I think people are massively underestimating the money they will come from ads in the future.
They generated $4.3B in revenue without any advertising program to monetise their 700 million weekly active users, most of whom use the free product.
Google earns essentially all of its revenue from ads, $264B in 2024. ChatGPT has more consumer trust than Google at this point, and numerous ways of inserting sponsored results, which they’re starting to experiment with with the recent announcement of direct checkout.
The biggest concern IMO is how good the open weight models coming out of China are, on consumer hardware. But as long as OpenAI remains the go-to for the average consumer, they’ll be fine.
What is OpenAI's competitive moat? There's no product stickiness here.
What prevents people from just using Google, who can build AI stuff into their existing massive search/ads/video/email/browser infrastructure?
Normal, non-technical users can't tell the difference between these models at all, so their usage numbers are highly dependent on marketing. Google has massive distribution with world-wide brands that people already know, trust, and pay for, especially in enterprise.
Google doesn't have to go to the private markets to raise capital, they can spend as much of their own money as they like to market the living hell out of this stuff, just like they did with Chrome. The clock is running on OpenAI. At some point OpenAI's investors are going to want their money back.
I'm not saying Google is going to win, but if I had to bet on which company's money runs out faster, I'm not betting against Google.
Consumer brand quality is so massively underrated by tech people.
ChatGPT has a phenomenal brand. That's worth 100x more than "product stickiness". They have 700 million weekly users and growing much faster than Google.
I think your points on Google being well positioned are apt for capitalization reasons, but only one company has consumer mindshare on "AI" and its the one with "ai" in its name.
I’ve got “normie” friends who I’d bet don’t even know that what Google has at the top of their search results is “AI” results and instead assume it’s just some extension of the normal search results we’ve all gotten used to (knowledge graph)
Every one of them refers to using “ChatGPT” when talking about AI.
How likely is it to stay that way? No idea, but OpenAI has clearly captured a notable amount of mindshare in this new era.
I'm not sure if physical products are analogous to internet services. If all it took to vacuum your house was typing "Hoover" into a browser, and everyone called vacuums "a Hoover," then I would expect Hoover to have 90% of the vacuum market share.
But since buying a vacuum usually involves going to a store, looking at available devices, and paying for them, the value of a brand name is less significant.
Pre-pandemic, at least in my social circles, "Skype" was the term for video calling. "Hey, wanna Skype?" and we'd hop on a discord call.
Post-pandemic, at work and such, "Zoom" has become synonymous for work call. Whether it's via Slack or Google Meet, or even Zoom, we use the term Zoom.
I don't know what the market share is on Skype (Pre-pandemic) or Zoom, but these common terms appear to exist for software.
Video description, from the Velcro brand YouTube channel:
Our Velcro Brand Companies legal team decided to clear a few things up about using the VELCRO® trademark correctly – because they’re lawyers and that’s what they do. When you use “velcro” as a noun or a verb (e.g., velcro shoes), you diminish the importance of our brand and our lawyers lose their insert fastening sound. So please, do not say “velcro shoes” (or “velcro wallet” or “velcro gloves”) - we repeat “velcro” is not a noun or a verb. VELCRO® is our brand. #dontsayvelcro
Even I often tell I chatgeepeeteed the result, in the same fashion when I continue saying I googled the result, while actually I used Duck Duck Go. I could ask another LLM provider, but I have no idea how to communicate that properly to a non-technical folks. Heck, I don’t want to communicate that _properly_ to tech peers either. I don’t like these pedantic phrases ‘well, actually … that wasn’t Google, I used DDG for that.’ Sometimes I can say ‘web search,’ but ‘I googled that’ is just more natural thing to say.
Same here. I tried saying ‘I asked LLM’ or ‘I asked AI’ but that doesn’t sound right for me. So, in most conversations I say ‘I asked Chat GPT’ and in most of these situations, it feels like the exact provider does not matter, since essentially they are very similar in their nature.
I cheekily refer to it as Al (like, short for Albert) because Google seems to love to shove Al's overviews in my search results.
But when I'm being more serious I'd usually just say "I asked GPT"
I have a colleague who just refers to AI as "Chat" which I think is kinda cute, but people also use the term "chat" to refer to... Like, people, or "yall". Or to their stream chat.
Yep, this. I’ve switched to Claude for a while (because I can’t afford max plans for both) and nobody in the real world has any idea what it is I’m talking about. “Oh it’s like ChatGPT?”
Claude is also difficult to consistently pronounce for a non-English speaker. Sometimes people dont say that because it can get misinterpreted. ChatGPT is something easy on the the tongue and very difficult to mis-pronounce.
The CEO is also more puritan than the pope himself considering the amount of censorship it has. Not sure if they are even interested in marketing to normies though.
> The CEO is also more puritan than the pope himself considering the amount of censorship it has.
In that case, you should try OpenAI's gpt-oss!
Both models are pretty fast for their size and I wanted to use them to summarize stories and try out translation. But it keeps checking everything against "policy" all the time! I created a jailbreak that works around this, but it still wastes a few hundred tokens talking about policy before it produces useful output.
I read that as OpenAI’s WAU is showing a steeper increase than Google ever did. Not saying it’s factually accurate, just that it’s not a fixed point-in-time comparison :)
My wife asked for information about a product, and ChatGPT fed her a handful of blatant product ads. She told the AI never to do that again, and that was the last time she saw that format of output.
I would wager that she was part of an A/B testing group, so her instruction may not have any real effect. However, we were both appalled by that output and immediately discussed alternative AI options, should such a change become permanent.
This isn’t the rise of Google, where they have a vastly superior product and can boil us frogs by slowly serving us more and more ads. We are already boiling mad from having become hypersensitive to products wholly tainted by ads.
My observation is different: ChatGPT may be well-known, but does not have a really good reputation anymore (I'd claim that it is in average of equal dubious reputation as Google) in particular in consideration of
- a lot of public statements and actions of Sam Altman (in particular his involvement into Worldcoin (iris scanning) makes him untolerable for being the CEO of a company that is concerned about its reputation)
- the attempts to overthrow Sam Altman's throne
- most people know that OpenAI at least in the past collaborated a lot with Microsoft (not a company that is well-regarded). But the really bad thing is that the A"I" features that Microsoft introduced into basically every product are hated by users. Since people know that these at least originated in ChatGPT products, this stained OpenAI's reputation a lot. Lesson: choose carefully who you collaborate with.
