OpenAI on ‘Code Red’ Amid Crisis, But Altman Remains Its Ultimate Trump Card

TradingKey - Google's powerful AI model, Gemini 3, has delivered a significant blow to OpenAI, forcing Sam Altman's company to declare an urgent "Code Red" amid a brewing technical and brand crisis. OpenAI indeed faces immense pressure, though its vast user base may yet prove a formidable moat.

According to a Wall Street Journal report on December 2, OpenAI announced an internal "Code Red" plan aimed at optimizing its ChatGPT model. This initiative concentrates company-wide resources on enhancing the chatbot's experience, consequently delaying the launch of other products such as advertising and shopping AI agents.

OpenAI CEO Sam Altman stated they have more work to do on the chatbot's daily experience. This includes improving user personalization, enhancing speed and reliability, and addressing a wider range of user questions.

This move is widely seen as OpenAI's clearest signal to date of feeling competitive pressure. Google's Gemini 3 model reportedly outperformed OpenAI's leading models in several performance tests.

Furthermore, the Nano Banana image generation model, released in August, significantly boosted Google Gemini's user growth, with monthly active users surging from 450 million in July to 650 million in October, closely trailing OpenAI's 800 million users.

OpenAI, once perceived as unassailable, now finds itself under siege. It faces not only Google Gemini's comprehensive catch-up in AI models but also Anthropic's challenge in enterprise-grade applications. Additionally, OpenAI shoulders significant operational and financial burdens. Anthropic, founded by former OpenAI members, exhibits a clearer path to profitability and an IPO, having grown its large enterprise customer base by over sevenfold in the past year.

Recognizing these threats, OpenAI has activated "Code Red," its highest-level and most urgent response, in an attempt to reassert its dominance in AI models. These business challenges pose a greater test for the $500 billion-valued AI unicorn on how to deliver returns to investors. Nevertheless, some industry insiders argue that OpenAI's leading technology and 800 million active users provide sufficient resilience to survive.

Tech analyst Ben Thompson believes that ChatGPT's 800 million users create a significant moat against rivals eroding its market share. He notes that the stickiness of API developers and pervasive user habits solidify ChatGPT's usage.

For one, developers utilizing OpenAI's model APIs tend to be sticky and reluctant to easily switch interfaces. While the industry aims to avoid single-vendor reliance, developers often build upon existing tech stacks to expand and deepen products, prioritizing product consistency.

Moreover, user cognitive habits and ecosystem reliance present high switching barriers. ChatGPT users' personalized histories, command preferences, established workflows, deeply integrated tool types, and trust in the product are not easily altered in the short term.

At the same time, OpenAI's immense user base constructs self-reinforcing competitive barriers. For example, the vast volume of real-world user interaction data driving model optimization and improvement is not easily replicated by competitors. This represents a core asset with high investment costs and significant replication difficulty.

Furthermore, few companies can match the AI infrastructure OpenAI has built to support such a large user volume and massive requests, while maintaining high operating speed and reliability. Altman previously stated that their greater risk lies in a lack of sufficient computing power, rather than an excess.

OpenAI has shifted from "disruptor" to "defender," with its focus returning to AI model optimization. Whether it can withstand the fierce assault from rivals like Google remains to be seen.