By Adam Clark
Alphabet's Google has shaken up the artificial-intelligence race. ChatGPT-developer OpenAI is in danger of losing its crown as the leading AI company and that's bad news for key partners Oracle and Microsoft.
Google launched its Gemini 3 AI model last month and it made a splash, winning rave reviews from users and analysts and beating OpenAI's latest GPT 5.1 on benchmarking tests.
OpenAI isn't taking that lying down. The start-up has declared a "code red" effort to improve ChatGPT and will delay other initiatives -- such as advertising, AI agents for health and shopping, and a personal assistant -- to redirect resources, according to an internal memo by OpenAI CEO Sam Altman, as reported by The Wall Street Journal on Tuesday.
OpenAI didn't immediately respond to a request for comment early on Tuesday. Barron's owner News Corp has a content-licensing partnership with OpenAI.
The worry for Oracle and Microsoft is that OpenAI's efforts to keep up with Google will push back its timeline for making a profit and raise questions about its sustainability.
OpenAI has made huge spending commitments totaling more than $1 trillion. Those include a $300 billion cloud-computing deal with Oracle and a $250 billion arrangement with Microsoft. OpenAI is valued at around $500 billion and expects to reach over $20 billion in annualized revenue this year.
OpenAI's backers are counting on the company being able to generate significantly more revenue from advertising, subscription, and other sources to fund its commitments. Altman has suggested OpenAI could reach $100 billion in annual revenue by 2027. But that trajectory could be derailed if Google's Gemini begins to take significant market share and OpenAI has to delay its monetization initiatives.
Gemini has over 650 million monthly active users, up from around 450 million in July. That compares with ChatGPT's 800 million weekly active users, up from roughly 700 million in July. That suggests Google's AI is growing quicker, while Gemini is also set to power Apple's digital-assistant Siri from early next year, according to Bloomberg.
While it is difficult to compare AI models across different areas, Gemini 3 Pro mode appears to outperform OpenAI's GPT 5.1 on general intelligence and coding-specific tasks according to data from AI-benchmarking firm Artificial Analysis, as well as rivals from xAI, Meta Platforms, and China's Alibaba and DeepSeek, although it is also more expensive to use.
OpenAI doesn't only face pressure from Google. Chinese AI start-up DeepSeek on Monday released two new large-language models of its own. It said that its DeepSeek-V3.2 achieves similar performance to OpenAI's GPT-5 across multiple benchmarks, while a computing-intensive variant surpassed GPT-5 and matched Gemini 3 Pro in its reasoning capabilities.
"There is plenty in the models and technical paper to get excited about, which only heightens our anticipation for a DeepSeek-4 release in the near future," D.A. Davidson analyst Alexander Platt wrote in a research note.
OpenAI has a tough task ahead to keep in front of the chasing pack. Microsoft and Oracle will be watching closely.
Write to Adam Clark at adam.clark@barrons.com
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December 02, 2025 06:36 ET (11:36 GMT)
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