You massively overestimate what people actually know and read about. If you are in the tech sphere these things might be obvious to you, but I assure you regular people are not keeping track as closely.
I bet at most 10 % of people in the West can name the CEO of OpenAI.
Eh. Altman is not Musk in terms of negative coverage or average sentiment on the net. That might change in the future, but my personal guess is that your perception may be based on spending too much time in a specific echo chamber. I personally like to use people who don't use llms at all for a proper grounding. In those cases, Altman name does not exist, while Musk barely registers.
> Altman is not Musk in terms of negative coverage or average sentiment on the net.
I can assure you that in Germany (where people are very sensitive with respect to privacy topics), Sam Altman (in particular because of his involvement with Worldcoin ("iris scanning" -> surveillance)) has a very bad reputation by many people.
Most normal people don't know about these things they don't even know who Sam Altman is, for example my family that are not Americans they know about chat gpt but they don't know who Sam Altman is
my mom sees it as a nice internet bloke that helps her with writing emails. She once asked why it can't change background of her image from white to red if it can generate all that amazing art, and was genuinely disappointed that she can't get it to understand what she wants. You have skewed view on public perception on llms - they don't think about it, they just use it.
They might be. Google has been getting mildly 'aggressive' in their emails pleading with me to use gemini and I have yet to try it ( and that is despite being mildly interested ). There is a reason first mover's advantage is a real thing. People stick with what they think they know.
> What is OpenAI's competitive moat? There's no product stickiness here.
Would have agreed with you untill I saw the meltdown of people losing their "friend" when chatgpt 5 was released. Somehow openai has fallen into a "sticky" userbase.
Will people accept ads from their “computer friend”? Might feel like the Truman Show when your friend starts giving you promo codes in casual conversation
I have a non-techy friend who used 4o for that exact reason. Compared to most readily available chatbots, 4o just provides more engaging answers to non-techy questions. He likes to have extended conversations about philosophy and consciousness with it. I showed him R1, and he was fascinated by the reasoning process. Makes sense, given the sorts of questions he likes to ask it.
I think OpenAI is pursuing a different market from Google right now. ChatGPT is a companion, Gemini is a tool. That's a totally arbitrary divide, though. Change out the system prompts and the web frontend. Ta-daa, you're in a different market segment now.
All of these teens use Google Docs instead of OpenAI Docs, Google Meet instead of OpenAI Meet, Gmail instead of OpenAI Mail, etc.
I'm sure that far fewer people to go gemini.google.com than to chatgpt.com, but Google has LLMs seamlessly integrated in each of these products, and it's a part of people's workflows at school and at work.
For a while, I was convinced that OpenAI had won and that Google won't be able to recover, but this lack of vertical integration is becoming a liability. It's probably why OpenAI is trying to branch into weird stuff, like running a walled-garden TikTok clone.
Also keep in mind that unlike OpenAI, Google isn't under pressure to monetize AI products any time soon. They can keep subsidizing them until OpenAI runs out of other people's money. I'm not saying OpenAI has no path forward, but it's not all that clear-cut.
>All of these teens use Google Docs instead of OpenAI Docs, Google Meet instead of OpenAI Meet, Gmail instead of OpenAI Mail, etc.
Billions of people use Meta apps and products. Meta AI is all over all those apps. Why is usage minuscule compared to ChatGPT or even Gemini ? Google has billions of users, many using devices operating their own OS, in which Gemini is now the default AI assistant, so why does ChatGPT usage still dwarf Gemini's ?
People need to understand that just because you have users of product x, that doesn't mean you can just swoop in and convert them to product y even if you stuff it in their faces. Yes it's better than starting from scratch but that's about it. In the consumer LLM space, Open AI have by far the biggest brand and these mega conglomerates need to beat that and not the other way around. AI features in Google mail is not going to make people stop using GPT anymore than Edge being bundled in Windows will made people stop using Chrome.
Nah. No one is using Meta AI because it's shoehorned into contexts where you don't actually need it. And that's because these happen to be the only surfaces that Meta controls. They know full well they won't win there, which is probably why they're so desperate for a "hail Mary" in the VR / AR space.
For the average person, what's the most serious / valuable use of ChatGPT right now? It's stuff like writing essays, composing emails, planning tasks. This is precisely the context in which Google has a foothold. You don't need to open ChatGPT and then copy-and-paste if you have an AI button directly in the text editor or in the email app.
>No one is using Meta AI because it's shoehorned into contexts where you don't actually need it.
What's shoehorned about LLMs in a messaging app? This kind of casual conversation is a significant amount of LLM usage? Open AI says non-work queries account for about 70% of ChatGPT usage. They say that '“Practical Guidance,” “Seeking Information,” and “Writing”' are the 3 mot common topics, so really, how is it shoehorned to place this in Facebook ? [0]
>For the average person, what's the most serious / valuable use of ChatGPT right now? It's stuff like writing essays, composing emails, planning tasks. This is precisely the context in which Google has a foothold. You don't need to open ChatGPT and then copy-and-paste if you have an AI button directly in the text editor or in the email app.
Lol I don't know what else to tell you but that really doesn't matter, but it's not like you have to take my word for it. Copilot is baked in the Microsoft Office Suite. The Microsoft Office Suite dwarfs Google Docs, Sheets etc (yes even for students) in terms of usage. What impact has this had on Open AI and chatGPT ? Absolutely nothing.
> All of these teens use Google Docs instead of OpenAI Docs, Google Meet instead of OpenAI Meet, Gmail instead of OpenAI Mail, etc.
Google Docs, Google Meet and Gmail provide a tiny fraction of Google's overall revenue. And they're hardly integrated in with Google's humongous money maker, search, in a way that matters (Gmail has ads but my guess is that its direct revenue is tiny compared to search - the bigger value is the personalization of ads that Google can do by knowing more about you).
