Meta makes about $200B on ads, Google makes about $235B on ads. Advertising is roughly 1.5% of the total GDP of the US and hasn't changed in 20+ years. So what you have is a big ass pie with a few players fighting for it that barely grows every year.
OpenAI has to somehow:
1. Compete directly with Google Gemini and Meta's Llama for a piece of users pie with a product that has very little differentiator (functionality and technically speaking).
2. Have to prove to advertisers that their single dollar ad purchase on OpenAI is categorically worth more than any other channel.
3. Have enough forward capital to continue purchasing capital-intense hardware purchases.
4. Having enough capital to weather any potential economic headwinds.
I know where my bet is.
We're on Hacker News. Y Combinator literally teaches their companies that they can beat incumbents using focus and speed.
My bet is on OpenAI. When they IPO, I can easily see them with $1 trillion in valuation and raise the a record amount of money in an IPO.
If Meta and Google don't see OpenAI and LLMs as an existential threat, they wouldn't invest so much. I think AI has that potential to completely disrupt Google and Meta because it fundamentally changes the way people behave. It's a paradigm shift. It isn't just playing the same game.
With consumers right now? Sure, but so does WhatsApp and IG, both Meta properties. Meta and Google also WAY better brand power with advertisers. So there's that.
> I can easily see them with $1 trillion in valuation and raise the a record amount of money in an IPO.
They have agreements of roughly in $1.5T infra spend (and that doesn't include their own S&M and R&D spend) for the next 5 years. They have to have a combined amount of cashflow to cover that $1.5T (mix of income, debt financing, and stock financing) + all their other spending. The CFO admitted that they may need to bail out data centers to cover this to stay solvent in the long run.
> Y Combinator literally teaches their companies that they can beat incumbents using focus and speed.
YC is literally not God when it comes to advice, so this point is moot. Meta and Google didn't come out of YC and yet still beat incumbents.
With consumers right now? Sure, but so does WhatsApp and IG, both Meta properties. Meta and Google also WAY better brand power with advertisers. So there's that.
They have agreements of roughly in $1.5T infra spend (and that doesn't include their own S&M and R&D spend) for the next 5 years. They have to have a combined amount of cashflow to cover that $1.5T (mix of income, debt financing, and stock financing) + all their other spending. The CFO admitted that they may need to bail out data centers to cover this to stay solvent in the long run.
YC is literally not God when it comes to advice, so this point is moot. Meta and Google didn't come out of YC and yet still beat incumbents.
If you're so sure, can you share your source?
> Their comment about government support for data center is isn't a call for a bailout and taken out of context/exaggerated by mass media.
The context was vague, but the idea that she was conveying is well understood - basically she was saying "we're going to get so big and so important for basic societal needs in the US that if we ever become insolvent the US government can step in and make sure we survive".
> Yes but Google also beat the incumbents in Yahoo, AOL.
That was my point - did you even read my comment?
ChatGPT has roughly the same MAU as tiktok. I don't see why their ad business wouldn't meet or exceed what tiktok was able to do in less than 5 years.
Reuters reported that ByteDance (TikTok parent) in Q1 2025 had $48b in revenue.[0] They should surpass $200b for 2025 which would make them bigger than Meta.
In other words, Tiktok has already caught up with Instagram in terms of revenue.
[0]https://www.reuters.com/business/finance/tiktok-owner-byteda...
We're not comparing apples and oranges here. Google and Meta don't operate in China, so there is no giant online ad spend (especially for social) already allocated like there is in the US.
TikTok, or rather ByteDance, acquired Musical.ly as a competitor to absorb the user base and jump start their network. Their also have been a lot of short-form video platforms before (e. G., Vine) and during TikToks growth (Instagram reels, YT Shorts).
You'll probably argue that this time it's different but no one knows what's different until it's already changed.
I think people who say they're only doing this for investors is wrong. I think management at Google and Meta truly think they're f'ed if they don't get AI right.
I already get mad at gemini when it shoves a barely-related youtube link into the chat with someone's huge stupid youtube face on it. Its a major reason why I rarely use it.
Hacker News commentator !== normal people.
Meta has WhatsApp, Instagram, and Facebook to account for that.
OpenAI has ChatGPT (not a social platform).
It seems to me you're comparing apples and oranges here.
OpenAI has ChatGPT (not a social platform).
Anyways, check this out: https://openai.com/index/group-chats-in-chatgpt/
It seems to me you're comparing apples and oranges here.
PS. That's why Meta and Google are all in on AI. OpenAI is an existential threat to both in my humble opinion.
The network effects matter so much more for a social platform than a chat bot. The switching costs for a user are much lower, so users can move to a different one much easier.
