of ChatGPT, Sam Altman’s company has seen its losses double, reaching a staggering USD 540 million. Despite ChatGPT’s widespread use and popularity, OpenAI’s financial health appears to be hanging in the balance.

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The situation took a concerning turn in recent months, with a noticeable decline in ChatGPT’s user base. Analytics India Magazine’s data indicates that June witnessed a dip, followed by an even more pronounced drop in July. The number of active users dwindled by 12 percent, plummeting from 1.7 billion in June to 1.5 billion in July. One Twitter user, identified as X, proposed that the decline could be attributed to ‘API cannibalisation’. Many workplaces have barred employees from using ChatGPT directly but are leveraging ChatGPT’s API to create their own Language Model Models (LLMs), encouraging their staff to embrace this approach.

While Microsoft’s hefty investment of USD 10 billion might be propping up OpenAI for the time being, the company is far from achieving its targeted USD 1 billion in revenue by the end of 2024. The expanding workforce, competitive salaries, and office expansions in London have all contributed to the growing operational costs. These challenges have hindered OpenAI’s progress toward financial viability.

As previously mentioned, the daily operational expenses are estimated at USD 700,000, primarily being covered by Microsoft and other investors. However, unless OpenAI rapidly transitions into a profitable entity, the specter of bankruptcy looms large.

Adding to the intrigue, a recent report from Windows Latest has unveiled OpenAI’s application for a trademark hinting at GPT-5, the potential successor to ChatGPT. The trademark application, dated July 18, underscores the prospect of an upcoming GPT-5 model. Notably, similar terms were used for trademark applications of GPT-3.5 and GPT-4, both described as ‘downloadable computer software for using language model’. This new revelation ignites curiosity about OpenAI’s plans for an even more powerful iteration of ChatGPT. However, concrete details remain elusive, and the launch of GPT-5 this year is far from certain.

In a landscape where operational costs and user engagement are pivotal, OpenAI faces a critical juncture. As the company navigates these challenges and explores new horizons, the fate of ChatGPT and OpenAI’s future hangs in the balance.

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