OpenAI delays advertising to combat Google's AI competition

OpenAI issued an internal "code red" memo on December 2, 2025, directing all company resources toward improving ChatGPT's core functionality while delaying advertising implementation and other revenue initiatives. CEO Sam Altman told employees that newer projects, including advertising, AI agents for health and shopping, and a personal assistant called Pulse, would be postponed so the company could concentrate on enhancing the chatbot's day-to-day experience.

The companywide directive represents the most decisive indication yet of pressure OpenAI faces from competitors that have narrowed the startup's lead in the AI race. Google released a new version of its Gemini AI model in November that surpassed OpenAI on industry benchmark tests and sent the search giant's stock soaring, according to internal documents. Anthropic has also gained traction among business customers, creating additional competitive pressure.

Altman outlined specific areas requiring immediate attention: improving personalization features for users, increasing ChatGPT's speed and reliability, and allowing it to answer a wider range of questions. The memo indicated OpenAI would push back work on initiatives beyond core chatbot functionality. He encouraged temporary team transfers and said the company would conduct daily calls for those responsible for improving ChatGPT.

Google's Gemini user base has climbed substantially since the August release of an image generator called Nano Banana. Monthly active users grew from 450 million in July to 650 million in October 2025, according to the Wall Street Journal. Google launched Gemini 3 on November 18, 2025, featuring state-of-the-art reasoning and generative UI capabilities that dynamically create visual experiences in response to user queries.

The memo used OpenAI's internal color-coded urgency system to communicate priority levels. The company employs three different codes—yellow, orange, and red—to describe varying levels of urgency needed to tackle problems. OpenAI had earlier declared a "code orange" in its effort to improve ChatGPT before escalating to the current red status.

Altman said OpenAI's new reasoning model planned for release next week is ahead of Google's latest Gemini model. He emphasized that the company continues performing well on various fronts despite the competitive challenges. ChatGPT maintains more than 800 million weekly users, providing OpenAI with a substantial user base advantage.

OpenAI is committed to hundreds of billions of dollars in future data-center investments. Concerns about its timeline for turning those investments into meaningful revenues have sent tremors through the stock market in recent weeks. The company remains private—Chief Financial Officer Sarah Friar said at a Journal event in November that an IPO wasn't on the immediate horizon. However, OpenAI's fortunes are closely bound with those of Nvidia, Microsoft and Oracle, among others.

The startup isn't profitable and must raise funding at a near-constant pace to survive, creating a financial disadvantage against Google and other tech firms that can fund investments out of revenues. OpenAI is spending more aggressively than its main startup rival, Anthropic, and will need to grow its revenue to roughly $200 billion to turn a profit in 2030, according to its own financial projections.

Recent months have seen OpenAI struggle with balancing concerns about its chatbot's safety with making it more engaging for users. Its GPT-5 model released in August fell flat among some users, who complained about its colder tone and difficulty answering simple math and geography questions. OpenAI upgraded the model in November to make it warmer and better able to follow user instructions.

Debra Aho Williamson, Chief Analyst at Sonata Insights, provided analysis of the advertising delay from a marketing and media perspective. "This is confirmation that ads are on OpenAI's roadmap," Williamson said in a statement on December 2. OpenAI has never officially said it was going to launch advertising, but the memo confirms that ads are on the way.

Williamson characterized the platform power dynamic as shifting faster than many marketers realize. Advertisers have built strategies around stable ecosystems—search, social, retail media—for years. In AI, competitive advantage is much more fluid. "If model performance slips, everything built on top of it (including monetization) gets deprioritized," she said. That creates room for the stable ecosystems—Google, Meta, Amazon—to make headway.

The analyst emphasized that marketers need to watch what platforms do, not just what they say. Sam Altman has been warming to ads, but he's still more negative on them than positive, according to Williamson. A pause on ads tells observers where OpenAI thinks its real near-term leverage is: consumer usage, product quality and retention.

The advertising delay doesn't mean AI ads are delayed indefinitely, Williamson noted. The foundations are still being poured. Ads in AI media will still expand and grow next year. She said she's paying close attention to OpenAI's competitors that have already started experimenting with ads: Google, Amazon, Microsoft. She added that observers shouldn't overlook Anthropic.

OpenAI has been building internal advertising infrastructure for potential future monetization. The company posted a job listing on September 24, 2025, seeking a Growth Paid Marketing Platform Engineer to construct foundational marketing technology systems for the ChatGPT platform. The position centers on building technical infrastructure for OpenAI's paid marketing operations, including campaign management tools, integrations with major advertising platforms, and real-time attribution pipelines.

The company also appointed Omnicom Media Group's PHD as its global media agency of record, responsible for global media planning and purchasing. Fidji Simo, OpenAI's CEO of Applications, conducted interviews with candidates to lead a new team focused on bringing advertisements to ChatGPT. Simo previously served as CEO of Instacart, where she oversaw development of that company's advertising product.