> I'm sure that far fewer people to go gemini.google.com than to chatgpt.com, but Google has LLMs seamlessly integrated in each of these products, and it's a part of people's workflows at school and at work.
But the product isn't "LLMs", the product is really "where do people go to find information", because that is where the money to be made in ads is.
I definitely don't think that OpenAI "winning" means Google is going anywhere soon, but I do agree with the comments that OpenAI has a huge amount of advertising potential, and that for a lot of people, especially younger people, "ChatGPT" is how they think of gen AI, and it's there first go-to resource when they want to look something up online.
> Google Docs, Google Meet and Gmail provide a tiny fraction of Google's overall revenue.
I don't understand your argument here. Like Chrome and Android, these products exist to establish foothold, precisely so that Microsoft or OpenAI can't take Google's lunch.
My point is that brand recognition doesn't matter: if you can get equivalent functionality the easy way (a click of a button in Docs), you're not going to open a separate app and copy-and-paste stuff.
All of this will make it harder for OpenAI to maintain moat and stop burning money. Especially when their path to making money is to make LLMs worse (i.e., product placement / ads), while Google has more than enough income to let people enjoy untainted AI products for a very long time.
Even for search, right now, I'm pretty sure there are orders of magnitude more people relying on Google Search AI snippets than on ChatGPT. As these snippets get better and cover more queries, the reasons to talk to a chatbot disappear.
I'm not saying it's a forgone conclusion, but I think that OpenAI is at a pretty significant disadvantage.
> My point is that brand recognition doesn't matter: if you can get equivalent functionality the easy way (a click of a button in Docs), you're not going to open a separate app and copy-and-paste stuff.
I couldn't disagree more with this statement. So far I've seen companies trying to shoehorn AI into all these existing apps and lots of us hate it. I want Docs to be Docs - even if I'm writing some sort of research paper on a topic, I still don't want to do my research in Docs, because they're two completely separate mental tasks for me. There have been legions of failed attempts to make "everything and the kitchen sink" apps, and they usually suck.
> Even for search, right now, I'm pretty sure there are orders of magnitude more people relying on Google Search AI snippets than on ChatGPT. As these snippets get better and cover more queries, the reasons to talk to a chatbot disappear.
I'm sure that's true for older people, where Google is "the default", but just look at all the comments in this thread about where younger people/teenagers go first for information. For a lot of these folks ChatGPT is "the default", as as that is Google's big fear, that they will lose a generation of folks who associate "ChatGPT" with "AI" just like a previous generation associated "Google" with "search".
You're absolutely right about ChatGPT's consumer mindshare, and I think a lot of people undervalue that.
Having Gemini in docs is useful, though. You can ask questions about the document without copying back and forth and context switching. Plus, it has access to the company's entire corpus, and so can understand company-specific concepts and acronyms.
Hell, I had a manager jokingly ask it for a status update meeting for another related project. According to someone actually involved with that project, it actually gave a good answer.
I think the beneficiary is wrong here. Those teens will grow up to work for organizaitons using Azure AD, Windows, Office and OneDrive/SharePoint/Teams.
If any company is going to get the windfall of "AI provider by default" it is going to be Microsoft. Possibly powered by OpenAI models running on Azure.
Google could make a "better" (basically - more sublime) advertising platform but little to attract new users. Perhaps Android usage would rise - Apple _is_ behind on AI after all. On the other hand, users will either use the AI integrated into Excel, Word, PowerPoint, Teams, Edge and more, or else users' AI of choice (ChatGPT) will learn to as competently drive the Windows and Web UIs as Claude Code drives bash, giving a productive experience with your desktop (and cloud) apps.
Once you use _that_ tool, its now where you start asking questions, not google.com. I am constantly asking ChatGPT and Claude about things I might be purchasing, making comparisons, etc (amongst many other things I might possibly google). Microsoft has an existing interest in advertising, and OpenAI is currently exploring how best go about it. My bet isn't on Google right now.
Possibly, but I don't think that Microsoft apps have the kind of a foothold in the corporate world that they used to have.
Sure, if you join a bank or a government agency, or a big company that's been around for 40+ years, you're probably gonna be using Microsoft products. But the bulk of startups, schools, and small businesses use Google products nowadays.
Judging by their MX record, OpenAI is a Google shop... so is Perplexity... so is Anthropic... so is Mistral.
> I think the beneficiary is wrong here. Those teens will grow up to work for organizaitons (sic) using Azure AD, Windows, Office and OneDrive/SharePoint/Teams.
Idk, younger companies like Anthropic and OpenAI are using google.
All of these teens use Microsoft Word instead of Google Word, Microsoft NetMeeting instead of Google NetMeeting, Microsoft Hotmail instead of Google Mail, etc.
I’m sure far fewer people go to MSN Search than to Google.com, but Microsoft has Windows integrated into all of these products, and it’s part of people’s workflows at school and at work.
When you say ‘Word’, do you mean the app, the web app, or the Teams app? They don’t work well together and leave documents looking truly awful on whichever variant you aren’t currently using.
That this bonfire is an industry standard has to be embarrassing for Microsoft.
I think the biggest risk to ChatGPT as a consumer brand is that they don’t own the device surface. Google / Microsoft / Apple could make great AI that’s infused in the OS / browser, eliminating the need to go to ChatGPT.
Since microsoft kinda sorta owns or is merging with openai it's probably already close to that... copilot is constantly down for me at least, but I assume that's not a hard thing to fix on Microsoft's end if it wants to start paying the server costs...
What is Google's competitive moat? There's no product stickiness here. What prevents people from just using Altavista/Yahoo/[any other search engine].
You vastly underestimate the power of habit and branding combined together. Just like then, the vast majority of people equate ChatGPT with AI chatbot, there is no concept of alternative AI chatbot. Sure people might have seen some AI looking thing called Copilot and some weird widget in the Google Search results but so far ChatGPT is winning the marketing game even if the offerings from rivals might be the same or even superior sometimes
Google's competitive moat 20-25 years ago was being a significantly better search engine than the alternatives. That remained true for decades.
You can't say the same about ChatGPT. And Google wasn't spending $4 to make $1 almost 10 years after its founding, which will become an issue at some point.
