OpenAI is done with Shipmas, faces daunting challenges for 2025

OpenAI’s “12 days of ship tasting,” which ended Friday, brought a sense of levity to end the year. The marketing blitz served as a way for the high-profile and controversial AI startup to show that it can release an extensive list of new features and tools while also having some funny

But when the calendar turns, the company faces some serious challenges. Most notably, co-founder Elon Musk, who now runs rival startup xAI, is in the middle of a heated legal battle with OpenAI CEO Sam Altman that could have a big impact on the company’s future.

The threat Musk poses to OpenAI is even more significant given the sheer amount of influence the world’s richest person is poised to assume as part of the incoming Trump administration.

In recent months, Musk has sued Microsoft-backed OpenAI and asked a court to stop the company from converting to a for-profit corporation from a nonprofit. In posts on X he has described that effort as a “total scam” and claimed that “OpenAI is evil.” At the New York Times’ DealBook Summit earlier this month, Altman said he considers xAI a “fierce competitor.”

The pressure on OpenAI is largely tied to its $157 billion valuation, achieved in the two years since the company launched its viral chatbot, ChatGPT, and set off the boom in generative AI. OpenAI closed its latest $6.6 billion round in October, preparing to aggressively compete with xAI as well as Microsoft, Google, Amazon and anthropically in a market that is predicted to top $1 trillion in revenue within a decade.

Alongside the drama swirling around OpenAI and Altman, Shipma’s shtick served as a way for the company to shift focus to its technology and generate buzz for its products.

The most significant release during the 12 days was the public launch of Sora, OpenAI’s much-hyped video generation tool, on December 9.

Using Sora, which OpenAI first announced in February, is relatively simple: A user types a desired scene and the engine will return a high-definition video clip. Sora can also create clips inspired by still images and extend existing videos or fill in missing frames. While other AI video tools are available, Sora has been by far the most anticipated due to the power of OpenAI’s large language models.

On Wednesday, OpenAI gave users a new way to talk to its viral chatbot: 1-800-CHATGPT. Those in the US can call the number (1-800-242-8478) for 15 minutes for free a month, OpenAI said, and WhatsApp users globally can message the chatbot at the same number.

Other announcements included the full release of OpenAI’s new o1 AI model with a focus on reasoning, a demo of video and screen sharing capabilities in ChatGPT’s Advanced Voice Mode, the ability to organize work into “Projects” in ChatGPT, a wider rollout of ChatGPT Search, and new developer tools. The company also used the marketing push to talk about its integration with Apple for the iPhone, iPad and macOS.

OpenAI closed its 12-day streak of releases on Friday by announcing its latest frontier model, the o3, as well as the o3 mini. On one live streamAltman said the company would not launch the models publicly on Friday, but would make them immediately available for public safety testing.

The company launched o1 in September, and by jumping straight to o3, Altman said he’s continuing “the great tradition of OpenAI being really, really bad at names.”

The campaign was celebrated in some corners for the company’s ability to make a strong year-end push, and criticized by others as significantly more hype than substance. Either way, OpenAI is well aware that the competition is increasing – and fast.

One of its main rivals, Amazon-backed Anthropic, was founded by early OpenAI researchers and has attracted top talent. In May, OpenAI security chief Jan Leike left OpenAI for Anthropic, and in August, OpenAI co-founder John Schulman announced he was leaving to join the rival startup. They were part of a wave of departures that culminated in September when three top executives, most notably chief technology officer Mira Murati, announced their departures on the same day.

A recent report from anthropic investor Menlo Ventures found that OpenAI reported market share this year in enterprise AI, falling from 50% to 34%, while Anthropic doubled its market share from 12% to 24%. The findings came from a survey of 600 enterprise IT decision makers from companies with 50 or more employees, according to the report.

However, the primary battle is still for the users. Altman said publicly earlier this month that OpenAI now has 300 million weekly active users. Over the next year, the company is reportedly target 1 billion.

This level of growth will likely require an expensive marketing push and rapid feature launches as the company moves forward in its two-year timeline for transitioning from a nonprofit to a fully for-profit company. Earlier this month, OpenAI announced that it had hired its first chief marketing officer, nabbing Kate Rouch from crypto firm Coinbase.

Then there is the increasingly complicated relationship with Microsoft, OpenAI’s leading investor and key cloud provider. While both companies continue to highlight the value of their close partnership, there are growing signs of tension.

After Altman’s sudden but short-lived expulsion from OpenAI late last year, reports emerged that Microsoft CEO Satya Nadella was not briefed beforehand. After Altman was quickly reinstated, OpenAI gave Microsoft a non-voting board seat. Microsoft abandoned the position in July.

In March, Nadella arrived with Mustafa Suleyman, who had co-founded AI research firm DeepMind and sold it to Google in 2014. Suleyman, who later co-founded and led startup Inflection AI, was effectively acquired by Microsoft.

In its annual report published in July, Microsoft named OpenAI as a competitor, adding the company to a list that has for years included megacap peers Amazon, Apple, Google and Meta. And in October, OpenAI debuted a search feature in ChatGPT that positions it to better compete with search engines like Google and Microsoft’s Bing.

But the toughest issue heading into the new year likely involves Musk, who has been a fixture at President Donald Trump’s Mar-a-Lago resort in Florida since the election.

Trump has previously said he would rescind President Joe Biden’s AI executive order, issued in October 2023, which introduced new safety assessments, guidance on justice and civil rights, and research on AI’s impact on the labor market.

Musk will lead the Trump administration’s Department of Government Efficiency (DOGE), which is expected to serve as an advisory office alongside former Republican presidential candidate Vivek Ramaswamy. His new role could give Musk, who is also running Tesla and SpaceX and owns social media company X, influencing federal agency budgets, staffing and regulations in ways that favor his companies.

“Beginning to feel that @DOGE has real potential,” Musk submitted on X last month.

OpenAI did not comment on the story, and Musk did not respond to a request for comment.

CLOCK: OpenAI Begins ‘Shipmas’