How sticky will chat bots prove to be in the long term? Will OpenAI be able to maintain a lead in the space in the long term, the way Google was over Bing? It's possible, but it's also pretty easy to imagine other providers being competitive and a landscape where users move between different LLMs more fluidly
There's nothing to pointlessly waste your time on. You open it to do a thing, you either do the thing or get frustrated or leave. Social networks are designed to waste your time even when they outlive their usefulness, therefore they can serve you more ads.
You could argue Google is the same as ChatGPT in that regard, but that's why Google has Adsense in almost any search result you click on.
As for your group chats feature argument, anyone can make a social network, that's the easy part. Getting friend groups to switch is the more difficult part.
> PS. That's why Meta and Google are all in on AI. OpenAI is an existential threat to both in my humble opinion.
They're all in on AI because that's what their investors want them to do to "not be left behind". Meta was all in Metaverse. And on a cryptocurrency before that (Diem). And on Free Basics before that. The fact that none of those succeeded didn't hurt them at all precisely because they had an infinite money glitch known as ads.
They can afford to waste amounts of money equivalent to a yearly budget of a small country, ChatGPT can't.
Like Google Search, this does not really matter. Fact is, chatgpt is the 5th most visited site on the planet every month. And it happened in about 3 years. 'Nothing to waste your time on?' Completely irrelevant.
Any idiot off the street can be the most used website on Earth. Easy - go to my website, and I give you free stuff. So why am I not a billionaire? Because that's a dumbass business model and that won't go anywhere.
The idea that if you just "flood the market" you can be successful is a crock of shit, and I think we're all starting to realize it. It's not difficult, or impressive, or laborious to provide something people want. It's difficult to do it in a way that makes money.
You might say - but what about Spotify? What about Uber? Those companies are not successful. They are just barely profitable, after investment on the order of decades. We don't actually know if a service like Spotify even works long term. It sounds fantastic - pay ten bucks or whatever and get all the music you want.
But has anyone taken a step back and asked - hmm - how do we make money off of this? Because obviously that is not the cost of music, right? And we don't own any of the capital, right? And we don't actually make a product, right, we're just a middle man?
ChatGPT is in a similar predicament. The value of ChatGPT is not the ChatGPT, it's what ChatGPT produces. It's a middle man, operating at massive losses, with absolutely no path towards profitability.
Spotify and Uber are aggregators with high marginal costs that they do not control. Spotify has to pay labels for every stream; Uber has to pay drivers for every ride. They cannot scale their way out of those costs because they don't own the underlying asset (the music or the labor).
OpenAI is not a middleman; they own the factory. They are "manufacturing" intelligence. Their primary costs are compute and energy. Unlike human labor (Uber) or IP licensing (Spotify), the cost of compute is on a strong deflationary curve. Inference costs have dropped orders of magnitudes in the last couple years while model quality has improved and costs will keep dropping. Gemini's median query costs no more than a google search. LLM inference is already cheap.
> Any idiot off the street can be the most used website on Earth. Easy - go to my website, and I give you free stuff.
If they were only burning cash to give away a free product, you’d be right. But they are reportedly at ~$4B in annualized revenue. That is not "giving away free stuff" to inflate metrics; that is the fastest-growing SaaS product in history.
You are conflating "burning cash to build infrastructure" (classic aggressive scaling, like early Amazon) with "structurally unprofitable unit economics" (MoviePass).
Open AI's unit economics are fine. Inference is cheap enough for ads to be viable enough for profitability as a business today. The costs this article is alluding to ? Open AI don't need to do any of that for tier of models and use-cases they have today. They are trying to build and be able to serve 'AGI', which they project will be orders of magnitudes more costly. If they do manage that, then none of those costs will matter. If they don't, then they can just...not do it. 'AGI' is not necessary for Open AI to be a profitable business.
Right, which is just not very impressive giving how much money they are burning.
> Open AI's unit economics are fine
I disagree, they lose massive amounts of money on every query.
The only way for OpenAI to make money off queries is to make it cost more, but that won't work because they have no moat, and cannot even create a moat because of how LLMs work. Again, the model itself or the interface is worthless, consumers only care about what it produces.
Google, Meta, et al. could trivially overthrow OpenAI in my view. Most users probably wouldn't even notice, because they use other interfaces on top of models.
I also think ads are a dead end. Consumers absolutely will not tolerate advertisements in their LLMs. No student is going to submit an essay which has obvious hints towards Bose making the best speakers. No programmer is going to write code that embeds a Java runtime because Oracle paid for OpenAI ad space. No artist is going to publish art that just so happens to contain lots of references to Coca Cola.
LLM chats are just not like other tools. If Google has ads, they can get in the way, but the core Google thing is not compromised. If an LLM has ads, I can no longer trust ANY of it's output, ever, and it's as good as worthless.