> What prevents people from just using Altavista/Yahoo/[any other search engine].
Google shows the results you're looking for. At least this was true when they were in competition with the engines you mentioned, they had genuine quality advantage.
Google has defaults as their huge moat. They have Chrome and Android under their control and pay Apple and Mozilla to be the default search engine.
Here in Europe this is mitigated by them having to show a browser/search engine selection screen, but in the US you seem to be more accepting of the monopoly power. Or it seems the Judge in Calfornia seems to think that OpenAI actually has a change of winning this. It doesn't in my estimation.
On the other side Google has a monopoly on Ads. When OpenAI somehow starts displaying ads, they'd have to build their own Ad network and then entice companies and brands to use it. Good luck with that.
ChatGPT (and all the competitors) are trivially sticky products: I have a lot of ongoing conversations in there, that I pick up all the time. Add more long term memory stuff — a direction I am sure they will keep pushing — and all of the sudden there is a lot of personal data that you rely on it having, that make the product better and that most people will never care to replicate/transfer. Just being the product that people use makes you the product that people will use. "the other app doesn't know me" is the moat. The data that people put in it is the moat.
This. I am not sure why or how this is missed, but because you cannot easily port context ( maybe yet ), the stickiness increases with every conversation assuming your questions are not encyclopedia type questions that don't need follow up.
Hmm. You got me thinking. I rarely delete conversations, but I don't randomly engage either unless I am curious how llm will respond in a given scenario. For example, last time I was comparing how my output compared against some of the other online community. Maybe curate is too strong a word? Maybe I select for specific desired paths?
As a counter, you can buy a hell of a lot of brand for $8 billion dollars though.
You can give your most active 50,000 users $160,000 each, for example.
You can run campaign ads in every billboard, radio, tv station and every facebook feed tarring and feathering ChatGPT
Hell, for only $200m you could just get the current admin to force ChatGPT to sell to Larry Ellison, and deport Sam Altman to Abu Dahbi like Nermal from Garfield.
According to Google, Coca Cola spent over $5B on advertising in 2024 and most of the world already knows who they are. I think $8B (or the $2B OpenAI spent) buys a lot less branding than you think.
Users' chat history is the moat. The more you use it, the more it knows about you and can help you in ways that are customized to particular user. That makes it sticky, more so than web search. Also brand recognition, ChatGPT is the default general purpose LLM choice for most people. Everyone and their mom is using it.
Yeah most people genuinely cannot tell the difference in quality between those top models. People here jerk off to some benchmarks but in real life that crap is completely meaningless
Google is lacking a coherent product vision. They are trying to foot their models' output everywhere, creating chaos. Meanwhile, Gemini chats are not synced between web and Android app, and this is ridiculous.
As history showed us numerous times, it doesn't even have to be the best to win.
It rarely is, really. See the most pervasive programming languages for that.
I'm saying Google is going to win. They're not beholden to their current architecture as much as other shovelmakers and can pivot their TPU to offer the best inference perf/$. They also hold about as much personal data as anyone else and have plenty of stuff to train on in-house. I work for a competitor and even I think there's a good chance google "wins"(there's never a winner because the race never ends).
The problem is that Google is horrible at product. They have been so spot on at search it's covered up all the other issues around products. YT is great, but they bought that. The Pixel should the Android phone, but they do a poor job marketing. They should be leading AI, but stumbled multiple times in the rollout. They normally get the tech right, and then fumble the productizing and marketing.
Pixel being undermarketed is deliberate, Android is an alliance and they don't want to compete against Samsung too hard.
But Google have other weaknesses. In the most valuable market (the USA) Google is very politically exposed. The left don't like them because they're big rich techbro capitalists, the Democrats tried to break them up. The right hate them because of their ongoing censorship, social engineering and cancellation of the right. They're rapidly running out of friends.
The Google SERP is a trash fire, and it must be deliberate. It's almost like the search engine is broken. Not a single conservative chat bot ranks. On Bing the results are full of what the searcher is looking for. ChatGPT isn't perfect but it's a lot less biased than Google is. Its search results come from Bing which is more politically neutral. Also Altman is a fresh face who hasn't antagonized the right in the same way Google has. For ~half the population Gemini is still branded as "the bot that drew black nazis and popes", ChatGPT isn't. That's an own goal they didn't need.
I think we are all forgetting that Google is a massive bureaucracy that has to move out of its own way to get anything done. The younger companies have a distinct advantage here. Hence the cycle of company growth and collapse.I think openai and the like have a very good chance here.
> I think we are all forgetting that Google is a massive bureaucracy that has to move out of its own way to get anything done
This was true pre-ChatGPT, but Google is releasing and updating products furiously now. It's hard to think of a part of the AI space where Google does not have the leading or a very competitive offering.
yeah ... poly market and other makers seem to be betting that Google by year's end or sometime next year or so will have teh best gen ai models on the market ... but I've been using Claude sonnet 4.5 with GitHub Copilot and swear by it.
anyways would be nice to really see some apples-to-apples benchmarks of the TPU vs Nvidia hardware but how would that work given CUDA is not hardware agnostic?
For consumer product, memory, the recent pulse one and _much awaited_ ai feed are the products that will build stickiness. I pay for both claude and openai currently and it is much more difficult to continue a chat on other platform as the context systems isn’t something i can cook up swiftly.
Yeah, anyone saying "Normal, non-technical users can't tell the difference between these models at all" isn't talking to that many normal, non-technical users.
Chats have contexts. While search engines try to track you it is spookier because it is unclear to the user how the contexts are formed. In chats at least the contexts are transparent to both the provider and the user.
What prevents people from just using Google, who can build AI stuff into their existing massive search/ads/video/email/browser infrastructure?
Google have never had a viable competitor. Their moat on Search and Ads has been so incredibly hard to beat that no one has even come close. That has given them an immense amount of money from search ads. That means they've appeared to be impossible to beat, but if you look at literally all their other products they aren't top in anything else despite essentially unlimited resources.
