OpenAI's "Code Red" Moment

OpenAI chief executive Sam Altman issued an internal "code red" memo to staff on Monday, directing the entire company to pivot and focus all resources on improving its flagship ChatGPT product.

The urgency stems from the rise of its competitor, Google. 

OpenAI’s trajectory has been astonishing over the past three years. With an estimated 800 million weekly active users, ChatGPT has become the largest consumer artificial intelligence (AI) chatbot, culminating last month in a $500 billion valuation, which has made OpenAI the world’s most valuable private company. The firm, backed by billions from Microsoft, had, until recently, appeared untouchable. 

However, last month, Google’s latest iteration of its AI technology, Gemini 3, not only surpassed ChatGPT on several industry benchmarks but also claimed a user base of more than 650 million monthly users. Gemini’s capabilities are not just about raw text; they represent a leap into multimodal interaction.

A user can now upload a video of a complex activity, such as a golf swing, and receive detailed, professional-grade analysis, or generate a functional, fully designed website from a simple conversation prompt. 

Google is also embedding Gemini across its core ecosystem, most notably into its search engine, which processes an estimated 90% of global internet search queries. This deep integration threatens to lock users into Google's platforms and potentially put a ceiling on OpenAI's ability to grow its market share. 

The true battle for AI supremacy, however, is not simply fought over user statistics or chatbot features; it is a brutal, high-stakes competition for computing power. The creation and operation of advanced AI models require gargantuan, sustained investment in specialised computer chips and the massive data centres, often referred to as "the cloud", that house them. Since the cost of these chips and the energy required to run them are measured in the billions, access to this sophisticated infrastructure is now the ultimate deciding factor in the race. 

OpenAI has already staked its future on this premise. The company has entered into seven major deals with powerhouse cloud providers, including Oracle and Amazon Web Services, as well as chipmaker Nvidia. These complex arrangements commit OpenAI to an astounding $1.15 trillion expenditure on computing infrastructure over the next decade. 

This sum is now woven into the valuations and balance sheets of the partnering firms. Any perception of diminished dominance for ChatGPT puts immense pressure on OpenAI’s ability to generate the revenue necessary to service these infrastructure debts.

For OpenAI, the competition with Google has rapidly transitioned from a technological rivalry to a question of economic survival.