High Operational Costs, OpenAI Threatens to Lose $5 Billion This Year

Bittime - OpenAI, the company behind ChatGPT which is popular, could potentially suffer losses of up to $5 billion by 2024 and run out of funds in the next 12 months. Why? Read this article to find out!

OpenAI Operational Costs are High

OpenAI is expected to spend about $7 billion on artificial intelligence (AI) training and $1.5 billion on personnel costs. This is a stark contrast to competitors like Amazon-backed Anthropic, which estimates spending of $2.7 billion by 2024.

These high expenses could force OpenAI to close another funding round in the next 12 months to strengthen its balance sheet. OpenAI has completed 7 rounds of funding, and raised over $11 billion. 

Development of New AI Models

OpenAI, which launched ChatGPT in November 2022, quickly gained attention and gained more than 100 million weekly users. Recently, the company announced the launch of a new generative AI model called “GPT-4o Mini” on July 18. 

Additionally, OpenAI is developing a new AI model called “Strawberry” with stronger reasoning capabilities and more human-like responses compared to the current flagship model, GPT-4o.

Regulatory and Security Challenges

Additionally, OpenAI is facing a potential investigation by the US SEC regarding alleged violations of non-disclosure agreements. On July 23, US lawmakers sent a letter to OpenAI CEO Sam Altman expressing concerns about OpenAI's security standards and work practices.

The letter, first obtained by the Washington Post, highlights the company's lack of transparency and asks whether OpenAI will commit to making its next baseline model available to US government agencies for pre-deployment testing, review, analysis and assessment.

The Future of OpenAI

With the financial and regulatory challenges it faces, OpenAI's future looks challenging. These companies must find ways to reduce expenses or find new sources of funding to keep their operations running. Additionally, OpenAI must ensure that it complies with regulatory standards to avoid potential legal issues in the future.

However, with the launch of new AI models and continued technological developments, OpenAI has great potential to continue to lead in the AI ​​industry. However, to achieve that, OpenAI must immediately overcome existing financial and regulatory challenges.

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