A company becoming a viable competitor to Google Search and/or Ads is not something we can easily predict the outcome of. Many companies in the past who have had a 'monopoly' have utterly fallen apart at the first sign of real competition. We even have a term for it that YC companies love to scatter around their pitch decks - 'disruption'. If OpenAI takes even just 5% of the market Google will need to either increase their revenue by $13bn (hard, or they'd have done that already) or they'll need to start cutting things. Or just make $13bn less profit I guess. I don't think that would go down well though.
Currently their moat is history. Why I keep coming back to ChatGPT is it ‘remembers’ our previous chats, so I don’t have to explain things over and over again.
And this history builds up over time.
Not sure how this argues their moat. The context window in pretty small (at best 192k on 5 with the right subscription). Once you run past it, history is lost or becomes gimmicky. Gemini 2.5 Pro by contrast offers 1M. Llama 4 offers 10M (though seems to perform substantially worse).
Yeah, for me, the biggest issue is, counter-intuitively given it's Google, I know Gemini is going to continue existing as a product for a long time; I feel comfortable storing data and building things out for it. Anthropic's putting out great models, but it's financially endangered, and OpenAI isn't doing great either; and I'm confident Gemini 3 release will put it right back at top-of-pack again as far as model output quality, so these little windows where I'm not using The Best are not a big deal.
Once the single-focus companies have to actually make a profit and flip the switch from poorly monetized to fully monetized, I think folks will be immediately jumping ship to mega-companies like Google who can indefinitely sustain the freemium model. The single-focus services are going to be Hell to use once the free rides end: price hikes, stingy limits, and ads everywhere.
.... but the field will change unpredictably. Amazon offers a lot of random junk with Prime -- hike price $50/year, slap on a subscription to high-grade AI chatbot 10% of users will actually use (say 2% are "heavy users"), and now Anthropic is financially sustainable. Maybe NYT goes from $400 to $500 per year, and now you get ChatGPT Pro, so everything's fine at OpenAI. There're a ton of financial ideas you'll come up with once you feel the fire at your feet; maybe the US government will take a stake and start shilling services when you file taxes. Do you want the $250 Patriot Package charged against your tax refund, or are we throwing this in the evidence pile containing your Casio F91-W purchase and tribal tattoos?
> What is OpenAI's competitive moat? There's no product stickiness here.
20 years ago everyone said the exact same thing about Google Search.
I mean, how could you possibly build a $3T company off of a search input field, when users can just decide to visit a different search input field??
Surprise. Brand is the most powerful asset you can build in the consumer space. It turns out monetization possibilities become infinite once you capture the cultural zeitgeist, as you can build an ecosystem of products and eventually a walled garden monopoly.
AI has been incredibly sticky. Look at the outrage, OpenAI couldn't even deprecate 4o or whatever because it's incredibly popular. Those people aren't leaving OAI if they're not even leaving a last gen model.
I also wonder if this means that even paid tiers will get ads. Google's ad revenue is only ~$30 per user per year, yet there is no paid, ad-free Google Premium, even though lots of users would gladly pay way more than $30/year have an ad-free experience. There's no Google Premium because Google's ad revenue isn't uniformly distributed across users; it's heavily skewed towards the wealthiest users, exactly the users most likely to purchase an ad-free experience. In order to recoup the lost ad revenue from those wealthy users, Google would have to charge something exorbitant, which nobody would be willing to pay.
I fear the same will happen with chatbots. The users paying $20 or $200/month for premium tiers of ChatGPT are precisely the ones you don't want to exclude from generating ad revenue.
The average is $x. But that's global which means in some places like the US it is 10x. And in other less wealthy areas it is 0.1x.
There is also the strange paradox that the people who are willing to pay are actually the most desirable advertising targets (because they clearly have $ to spend). So my guess is that for that segment, the revenue is 100x.
"Lots of users would gladly pay way more than $30/year have an ad-free experience"? Outside of ads embedded in Google Maps, a free and simple install of Ublock Origin essentially eliminates ads in Search, YouTube, etc. I'd expect that just like Facebook, people would be very unwilling to pay for Google to eliminate ads, since right now they aren't even willing to add a browser extension.
It worked for YouTube, I don’t see why the assumption of paid gpt models will follow google and not YouTube, particularly when users are conditioned to pay for gpt already.
I’d agree. The biggest exception I can think of is X, which post-Musk has plans to reduce/remove ads. Though I don’t know how much this tanked their ad revenue and whether it was worth it.
Why would it be any different for youtube premium? I think Google just doesn't think enough people will pay for ad-free search, not that it would cannibalize their ad revenue.
Pretty sure the reason they don't have a paid tier is because engagement (and results) is better when you include ads. Like Facebook found in the early days
Imagine if you are paying to publish an ad. One ad platform sends your ad to everyone, the other allows the most affluent users to avoid ads. If you choose the platform where affluent people won’t see your ad, you’re likely shooting yourself in the foot.
> But as long as OpenAI remains the go-to for the average consumer, they be fine.
This is like the argument of a couple of years ago "as long as Tesla remains ahead of the Chinese technology...". OpenAI can definitely become a profitable company but I dont see anything to say they will have a moat and monopoly.
They're the only ones making AI with a personality. Yeah, you don't need chocolate flavored protein shakes but if I'm taking it every day, I get sick of the vanilla flavor.
Did you mean the GPT-5 launch? They put it back in within 2 weeks, despite the side effects and bugs. It was pretty clear that it's their value proposition.
Between Android, Chrome, YouTube, Gmail (including mx.google.com), Docs/Drive, Meet/Chat, and Google Search, claiming that Google "isn't more trusted" is just ludicrous. People may not be happy they have to trust Alphabet. But they certainly do.
And even when they insist they're Stallman, their friends do, their family does, their coworkers do, the businesses they interact with do, the schools they send their children to do.
Like it or not, Google has wormed their way into the fabric of modern life.
Chrome and Google Search are still the gateway to the internet outside China. Android has over 75% market share of all mobile(!). YouTube is somewhat uniquely the video internet with Instagram and Tiktok not really occupying the same mindshare for "search" and long form.
People can say they don't "trust" Google but the fact is that if the world didn't trust Google, it never would have gotten to where it is and it would quickly unravel from here.
Looking through the JS-code of this site I was happily surprised finding 153 lines of not minified but pretty JS. I anticipated at least some unfree code. So I guess there is a chance some user might rightfully claim this.
