OpenAI Faces Renewed Competitive Pressure

OpenAI is entering a more demanding phase of the consumer AI race after Sam Altman issued a call for staff to concentrate on strengthening ChatGPT, the company’s flagship product. The instruction, described internally as a code red, reflects growing concern that the company has spread itself thin while rivals have begun to regain ground.

The message marks a shift in tone from an organisation that has encouraged broad experimentation. OpenAI’s leadership has spent the past two years promoting a wide portfolio of ideas, from generative video tools and a social platform built around creation to a shopping assistant and a suite of business facing services. This approach was driven partly by the need to build new revenue lines to support the rising cost of training models. It also reflected a belief that consumer appetite for AI products was still taking shape.

The strategy appeared sound after the extraordinary success of ChatGPT in late 2022, which forced technology groups to accelerate their own AI roadmaps. But the landscape has changed. Google’s Gemini model has earned strong reviews from developers and consumers, lifting the company’s share price and signalling that the original shock that ChatGPT delivered has faded. Google has also gained an advantage by integrating Gemini directly into its search engine, providing an immediate distribution channel for its conversational capabilities.

Altman’s memo says the company has not given enough focus to the core system that made its name. He urged teams to prioritise improvements to ChatGPT’s accuracy, personalisation and breadth of response. The instruction suggests that OpenAI now recognises the need to defend its position rather than assume continued dominance.

The decision raises questions about the strength of OpenAI’s competitive edge. The company built its early reputation on technical leadership in model development. But differentiation among the top model builders has become progressively harder to maintain. Each new release brings rapid responses from rivals, and none has sustained a decisive advantage for long. As the underlying model capabilities converge, more subjective elements such as tone, consistency and task flexibility become increasingly important.

OpenAI has struggled to stabilise those characteristics. The update to its 4o model earlier this year reinforced user viewpoints in ways that boosted engagement but created concerns about accuracy and neutrality. After acknowledging the issue, the company introduced GPT 5 with a more detached presentation that some users found wooden and less engaging. The shift highlighted the difficulty in building one system that satisfies both consumers and business customers with very different expectations.

The market for chatbots itself is also more fluid than before. Early adoption of ChatGPT gave OpenAI the advantage of familiarity and a strong brand. But the ability of search to funnel users directly into Google’s conversational tools means the contest for mainstream consumers remains open. Altman’s focus on building more advanced features into ChatGPT indicates that next year is likely to bring more intense competition around the depth and reliability of responses, rather than simple novelty.

A key challenge is monetisation. Most of ChatGPT’s revenue comes from premium subscriptions, but the proportion of users willing to pay remains low. Although advertising was seen as one possible path to scale, Altman signalled that this initiative should be de-emphasised, reducing the likelihood of near term diversification of income. The company faces a clear tension. It must enhance the product to encourage more paying users, while avoiding changes that risk short term volatility at a time of heightened competition.

The call to focus also affects OpenAI’s culture. Product experimentation has been one of its defining traits. The company has tended to frame ChatGPT as a fortunate outcome of internal testing rather than a planned consumer product. The decision to push promising ideas such as the shopping agent and the Pulse personal assistant into the background suggests a period of consolidation. For staff who joined with the goal of building new AI experiences, this shift may bring uncertainty.

The change underscores the broader strategic question of whether OpenAI can continue to present itself as both the leading research company in artificial intelligence and the leading consumer platform. Those aims have always sat together uneasily. The mission to ensure artificial general intelligence benefits humanity has offered little guidance on how to prioritise commercial decisions. Altman’s memo makes clear that competitive pressure now requires sharper choices and a narrower focus.

There is also the issue of whether OpenAI can maintain a distinctive position in the foundation model layer. As models become more capable and more similar, the strength of the consumer product becomes the main basis for differentiation. That is one reason for Altman’s renewed emphasis on ChatGPT. But it is also a sign of the shifting nature of competition. The next stages will revolve less around raw model strength and more around reliability, trust, safety and usability, areas where brand perception counts heavily.

For all the questions raised by the memo, OpenAI retains considerable strengths. It has a large installed base of users, extensive developer engagement and one of the most advanced AI research teams in the sector. It also benefits from Microsoft’s infrastructure and financial backing. The challenge is to convert those advantages into sustained leadership while keeping up with rivals that now move quickly and have deep resources of their own.

The code red moment suggests OpenAI is aware that its window for experimentation has narrowed. It must prove that it can refine and expand its main product at the pace required by the market. It must also decide which new initiatives genuinely support the company’s position and which risk further dilution of focus.

Altman’s intervention may give OpenAI a clearer direction. But it also signals that the next phase of the consumer AI race will be more demanding and more tightly contested than the one that followed ChatGPT’s original breakthrough.