OpenAI’s Throne Shakes: Who’s Threatening OpenAI’s Reign?


The Gist

  • Model multiplicity. OpenAI’s GPT-4 leads, but competitors with similar capabilities are emerging rapidly.
  • Margin challenge. As AI model costs decrease, OpenAI faces pressure from cheaper, customizable alternatives.
  • Innovation imperative. OpenAI must shift from adapting to creating breakthroughs amidst growing LLM commoditization.

It’s been a year of glossy profiles, breathless accolades and funding billions for OpenAI, but the ChatGPT-maker is far more vulnerable than the popular narrative suggests. Amid a seemingly unstoppable ascent, it’s facing fierce competition, a rising open-source movement and pressure to deliver hits in an unpredictable discipline. Surprisingly, its perch atop the AI field is less than rock solid. 

A line of golden humanoid robots walk in single file while the silver leader turns his head to look back at them, suggesting the vulnerability of OpeanAI to competitors.
OpenAI’s perch atop the AI field is less than rock solid.LFK on Adobe Stock Photos

OpenAI’s weakness stems in part from its strength. It popularized generative AI by taking others’ innovations — like the transformer model — and building stellar products on top of them. But now that the entire world is cued into AI, it’ll be much more difficult to take advantage alone. The blueprint and the materials are out there, and competitors are catching up.

After a week of interviews with OpenAI’s customers, here’s a look at its vulnerabilities:

Model Commoditization 

OpenAI’s GPT-4 is still the best-performing large language model, but well-funded imitators are suddenly everywhere. Anthropic’s models are so promising it landed two billion-dollar-plus investments, from Amazon and Google, within a month of each other. Google’s Gemini model is coming and rumored to be on par with — or better than — GPT-4. Meta’s Llama2 is available and gaining momentum. There’s plenty of selection now. Smart AI companies are going shopping.

Related Article: OpenAI Launches GPT-4 Turbo, Pioneering New Era of Personalized AI

Margin Compression

The cost to use large language models will come down with multiple, comparable offerings hitting the market. “OpenAI has a very clear lead,” George Sivulka, founder of Hebbia AI, told me. “But others will undercut them in pricing or customizability, and the majority of value will not be accrued in the large language model layer.” Infrastructure companies like NVIDIA will cash in while model developers compete on price. That’s one reason OpenAI is so fixated on achieving artificial general intelligence. “Their bet is on reaching AGI that finds a better way to make money,” Sivulka said.


Source link