OpenAI, made famous by its generative AI chatbot ChatGPT, is considering ways to incorporate advertising into its AI products. The company is looking for new sources of income as part of its transformation into a commercial company, and advertising could be one of them.
Image source: OpenAI
Following a $6.6 billion funding round in October, OpenAI is now one of Silicon Valley’s most valuable private companies, with a valuation of more than $150 billion. Thanks to the success of ChatGPT, OpenAI’s revenues have grown to about $4 billion year over year. which puts it on par with the fastest-growing startups of all time. The chatbot’s number of weekly active users has grown to more than 250 million in two years. But OpenAI’s costs associated with developing advanced AI models exceed its revenues. The company’s expenses are expected to exceed $5 billion this year.
One of OpenAI’s largest sources of revenue comes from providing access to an application programming interface (API) that allows organizations and developers to create AI-powered products. The company also makes money from sales of individual and corporate licenses to use ChatGPT. But, as one expert noted, “API is not a highly profitable business.”
OpenAI is ramping up efforts to generate revenue from its products, such as its AI-powered search engine. Its competitor Perplexity has already launched a pilot project to deploy advertising in its AI-powered search engine.
Sarah Friar, OpenAI’s chief financial officer, who previously held senior positions at Nextdoor, Square and Salesforce, noted in an interview with the Financial Times that the company’s chief product officer, Kevin Weil, has experience building ad-supported products on major technology platforms. , including Instagram✴ and X. In May, OpenAI also hired Shivakumar Venkataraman, who previously led the team, as vice president Google search advertising.
According to sources, at the moment, OpenAI executives are divided on what advertising on this platform should look like. Friar pointed out that advertising models have their shortcomings, and that the introduction of advertising forces the company to pay more attention to the demands of advertisers instead of meeting the needs of users. “I’m not ruling out advertising,” she said. “But at the moment there are a lot of positives in the way we operate.”
It should be noted that not everyone in the IT industry supports OpenAI’s plans to restructure into a commercial company. Billionaire Elon Musk even demanded through court that OpenAI should be prohibited from turning into a commercial organization.