Sam Altman has discussed OpenAI's advertising approach in previous public appearances. He expects advertising to become part of OpenAI's revenue strategy despite not representing the company's "biggest revenue opportunity." The distinction matters because OpenAI's business model depends on maintaining user trust through aligned incentives. Altman acknowledged that while some ad formats would be "really bad" for user trust, others would work well for ChatGPT.

The competitive landscape has intensified across the advertising technology ecosystem. Amazon launched a closed beta for its Model Context Protocol Server on November 13, 2025, enabling natural language interactions with advertising APIs. Advertisers can connect to the MCP server using Claude from Anthropic, ChatGPT from OpenAI, Amazon Q, Amazon Bedrock, Amazon AgentCore, and other MCP-compatible applications.

Google made its Ads Advisor and Analytics Advisor available to all English-language accounts on November 12, bringing Gemini-based campaign optimization to advertisers. The tools represent Google's implementation of agentic conversational experiences powered by Gemini models, designed to accelerate data analysis and campaign management for digital marketers.

The advertising delay has immediate implications for marketers who have been anticipating OpenAI's entry into the advertising market. ChatGPT's usage expanded substantially, reaching 700 million weekly active users in August 2025—a fourfold increase from the previous year. That scale represents a substantial potential advertising platform if and when OpenAI implements monetization.

Microsoft's relationship with OpenAI adds complexity to the competitive dynamics. Microsoft reported cloud revenue hitting $49.1 billion in the first quarter of fiscal year 2026, with substantial investments in datacenter infrastructure that supports OpenAI's capabilities. The restructured OpenAI partnership, finalized on October 28, 2025, extended IP rights through 2032.

OpenAI's head of ChatGPT, Nick Turley, said on X that the company is now focused on growing its chatbot while making it feel "even more intuitive and personal." The emphasis on user experience over monetization reflects OpenAI's current strategic priorities as it responds to competitive pressure.

The decision to delay advertising demonstrates how platform competition directly affects revenue timeline decisions in the AI industry. Companies must balance model improvement against monetization pressure, with competitive dynamics determining which priority receives immediate resources. For OpenAI, maintaining technical leadership currently outweighs accelerating advertising implementation.

Google's position as both a search incumbent and AI innovator creates unique competitive advantages. The company can experiment with AI features while maintaining existing advertising revenue streams. Google's search chief has addressed how AI Overviews increase queries while maintaining ad revenue stability, describing how lowering barriers to information access increases overall search volume.

The advertising industry has witnessed platform power plays reshape the competitive landscape throughout 2025. Amazon blocks AI scrapers while deploying autonomous shopping agents. Publishers face measurement challenges from agentic traffic. Google routes complex queries to Gemini 3 as the search landscape fragments.

Timeline

• September 24, 2025: OpenAI posts job listing seeking Growth Paid Marketing Platform Engineer to build advertising infrastructure
• October 4, 2025: OpenAI reportedly interviews candidates to lead new team focused on bringing advertisements to ChatGPT
• October 17, 2025: Sam Altman discusses advertising as part of OpenAI's revenue strategy at Progress Conference
• October 28, 2025: Microsoft and OpenAI restructure partnership with new governance framework extending IP rights through 2032
• November 12, 2025: Google launches Ads Advisor and Analytics Advisor for all English-language accounts
• November 13, 2025: Amazon launches closed beta for Model Context Protocol Server enabling AI agent advertising integration
• November 18, 2025: Google launches Gemini 3 with generative UI capabilities and advanced reasoning
• December 2, 2025: OpenAI CEO Sam Altman declares "code red" in internal memo, delaying advertising to focus on ChatGPT improvements

Summary

Who: OpenAI CEO Sam Altman issued a companywide memo to employees, with analysis provided by Debra Aho Williamson, Chief Analyst at Sonata Insights. The directive affects all OpenAI teams, particularly those working on newer initiatives beyond core ChatGPT functionality.

What: OpenAI declared a "code red" urgency status, postponing advertising implementation, AI agents for health and shopping, and a personal assistant called Pulse. The company directed all resources toward improving ChatGPT's personalization, speed, reliability, and question-answering capabilities. Altman encouraged temporary team transfers and established daily calls for teams responsible for chatbot improvements.

When: The internal memo was sent on December 2, 2025. OpenAI had previously declared a "code orange" before escalating to the current red status. The company plans to release a new reasoning model next week that Altman claims is ahead of Google's latest Gemini model.

Where: The announcement affects OpenAI's operations across all divisions, with ChatGPT serving more than 800 million weekly users globally. Competitive pressure comes primarily from Google, which grew its Gemini user base from 450 million in July to 650 million in October 2025, and from Anthropic, which has gained traction among business customers.

Why: Google released a new version of its Gemini AI model in November that surpassed OpenAI on industry benchmark tests, creating the most decisive pressure yet on OpenAI's competitive position. The company must balance hundreds of billions of dollars in future data-center investment commitments against the need to maintain technical leadership and user experience quality. OpenAI needs to grow revenue to roughly $200 billion to turn a profit in 2030 according to its own financial projections, but competitive dynamics currently prioritize model performance over monetization timeline.