Altman: Once upon a time, Google could have dominated OpenAI

The great power competition in the AI Age will probably be between OpenAI and Google, and one of the main battles may be over advertising dollars. OpenAI CEO Sam Altman seemed to describe the world in those terms during an appearance on the Big Technology podcast Monday.

OpenAI, which is not yet profitable, is reportedly getting set to sell ads within ChatGPT in an effort to monetize the many free users on its platform. ChatGPT now has an impressive 800 million weekly active users, but only 35 million of them buy subscriptions. The ads, which could help pay for OpenAI’s plan to spend $115 billion on infrastructure by 2029, could show up as soon as early 2026. 

As Altman pointed out on the podcast, Google was slow to put generative AI at the center of its products, especially search, its cash cow. “Google has probably the greatest business model in the whole industry, and I think they will be slow to give that up,” Altman said. Google became a two trillion-dollar company selling ads around its traditional “ten blue links” search results; answering search queries with AI-generated results would have meant lost revenue—especially for product searches. (Google has since developed its own AI search experiences and is experimenting with ads to match.)

Altman believes Google’s hesitation to go hard on infusing its products with generative AI has bought his company time and staying power. “If Google had really decided to take us seriously in 2023, let’s say, we would’ve been in a really bad place,” the CEO said. “I think they would’ve just been able to smash us.” 

OpenAI believes (as Perplexity does) that Google will struggle to monetize AI search ads after spending decades perfecting a massive apparatus for selling ads around traditional search results. “[B]olting AI into web search—I may be wrong, I may be drinking the Kool-Aid here—I don’t think that’ll work as well as reimagining the whole [business].” Altman said. He seems to suggest that his company is better positioned to reinvent web search and advertising because it’s a pure AI play. 

It’s true Google was slow to evolve search (and search ads) toward AI, but the company still has some massive advantages when competing for brand advertiser dollars. It has amassed databases full of custom information that it can serve for certain searches—like local business searches, weather, or mapping. And it has more ad targeting data than anyone else. 

“There are very legitimate reasons to be concerned that OpenAI is going to eventually succumb to the Google behemoth, just as Yahoo, Microsoft, Blackberry, and countless others have,” writes Stratechery analyst Ben Thompson in a recent newsletter. “I still want to believe that OpenAI can be an aggregator, but they don’t have the business model to match, and that may be fatal.” 

Altman has said he has reservations about putting ads within ChatGPT, worrying that it might erode trust in the chatbot’s outputs. But it may be that advertising will be the way consumer AI is paid for, just like it’s the reason that much of the web has been free for decades.  

Ad dollars may let OpenAI maintain its pace in pursuing human-level AI models, its major goal. But going head-to-head with Google in web ads is a daunting task, and it may be one of OpenAI’s biggest tests yet.