OpenAI Will Prioritize ChatGPT Improvement Rather Than Ads as Gemini Pressure Builds, Internal Memo Shows

OpenAI CEO Sam Altman has declared a "code red" inside the company, urgently redirecting resources toward improving ChatGPT's core experience amid intensifying competition from Google's Gemini and signs of slowing user growth.

According to an internal memo reported by The Information, Altman told employees, "we are at a critical moment for ChatGPT," signaling a strategic pivot away from near-term monetization and toward product quality and retention.

Despite testing various advertising formats—including shopping-related ad experiences leveraging ChatGPT interactions—OpenAI is now pausing ad integration and postponing multiple commercial initiatives, including AI agents for shopping and health tasks and the personalized briefing product known as Pulse. While OpenAI has never publicly confirmed an advertising business, these internal tests indicate that monetization pathways were already being explored before being frozen under the "code red" directive.

During this period, OpenAI will concentrate on five key improvement areas intended to reinforce engagement across its 800 million-plus weekly active users:

1. Personalization of user interaction,

2. Improved ImageGen capabilities,

3. Better model behavior and responsiveness in ranking environments like LMArena,

4. Faster and more reliable performance, and reducing excessive refusals to answer legitimate user queries.

This strategic reversal highlights a deliberate trade-off: short-term revenue opportunities are being deferred in favor of safeguarding OpenAI's core product at a time when Google is accelerating its push into AI-driven search and conversational interfaces. Gemini's active user base reportedly grew from 450 million in July to 650 million by October, underscoring its momentum.

The urgency is also tied to OpenAI's unprecedented funding horizon. Projections show ChatGPT subscription revenue of around $10 billion this year, doubling to $20 billion next year, and potentially reaching $35 billion by 2027. To sustain this trajectory, OpenAI may need to raise as much as $100 billion. Altman is acutely aware that the company's fundraising prospects depend on demonstrating that ChatGPT remains the category leader—not merely historically, but in real-time performance and user value.

To reinforce that leadership narrative, OpenAI plans to release a new reasoning model next week that Altman claims internally outperforms Google's Gemini 3. But even so, Altman stressed to employees that improving the holistic ChatGPT experience—not just its model benchmarks—is the defining mission of this phase.

The competitive landscape is now more crowded than at any point since ChatGPT's launch, with Anthropic, Google, and multiple open-source communities gaining credibility among developers and enterprise adopters. Yet OpenAI still holds dominant positioning: internally, the company estimates that ChatGPT accounts for 70% of global AI assistant interactions and around 10% of search-like queries executed through generative interfaces.