Sam Altman is feeling the pressure.
The OpenAI chief executive sent a memo to staff on Monday declaring a “code red” initiative to accelerate development of its flagship chatbot, ChatGPT, according to multiple reports. The memo indicated that OpenAI will scale back spending in ancillary verticals such as health, shopping and advertising to channel resources into the core conversational AI platform.
OpenAI declined to comment on Tuesday.
“Our focus now is to keep making ChatGPT more capable, continue growing, and expand access around the world — while making it feel even more intuitive and personal,” Nick Turley, head of ChatGPT at OpenAI, wrote in a post on X on Monday.
The Information was first to break the story about the internal memo.
ChatGPT boasts more than 800 million weekly users, but the rapid expansion of rival AI offerings is tightening the competitive landscape. Google and Anthropic have emerged as the most formidable challengers.
Google unveiled its latest AI model, Gemini 3, last month. The model topped industry benchmarks and has been praised by developers, researchers, and users on social media. Google reports that its Gemini app reaches 650 million monthly active users, while AI‑enhanced search overviews attract roughly 2 billion users each month.
Altman publicly congratulated Google on the launch, noting on X that Gemini 3 “looks like a great model.”
Anthropic, meanwhile, is gaining significant traction with enterprise customers. As of September, the startup services over 300 000 business clients—a steep rise from fewer than 1 000 two years ago. Large‑account engagements, defined as contracts exceeding $100 000 in annual run‑rate revenue, have grown more than sevenfold in the past year.
Founded as a nonprofit research lab in 2015, OpenAI has morphed into one of the fastest‑growing commercial entities on the planet since the launch of ChatGPT three years ago. Its valuation has ballooned to roughly $500 billion as the company scales its technology globally.
In recent months, OpenAI announced $1.4 trillion in infrastructure commitments as part of an aggressive deal‑making campaign. The magnitude of those obligations has sparked questions about financing and long‑term sustainability. Altman has repeatedly dismissed concerns, emphasizing that the company’s revenue trajectory justifies the outlay.
The firm projects an annualized revenue run‑rate exceeding $20 billion this year and aims to reach “hundreds of billions” in sales by 2030. In a detailed post on X in November, Altman explained that large‑scale infrastructure projects require early investment to build the necessary compute backbone, stating, “This is the bet we are making, and given our vantage point, we feel good about it.”
Nevertheless, the “code red” signal suggests mounting urgency. OpenAI now faces a trifecta of challenges: accelerating product innovation to stay ahead of Google’s Gemini 3, deepening enterprise adoption to counter Anthropic’s rapid growth, and managing an expanding balance sheet of infrastructure liabilities.
Strategic Implications
1. Capital Allocation – By trimming investments in peripheral sectors (health, retail, advertising), OpenAI can reallocate capital to enhance model performance, safety, and customization. This shift also signals to investors that the firm is prioritizing core profitability over speculative diversification.
2. Compute Competition – The AI arms race is increasingly defined by access to high‑performance compute. Google’s deep integration of Gemini 3 across its cloud and search ecosystems gives it a cost advantage that OpenAI must counter either through strategic partnerships or by scaling its own compute farms.
3. Enterprise Moat – Anthropic’s rapid win‑rate among large corporates underscores the importance of bundled enterprise solutions, service‑level agreements, and industry‑specific fine‑tuning. OpenAI’s “code red” could foreshadow a new enterprise‑focused product slate that emphasizes reliability, compliance, and integration with existing SaaS stacks.
4. Regulatory Landscape – As AI systems become more embedded in consumer and business workflows, scrutiny from regulators will intensify. Concentrating resources on a single, well‑controlled product line may help OpenAI tighten governance, reduce risk, and demonstrate responsible AI stewardship.
5. Revenue Diversification – While the $20 billion revenue target is ambitious, the path to reaching “hundreds of billions” will likely require monetizing beyond conversational interfaces—such as licensing foundational models, offering premium API tiers, and expanding into high‑value verticals like finance and aerospace.
In sum, OpenAI’s “code red” is a clear declaration that the company is recalibrating its strategic compass amid intensifying competition and escalating capital demands. The next 12‑18 months will be pivotal in determining whether ChatGPT can retain its market‑leading position or be eclipsed by the next wave of AI innovations.
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