OpenAI might be tempted to do the dark pattern thing and hide their ads as much as possible, but I don't think that will work either. It's just not acceptable for the tool to do that, and I don't think consumers will be stupid enough to fall for it. Already, we are seeing online advertisement rapidly plummet in value due to the sheer volume and amount of scams.
Advertisers don't know that yet, but they will. Google might know it, but they certainly won't say it out loud. I can tell you right now, the average consumer has been so bombarded by shitty ads they've become masterminds. They expertly navigate around them, and elegantly ignore them in their peripheral vision. They know X, Y, Z is a scam. New advertisement mediums shake it up, for a bit, but then those die too. Metrics won't necessarily tell you that, because most users are robots so you wouldn't know.
They are not burning that much money right now.
>I disagree, they lose massive amounts of money on every query.
Both google and Altman confirm the fact that a median LLM query is no more expensive than a google search. Beyond that, we have multiple third parties with who offer profitable access to open source llms and others. Inference is cheap, there's no doubt about it. They lose money because they have hundreds of millions of weekly active users that are not monetized in any way (no ads, nothing).
>Google, Meta, et al. could trivially overthrow OpenAI in my view.
If they could, it would have happened. Both of these players are stuffing their clones in front of billions of users (android and all of meta's apps), and neither have dented Open AI's growth or relevance. ChatGPT is still the undisputed leader in the consumer llm space. Gemini is a very very distant second, and the rest might as well not even register.
There's a reason edge and bing usage is still minuscule despite microsoft having a chokehold on consumer laptops/computers and setting those as defaults. People need to understand that you don't unseat a leader just by copying them. They wish the could trivially overthrow Open AI, but they actually can't.
>I also think ads are a dead end. Consumers absolutely will not tolerate advertisements in their LLMs.
People have said that about Netflix and countless services that introduced ads. Instead, it quickly became Netflix's most popular tier. The Implentation has to be really obnoxious before people actually care about ads.
>No student is going to submit an essay which has obvious hints towards Bose making the best speakers. No programmer is going to write code that embeds a Java runtime because Oracle paid for OpenAI ad space. No artist is going to publish art that just so happens to contain lots of references to Coca Cola.
I'm sorry but you are making up problems that don't need to exist. You are essentially imagining the llm equivalent of obtrusive pop up ads and I have no idea why. Of course chatgpt won't be doing any of these, that's ridiculous.
You're missing the forest here. Yes, Netflix has ads, but to do so they had to bring down the value of ALL ADVERTISING. The more ads consumers see, the less valuable each individual ad is. Because consumers are tired, and they only have so much money.
As of currently stands, online ads are very close to worthless. Again - nobody is going to tell you that, because they're trying to sell you ad space! But it's true. Just look at how the people around you behave.
apart from those oranges have ~100bn a year to spend on rnd and still make a profit, where as openai doesn't
So yes, it is apples to oranges. but its reality.
But I think Open AI is not a slam dunk for Ads. Gemini and AI mode will compete for the same budget, and Google's Ad machine is polished.
I think eventually you will buy Ads for Open AI in Google's marketing platforms, just like most people buy bing ads in Google.
I'm telling it nearly everything from my work problems to health problems to love life problems to product research, traveling plans, etc.
Your intent is the immediate need: how do I fix this leaky faucet?
Your user profile (love life problems) is generally not useful there.
Google just passively collects email and browsing history, much better data for targeting ads and way less cost to run.
Then they will have a social platform that they will continue to use to mine AI training data from + a source of ad revenue.
It's becoming social as well: https://openai.com/index/group-chats-in-chatgpt/
I will have whatever you're smoking. If a social media platform literally proves the dead internet theory, it's not making any money.
I think advertisers are fairly stupid and maybe don't realize that most eyes on their ads aren't eyes at all, and couldn't buy a hair dryer even if they wanted, because they have no hair. How Facebook is still a desirable advertising platform is beyond me.
Low effort input. Low effort consumption. What a depressing vision of the suture. This is why I don't use social media.
Do they use Google docs/sheets? Or even Google Search anywhere? Then they have Gemini integrated in some way
I think people are severely underestimating ChatGPT as a way to make money other than subscriptions. I also think people are underestimating the branding power ChatGPT has already. All my friends have ChatGPT on their phone. None of them except me has Gemini or Claude app.
This doesn't account for OpenAI's other ambitions such as Sora app.
Hey Sam Altman or OpenAI employee, if you are reading this, I think you should buy the North American version of TikTok if the opportunity presents itself. The future of short videos will be heavily AI generated/assisted. Combine Tiktok's audience with your Sora tools and ChatGPT data and you got yourself a true Instagram competitor immediately. If the $14b sales price of US Tiktok is real, that's an absolute bargain in the grand scheme of things.