With search you dont fully trust Google. You trust Google to find good results most of the time them trust those results based on other factors.
But with AI you now have all trust in one place. For Google and OpenAI their AI bullshits. It will only be trusted by fools. Luckily for the corporations there is no end of fools to fool.
I really don't trust either. Google because of what they've already done, OpenAI because it has a guy at the helm who doesn't know how to spell the word 'ethics'.
This really depends on where you are are. Some countries' populations, especially those known to value privacy, are extremely distrustful of anything associated with Facebook or Google.
> ChatGPT has more consumer trust than Google at this point
That trust is gone the moment they start selling ad space. Where would they put the ads? In the answers? That would force more people to buy a subscription, just to avoid having the email to your boss contain a sponsored message. The numbers for Q2 looks promising, sells are going up. And speaking of sales, Jif peanut butter is on sale this week.
If OpenAI plan on making money with ads then all the investments made by Nvidia, Microsoft and Softbank starts to look incredibly stupid. Smartest AI in the world, but we can only make money by showing you gambling ads.
I'm afraid there's plenty of avenues for them to insert ads that probably won't be perceived as obnoxious by most people (I still find it incredibly obnoxious).
About half of AI queries are "Asking" (as opposed to Doing or Expressing) and those are the ones best suited for ads. User asking how to make pizza? Show ads for baking steels and premium passata. User asking for a three day sightseeing routine in Rome? I'm sure someone will pay you them to show their venue.
It seems unlikely that the ads will be embedded directly into the answer stream, unless they find a way to reliably label such portions as advertisements in a "clear and conspicuous" way, or convince law makers/regulators that chat bots don't need to be held to the same standards as other media.
Why do people always think that just because you have a lot of users it automatically translates to ad revenue? Yahoo has been one of the most trafficked site for decades and could never generate any reasonable amount of ad revenue.
The other side of the coin is that running an LLM will never be as cheap as search engine.
No, I just think it's outlandish to claim LLM's will never be as efficient as the search infrastructure companies like Google use. How can you possibly know that?
Because the complexity an algorithms required to do search are a lot less than to run an LLM. Google ran well on 2000 level hardware. Could you run an LLM on 2000 level hardware? Are GPUs and equivalent hardware going to get as simple as CPUs
The moment they start mixing ads into responses Ill stop using them. Open models are good enough, its just more convenient to use chatgpt right now, but that can change.
People said the same thing about so many other online services since the 90s. The issue is that you're imagining ChatGPT as it exists right now with your current use case but just with ads inserted into their product. That's not really how these things go... instead OpenAI will wait until their product becomes so ingrained in everyday usage that you can't just decide to stop using them. It is possible, although not certain, that their product becomes ubiquitous and using LLMs someway somehow just becomes a normal way of doing your job, or using your computer, or performing menial and ordinary tasks. Using an LLM will be like using email, or using Google maps, or some other common tool we don't think much of.
That's when services start to insert ads into their product.
> People said the same thing about so many other online services since the 90s.
And this leads to something I genuinely don't understand - because I don't see ads. I use adblocker, and don't bother with media with too many ads because there's other stuff to do. It's just too easy to switch off a show and start up a steam game or something. It's not the 90s anymore, people have so many options for things.
Idk, maybe I am wrong, but I really think there is something very broken in the ad world as a remenant from the era where google/facebook were brand new and the signal to noise ratio for advertisers was insanely high and interest rates were low. Like a bunch of this activity is either bots or kids, and the latter isn't that easy to monetize.
Except it's hard to imagine a world where chatgpt is heads and shoulders over the other llms in capability. Google has no problem keeping up and let's not forget that China has state-sponsored programs for AI development.
The ads can be subtile. Same way Claude today prefers to generate html with tailwindcss. Feels like an ad for tailwind as sometimes when I ask it to do something else it still just gives me tailwind
How do you ignore ads when you ask for a recipe and it suggests using <insert brand-name here> ingredients, due to their superior flavors, textures, ability to mesh with the other ingredients, etc? Sure, you can decide to go with another brand, but over time, that stuff has the ability to stick in your brain. There have been many billions sunk into how to psychologically manipulate humans to get them to come buy your products, for instance McDs figured out decades ago through research that by giving away free toys in children's meals, the kids will whine and pester parents after seeing a commercial for a new toy from the latest superhero movie they just saw. Some parents will say no, but enough parents, after a long day/week of working will just give in.
Sure my example of asking for a recipe is contrived but imagine that for every query you make, that AI suggests using this framework for your web development, or basically any query you can think of will make subtle suggestions to use a specific product with compelling reasons why e.g. the competition has known bugs that will affect you personally!
Maybe that will end up being viable in the US, but I’m pretty sure it would remain illegal in the EU. There’s a reason why sponsored content has to be marked as such.
Are they though? I have the best consumer hardware and can run most open models, and they are all unusable beyond basic text generation. I'm talking 90%+ hallucination rate.
Depends on the use-case.
I like to generate front ends and there the hallucination is acceptable as html-css is pretty forgiving and I will manually modify it anyways
It boggles my mind that people still think advertising can be a major part of the economy.
If AI is propping up the economy right now [0] how is it possible that the rest of the economy can possibly fund AI through profit sharing? That's fundamentally what advertising is: I give you a share of my revenue (hopefully from profits) in order to help increase my market share. The limit of what advertising spend can be is percent of profits minus some epsilon (for a functioning economy at least).
Advertising cannot be the lions share of any economy because it derives it's value from the rest of the economy.
Advertising is also a major bubble because my one assumption there (that it's a share of profits) is generally not the case. Unprofitable companies giving away a share of their revenue to other companies making those companies profitable is not sustainable.
Advertising could save AI if AI was a relatively small part of the US (or world) economy and could benefit by extracting a share of the profits from other companies. But if most your GDP is from AI how can it possibly cannibalize other companies in a sustainable way?
You've run a false equivalency in your argument. Growth is not representative of the entire economy. The economy is, in aggregate, much more than tech - they have the biggest public companies which skews how people think. No exclusive sector makes up "most" of the economy, in fact the highest sector, which is finance only makes up 21% of the US economy.
