Comment by aurareturn
2 days ago
The team also assumes LLM companies will capture 2 per cent of the digital advertising market in revenue, from slightly more than zero currently.
This seems quite low. Meta has 3.5 billion users and projected ~$200b revenue in 2025. ChatGPT is at ~1 billion so far. By 2030, let's just stay ChatGPT reaches 2 billion years or 57% of Meta's current users. I'd like to think that OpenAI's digital ad revenue should reach 10% by 2030 an then accelerate from there. In my opinion, the data that ChatGPT has on a user is better than the inferred user data from Instagram/FB usage. I think ChatGPT can build a better advertisement profile of each user than Meta can which can lead to better ad targeting. Further more, I think ChatGPT can really create a novel advertisement platform such as learning about sponsored products directly via chat. I'm already asking ChatGPT about potential products and services everyday like medicine, travel, gadgets, etc.
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.
> Meta has 3.5 billion users and projected ~$200b revenue in 2025
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.
OpenAI has branding power, a clear product focused mindset, focused attention, and moves faster than Google and Meta. Nearly 1 billion users in 3 years is no joke.
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.
You’re betting on OpenAI a company that has literally never sold an online ad against the two kings of online advertising…cool.
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> OpenAI has branding power
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.
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If OpenAI (or any LLM chat product) starts shoving ads into people's faces, they aren't going to have a billion users anymore.
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.
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As devil's advocate, the innovator's dilemma is said to be the cause of incumbent disruption. But in the case of AI, we're seeing incumbents over-correct into rapid AI adoption. It is a mess, but I wouldn't then use history to predict who the winners will be.
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They have to compete against entities who really know what they are doing.
What about money spent on software developers, other knowledge work… AI could take 10-20% of spending on humans… that would be a few trillion per year.
> Meta has 3.5 billion users and projected ~$200b revenue in 2025.
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.
You didn't state reasons why not being a social platform matters here.
Anyways, check this out: https://openai.com/index/group-chats-in-chatgpt/
I don't think so. 1 billion users and a clear intention to deliver ads with an immense amount of data on users. That's a clear threat to both Meta and Google.
PS. That's why Meta and Google are all in on AI. OpenAI is an existential threat to both in my humble opinion.
> You didn't state reasons why not being a social platform matters here.
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.
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> You didn't state reasons why not being a social platform matters here.
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
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I think Google is the much bigger threat. I've more or elss stopped using ChatGPT now, it's easier to just type the question directly into Google and get the response from their AI rather than navigating to chatgpt first. Anecdotal but I don't see anything long term keeping people on that site.
Google makes over a billion of its ad Revenue from search. Intent works.
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.
OpenAI knows my intent better than Google.
I'm telling it nearly everything from my work problems to health problems to love life problems to product research, traveling plans, etc.
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> It seems to me you're comparing apples and oranges here.
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.
I think the play here for OpenAI is they will eventually acquire reddit and that will be their first intro into a social platform.
Then they will have a social platform that they will continue to use to mine AI training data from + a source of ad revenue.
I wonder if meta is a poor comparison for advertising because they're users tend to spend more time on their products doom scrolling, as opposed to something like google, where you get your answer right away and move on.
ChatGPT is a hybrid between Google and Meta. People use it for product and service search and research. People also use it as a companion - especially young people.
It's becoming social as well: https://openai.com/index/group-chats-in-chatgpt/
people hate ai content. if you dont believe me go into the comment sections of basically any IG reel these days. Plus, nothing locks these videos/reels into a single platform. I’ve seen so many sora videos on IG and I’ve yet to (and dont want to) use sora.
People hit like and then comment "ai"... I think they love being mad at ai or aren't mad enough to stop hitting like. (Just today I saw a viral video on IG of a monkey on the side of a mountain path jumping onto a man's umbrella and getting taken away by the wind)
They also love it. I see pure AI videos go viral all the time.
> None of them except me has Gemini or Claude app.
Do they use Google docs/sheets? Or even Google Search anywhere? Then they have Gemini integrated in some way
I can reset my advertisement profile by creating a new account on ChatGPT, for Meta platforms (Facebook, Instagram and WhatsApp) this is not the case.
>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.
I will have whatever you're smoking. If a social media platform literally proves the dead internet theory, it's not making any money.
> short videos will be heavily AI generated/assisted.
Low effort input. Low effort consumption. What a depressing vision of the suture. This is why I don't use social media.
I actually believe we are speed running into this. I have seen way too many people watching AI generated videos and scrolling through them.
The main problem, I think, is that if your stuff is by robots, for robots, you have no advertising leverage.
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.