Sam Altman Declares ‘Code Red’ For ChatGPT As Rivals Catch Up; Will Scale Back Advertising Plans

OpenAI CEO Sam Altman declared a “code red” on Monday, telling employees that ChatGPT needs serious improvement in terms of user experience – including personalization features, speed, reliability, and allowing it to answer a wider range of questions.

In a companywide memo, Altman also said that OpenAI would be pushing back work on other initiatives, including advertising, AI agents for health and shopping, and a personal assistant called Pulse, the Wall Street Journal reports. And with hundreds of billions of dollars committed to future data-center investments, they need to remain on top at all costs. 

The company will now hold daily calls with the team responsible for improving the chatbot, while OpenAI’s head of ChatGPT, Nick Turley, said Monday on X that the company is now focused on making GPT feel “even more intuitive and personable.” 

The announcement comes days after a report in the Financial Times warning that OpenAI rivals from Google and Anthropic are catching up in terms of features and popularity. 

Three years on from the debut of its popular chatbot, the $500bn start-up is grappling with the reality of soaring data centre costs, the technical challenges of remaining at the frontier of AI and the constant battle to retain key talent.

It is also facing a resurgent Google, with the release last week of Gemini 3, Google’s latest large language model, which is considered to have leapfrogged OpenAI’s GPT-5 and achieved gains from the model training process that have eluded OpenAI in recent months.

“It’s quite a strong difference with the world we had two years ago where OpenAI was leading ahead of everyone else,” Thomas Wolf, co-founder and chief science officer of open-source start-up Hugging Face told FT. “It’s a new world.”

Gemini’s user base has been rapidly growing since the August release of an image generator – Nano Banana. According to Google, monthly active users have also grown from 450 million in July to 650 million in October. 

Anthropic, meanwhile,  is also growing in popularity among business customers. 

Last month Altman told employees that OpenAI would “need to stay focused through short-term competitive pressure . . . expect the vibes out there to be rough for a bit.” 

Meanwhile, OpenAI is at a disadvantage – not only are they not profitable, they have to raise money at a near-constant pace to keep their heads above water – something Google and other tech firms that fund growth with revenues don’t have to worry about. OpenAI is also outspending its main startup rival, Anthropic, and needs to grow revenue to roughly $200 billion to even have a chance at turning a profit in 2030. 

Google told the Financial Times that their Big Tech group had “pushed our performance quite significantly” by training their AI models using Google’s own bespoke chips. 

“Being able to connect with consumers, customers, companies, at that scale is really something that we can do because of that full stack integrated approach that we have,” said Koray Kavukcuoglu, Google’s AI architect and DeepMind’s chief technology officer.

That “full stack” includes its custom tensor processing unit chips, which allowed Google to train Gemini 3 without needing to rely on the costly Nvidia chips that most of the AI industry uses. “I think we have a unique approach there,” said Kavukcuoglu.

Google “always had these muscles to flex”, said Michael Nathanson, co-founder and analyst at MoffettNathanson, an equity research firm, adding that the IO event showed that “they really managed to find their product footing”.

“The pressure has definitely flipped to Sam Altman and his ability to monetise and keep all the plates spinning,” said Nathanson. -FT

As Google’s Gemini showed a potential step-change improvement vs ChatGPT, the market has found itself mis-aligned and mis-priced for that…

And now, Altman is starting to panic…