> Growth is not representative of the entire economy
Our entire economy is based on debt, it cannot function without growth. This is demonstrated by the fact that:
> in fact the highest sector, which is finance only makes up 21% of the US economy
Every cent earned by the finance sector boils down from being derived from debt (i.e. growth has to pay it off). You just pointed out the largest sector of our economy relies on rapid growth, and the majority of growth right now is coming from AI. AI, therefore, cannot derive the majority of it's value by cannibalizing the growth of other sectors because no other sector has sufficient growth the fund both AI, itself and the debt that needs to be repaid to make the entire thing make sense.
US GDP is 30T so that revenue is less than 1% of it. But 1% of GDP us still eye popping amount. But remember in the non Google world that is split up into Yellow Pages and TV ads and etc. and possibly many ventures that were not possible because of lack of targeted ads didnt come to fruition.
If advertising helps high-quality / innovative products spread faster, it can power growth. Indeed, the rate of adoption of innovations seems a fairly critical input for growth. Advertising can speed such adoption.
If your revenue model is predicated on Star Trek-style communism, it's maybe not a very realistic model. I really don't think if producing things is essentially free that advertising will be a very big thing since it would be pointless.
First, as an advertiser you want those sweet-sweet people with money.
Second, if they put “display: hidden” on ads doesn’t mean they will create and use entirely other architecture, data flow and storage, just for those pro users.
They should be concerned with open weight models that don’t run on consumer hardware. The larger models from Qwen (Qwen Max) and ZLM (GLM and GLM air) perform not too far from Claude Sonnet 4 and GPT-5. ZLM offers a $3 plan that is decently generous. I can pretty much replace it over Sonnet 4 in Claude Code (I swear, Anthropic has been nerfing Sonnet 4 for people on the Pro plan).
You can run Qwen3-coder for free upto 1000 requests a day. Admittedly not state of the art but works as good of 5o-mini
I believe regular people will not change from chatGPT if it has some ads. I know people who use "alternative" wrappers that have ads because they aren't tech savvy, and I agree with the OP that this could be a significant amount of money
We aren't 700 million people that use it.
Definitely don’t argue against that, once people get into a habit of using something, it takes quite a bit to get away from it. Just that an American startup can literally run ZLM models themselves (open weight with permissive license) as a competitor to ChatGPT is pretty wild to think about
One of the side effects of having a chat interface, is that there is no moat around it. Using it is natural.
Changing from Windows to Mac or iOS to Android requires changing the User Interface. All of these chat applications have essentially the same interface. Changing between ChatGPT and Claude is essentially like buying a different flavor of potato chip. There is some brand loyalty and user preference, but there is very little friction.
It'll be interesting to see the effect ads have on their trustworthiness. There's potential for it to end up worse than Google because sponsored content can blend in better and possibly not be reliably disclosed.
You mean, for instance, if you ask it to insert an advert into content, can it do so, based on its training set, without changing the wider content into advertorial?
It's a really good point. And it has some horrifying potential outcomes for advertisers.
What is OpenAI's moat? There's plenty of competitors running their own models and tools. Sure, they have the ChatGPT name, but I don't see them massively out-competing the entire market unless the future model changes drastically improve over the 3->4->5 trajectory.
It feels similar to Google to me - what is (was) their moat? Basically slightly better results and strong brand recognition. In the later days maybe privileged data access. But why does nobody use Bing?
Google got a massive leg up on the rest be having a better service. When Bing first came out, I was not impressed with what I got, and never really bothered going back to it.
Search quality isn't what it used to be, but the inertia is still paying dividends. That same inertia also applied to Google ads.
I'm not nearly so convinced OpenAI has the same leg up with ChatGPT. ChatGPT hasn't become a verb quite like google or Kleenex, and it isn't an indispensable part of a product.
I actually find bing better now for more technical searches.
Most technical Google searches end up at win fourms or official Microsoft support site which is basically just telling you that running sfc scannow for everything is the fix.
If you are ending up at win forums or Microsoft's support site then the chances are that you were searching for something Microsofty in the first place. And if that's the case then it's hardly surprising that Microsoft's own search engine is better for promoting Microsoft-related responses than any other.
Try searching for something technical which isn't MS-specific. That should be a more neutral test.
Google has always been much better than the competition. Even today with their enshittification, competitors still aren’t as good.
The only thing that has changed that status quo is the rise of audiovisual media and sites closing up so that Google can’t index them, which means web search lost a lot of relevance.
This! The cost of training models inevitably goes down over time as FLOPS/$ and PB/$ increases relentlessly thanks to the exponential gains of Moore's law. Eventually we will end up with laptops and phones being Good Enough to run models locally. Once that happens, any competitor in the space that decides to actively support running locally will have operating costs that are a mere fraction of OpenAI's current business.
The pop of this bubble is going to be painful for a lot of people. Being too early to a market is just as bad as being too late, especially for something that can become a commodity due to a lack of moat.
The number of transistors per unit area is still increasing, it's just a little slower than it was and more expensive than it was.
And there are innovations that will continue the scaling that Moore's law predicts. Take die stacking as an example. Even Intel had internal studies 20 years ago that showed there are significant performance and power improvements to be had in CPU cores by using 2 layers of transistors. AMD's X3D CPUs are now using technology that can stack extra dies onto a base die, but they're using it in the most basic of ways (only for cache). Going beyond cache to logic, die stacking allows reductions of wire length because more transisters with more layers of metal fit in a smaller space. That in turn improves performance and reduces power consumption.
The semiconductor industry isn't out of tricks just yet. There are still plenty of improvements coming in the next decade, and those improvements will benefit AI workloads far more than traditional CPUs.
You just said that everyone will be able to run a powerful AI locally and then you said this would lead to a pop of the bubble.
Well, which is it? That AI is going to have huge demands for chips that it is going to get much bigger or is the bubble going to pop? You can’t have both.
My opinion is that local LLMs will do a bulk of the low value interference such as your personal life mundane tasks. But cloud AI will be reserved for work and for advanced research purposes.
