Apple Not Investing in OpenAI; ChatGPT Subscription Could Cost Double in A Few Years

Highlights

• Apple has reportedly opted out of investing in OpenAI.
• Microsoft and Nvidia are set to contribute to a $6.5 billion funding round.
• Microsoft to add another $1 billion.
• OpenAI plans to raise the ChatGPT+ subscription from $20 to $22 per month by the end of 2024.
• The subscription cost could reach $44 per month over the next five years.
• OpenAI is now valued at $150 billion and expects $3.7 billion in revenue this year.

The Wall Street Journal recently reported that Apple has decided not to invest in OpenAI. This news, if true, is coming amidst reports of the Chat-GPT creator closing a $6.5 billion funding round. Major tech giants Microsoft and Nvidia are expected to be major contributors.

The WSJ report states, “Apple is no longer in talks to participate in an OpenAI funding round expected to raise as much as $6.5 billion, an 11th-hour end to what would have been a rare investment by the iPhone maker in another major Silicon Valley company.

Apple recently fell out of the talks to join the round, which is slated to close next week, according to a knowledgeable person.”

Apple was previously rumoured to be considering an investment in OpenAI. However, the investment amount was never confirmed. Meanwhile, Microsoft is reportedly set to expand its investment with an additional $1 billion. It already is a significant stakeholder in OpenAI with a 49% share of profits.

If the reports of Apple backing out from a potential investment in OpenAI are true, this comes at an interesting time. Both Apple and OpenAI are currently in the middle of leadership change.

On one hand, former Apple design chief Jony Ive is now working with OpenAI to create an AI hardware product. On the other hand, Apple is partnering with OpenAI to integrate ChatGPT into iOS 18 later this year.

The collaboration will allow ChatGPT to assist with world knowledge requests. This will work alongside Siri. Reports also suggest there will not be any financial exchange between the companies. It was revealed in a Bloomberg report that Apple believes iOS 18 integration with OpenAI is “of equal or greater value” than monetary benefit.

OpenAI’s Growing Valuation, Financials and Sam Altman’s Equity

OpenAI is valued at $150 billion in this latest funding round. It is a huge jump from last year’s $30 billion valuation following Microsoft’s investment.

The company expects to generate $3.7 billion in revenue this year. The primary source for this is ChatGPT subscriptions and AI services, mostly provided to tech companies.

However, a whopping $5 billion in loss is expected due to the high costs of AI development even with the impressive revenue.

OpenAI expects its revenue to triple next year to $11.6 billion. The company further projects its revenue to reach $100 billion by 2029. Interestingly, it is the same time when OpenAI plans to increase ChatGPT+ cost to $44 per month.

Reports doing rounds in the media suggest CEO Sam Altman is set to gain a 7% equity stake worth $10.5 billion in the company.

Altman was briefly fired by OpenAI’s board last year. He was reinstated following protests from employees and a board reshuffle. However, after his return, several senior employees including the CTO and Chief Scientist have left the company.

Meanwhile, certain rumours have increased the buzz around OpenAI switching from a non to a for-profit company. If true, the new business model will allow for the removal of any caps on investor returns. This will also provide more room for all parties to negotiate and for new investors to possibly get higher rates.

OpenAI’s ChatGPT+ Pricing to Increase

The New York Times recently reported that OpenAI is also planning changes to its ChatGPT+ subscription costs.

The ChatGPT+ subscription is currently priced at $20 per month. Reports now suggest it will rise to $22 by the end of the year and could potentially reach close to $44 per month over the next five years.

ChatGPT+ provides users access to advanced AI models including the image generation tool, DALL-E.

OpenAI has 10 million subscribers to the service.

FAQs

Q1. Will OpenAI increase the price of ChatGPT+?

Answer. Yes, OpenAI plans to increase the price of ChatGPT+. Currently priced at $20 per month, the subscription will rise to $22 by the end of this year and eventually reach $44 per month over the next five years.

Q2.  What is OpenAI’s current valuation and revenue outlook?

Answer. OpenAI is valued at $150 billion following its latest funding round. The company expects to generate $3.7 billion in revenue this year but also anticipates a $5 billion loss due to high expenses. By 2029, OpenAI projects its revenue to reach $100 billion.

Read More: Confirmed: Jony Ive Working on AI Hardware Product with OpenAI’s Sam Altman

Read More: ChatGPT to Get Advanced Voice Mode to Initiate Conversations; OpenAI Forms Independent Safety Board to Enhance AI Safety