Just because a bubble pops on the economic front doesn't mean the sector goes away. Pets.com went bust a mere 10 months after going public, yet we're buying all kinds of products online in 2025 that we weren't in 2000. A bubble popping is about the disconnect between the forward looking assumptions about profitability by the early adopters in the space versus the actual returns once the speculation settles down and is replaced by hard data.
Unless there is little friction in switching. I don’t feel any of the LLM products have a sticky factor as of yet, as far as viewing it from a consumer lens
If they overnight were able to capture as much revenue per user as Meta (about 50 bucks a year) they'd bring in a bucket of cash immediately.
But selling that much ad inventory overnight - especially if they want new formats vs "here's a video randomly inserted in your conversation" sorta stuff - is far from easy.
Their compute costs could easily go down as technology advances. That helps.
But can they ramp up the advertising fast enough to bring in sufficient profit before cheaper down-market alternatives become common?
They lack the social-network lock-in effect of Meta, or the content of ESPN, and it remains to be seen if they will have the "but Google has better results than Bing" stickiness of Google.
Why is this much money spent on advertising? Surely it isn't really justified by increase in sales that could be attributed to the ads? You're telling me people actually buy these ridiculous products I see advertised?
I work/have worked ecom adjacent for a long time. Ads absolutely work and the continued bewilderment of HN users to this reality will never cease to amaze me.
A lot of that money comes from search result ads. Sometimes I click on an ad to visit a site I search for instead of scrolling to the same link in the actual search results. Many companies bid on keywords for their own name to prevent others from taking a customer who is interested in you.
You use to be a useful site and be at the top of the search results for some keywords and now you have to pay.
Yes, they do. Advertising works. "Free with ads" isn't really free because on average you'll end up spending more money than you would otherwise. You're also paying more than if it was a subscription because the producer has to create both the product and also advertise it.
The problem with this is that I have moved to Gemini with zero loss in functionality, and I’m pretty sure that Google is 100x better at ads than OpenAI.
Some will but you’re underestimating the burning desire to avoid IT and sysadmin work. Look at how much companies overspend on cloud just to not have to do IT work. They’d rather pay 10X-100X more to not have to admin stuff.
>"Look at how much companies overspend on cloud just to not have to do IT work."
I think they are doing it for a different reasons. Some are legit like renting this supercomputer for a day and some are like everybody else is doing it. I am friends with the small company owner and they have sysadmin who picks nose and does nothing and then they pay a fortune to Amazon
I’m talking about prepackaged offline local only on device LLMs.
What you are describing though will almost certainly happen even sooner once AI tech stablizes and investing in powerful hardware no longer means you will become quickly out of date.
Its a completely optional purchase, and there's no clear way for ads to be included without it muddying up the actual answer.
"The most popular brand of bread in America is........BUTTERNUT (AD)"
Its a sinkhole that they are destroying our environment for. Its not sustainable on a massive scale, and I expect to see Sam Altman join his 30 under 30 cohorts SBF and such eventually.
> google.com, youtube, chrome, android, gmail, google map etc
Of those, it's 50/50. The acquisitions were YT, Android, Maps. Search was obviously Google's original product, Chrome was an in-house effort to rejuvenate the web after IE had caused years of stagnation, and Gmail famously started as a 20% project.
There are of course criticisms that Google has not really created any major (say, billion-user) in-house products in the past 15 years.
Indeed Chrome included many relatively small acquisitions to be built. For example, GreenBorder for sandboxing and Skia for the 2D graphics engine. At that time sandboxing was novel for a browser.
>> ... underestimating the money they will come from ads in the future.
I would like AI to focus on helping consumers discover the right products for their stated needs as opposed to just being shown (personalized) ads. As of now, I frequently have a hard time finding the things I need via Amazon search, Google, as well as ChatGPT.
Good luck with that. Every supermarket I've been in has those stupid baskets or racks of stuff blocking the aisle and their data must show that it gets people to buy a little more of that stuff even though it makes me quite resolved to never buy the shit they're forcing me to look at in order to go get the five things I really need.
> ChatGPT has more consumer trust than Google at this point
This is just HackerNews bias.
Everyone that has used ChatGPT (or any other LLM really) has already been burnt by being provided a completely false answer. On the contrary everyone understands that Google never claimed to provide a true answer, just links to potential answers.
One of the feature of ChatGPT is that because there are no ads and you got straight to the information you need.
If you add ads again it is all over again. You still have traction but it will not be so extraordinary and Google could do the same.
OpenAI must have a difference from Google.
I think affiliation is much more likely to be a relevant revenue stream for them in the future. Instant checkouts would be a game changer in my view. Especially for upcoming generations, that don't have the habit of scrolling the open web to get their stuff done, but are native to LLMs.
Google already has the ad network. They already have Gemini. IMO this will end up being OpenAI proving that the revenue model works and then Google will swoop in and take their market share away.
>ChatGPT has more consumer trust than Google at this point
"There are increasing reports of people having delusional conversations with chatbots. This suggests that, for some, the technology may be associated with episodes of mania or psychosis when the seemingly authoritative system validates their most off-the-wall thinking. Cases of conversations that preceded suicide and violent behavior, although rare, raise questions about the adequacy of safety mechanisms built into the technology."
Banner ads would only be the start of the enshittification of AI chats. I can't wait for the bots to start recommending products and services of the highest bidder.
> They generated $4.3B in revenue without any advertising program
To be clear, they bought/aired a Superbowl advert. That is a pretty expensive. You might argue that "Superbowl advert" versus 4B+ in revenue is inconsequential, but you cannot say there is no advertising.
Also, their press release said:
> $2 billion spent on sales and marketing
Vague. Is this advertising? Eh, not sure, but that is a big chunk of money.
They generated $4.3B in revenue without any advertising program to monetise their 700 million weekly active users, most of whom use the free product.
Google earns essentially all of its revenue from ads, $264B in 2024. ChatGPT has more consumer trust than Google at this point, and numerous ways of inserting sponsored results, which they’re starting to experiment with with the recent announcement of direct checkout.
The biggest concern IMO is how good the open weight models coming out of China are, on consumer hardware. But as long as OpenAI remains the go-to for the average consumer, they’ll be fine.