OpenAI Hits ‘Code Red’ on ChatGPT: Product Upgrade Trumps Advertising Push

OpenAI CEO Sam Altman has declared a “code red” to rapidly improve ChatGPT, pausing early advertising and shopping experiments as financial and competitive pressures from Google’s Gemini and other rivals intensify.

OpenAI CEO Sam Altman has reportedly declared a “code red” inside the company, ordering teams to focus aggressively on improving the core ChatGPT experience while delaying its early advertising rollout and other side projects. This shift comes as pressure mounts from Google’s Gemini models and other AI competitors that are rapidly gaining ground in performance benchmarks and user engagement.

The internal memo frames this as a critical moment for ChatGPT, prioritizing speed, reliability, and personalization over short‑term monetization. The company wants to make sure the daily experience feels faster, smarter, and more useful before leaning heavily into ads and shopping integrations.

Why OpenAI Declared ‘Code Red’

Altman’s “code red” follows a year in which Google’s Gemini models have started to overtake ChatGPT on several high‑profile AI leaderboards and reasoning tests. Analytics firms have also reported that, while ChatGPT still has more users overall, people are starting to spend more time with Gemini, suggesting a shift in engagement.

In response, OpenAI is concentrating on several improvement priorities for ChatGPT:

Making answers feel more personalized and context‑aware
Improving image generation quality and consistency
Refining model behavior so it performs better on public benchmarks and real‑world tasks
Increasing speed and reliability, especially under heavy load
Reducing unnecessary refusals when users ask legitimate questions

Altman has also encouraged internal team transfers and is organizing daily check‑ins for those responsible for upgrading ChatGPT, underlining just how urgent the company sees this effort.

Mounting Financial Pressures Behind the Shift

Behind the strategic refocus lies a challenging financial picture for OpenAI. The company is spending heavily on cutting‑edge chips, cloud infrastructure, and research, while also trying to keep ChatGPT accessible to a massive global audience.

Despite generating billions in revenue, OpenAI has not yet reached profitability and has warned internally that it will need extremely high revenues—potentially in the hundreds of billions annually by the end of the decade—to cover long‑term costs and commitments. Partners providing the computing backbone for OpenAI have also reportedly taken on significant debt, increasing pressure to find a sustainable business model.

This financial backdrop explains why the company was exploring ads and shopping‑focused features, but also why it cannot afford to lose momentum on the core product that underpins all of its revenue streams.

Advertising and Shopping Plans Put on Hold

Although OpenAI has never officially announced an ad business, internal tests and code references in the ChatGPT app have pointed to experiments with search ads, carousels, and shopping‑related formats. The company has also rolled out shopping research tools and pilot partnerships with major retailers to let users move from AI‑driven product research directly to purchase flows.

Under the new “code red” directive, however, these initiatives are being paused or slowed:

Advertising experiments inside ChatGPT are on hold
AI shopping agents and health‑focused assistants are being deprioritized
A planned personalized briefing product (reportedly called Pulse) is postponed

This means brands and marketers expecting rapid access to ChatGPT’s massive user base via ads may have to wait longer, while OpenAI doubles down on product quality and user retention.

ChatGPT’s Massive User Base and Competitive Threats

ChatGPT still commands an enormous audience, with reports indicating more than 800 million weekly active users and a dominant share of the consumer AI assistant market. That scale gives OpenAI a powerful advantage: even small improvements in usability or responsiveness can translate into huge perceived gains for millions of people.

However, competition has intensified:

Google’s Gemini models have posted strong scores on public benchmarks and are tightly integrated into Google’s search and productivity ecosystem.
Rival startups such as Anthropic are pushing safer, more “steerable” models with enterprise‑friendly positioning.
Open‑source models are improving quickly, giving developers free or low‑cost alternatives.

OpenAI’s concern is not just benchmark scores, but the risk that everyday users start to feel other tools are faster, more up‑to‑date, or better at reasoning through complex tasks.

A New Reasoning Model on the Way

As part of the reset, OpenAI plans to launch a new reasoning‑focused model that Altman has told staff should outperform Google’s latest Gemini release on complex problem‑solving. The aim is to improve ChatGPT’s ability to handle multi‑step reasoning, maths, logic puzzles, and intricate instructions that go beyond simple Q&A.

This move also responds to criticism that previous model updates, while powerful, sometimes felt colder or less capable on basic tasks, such as simple calculations or geography questions. OpenAI now appears determined to balance raw capability, safety, and user‑friendly behavior more carefully, ensuring the system feels both smart and approachable.

What This Means for Everyday Users

For regular ChatGPT users, the “code red” shift is likely to bring practical, visible changes:

Faster responses: Reduced lag and better performance at busy times
More helpful answers: Fewer unnecessary refusals, clearer explanations, and better follow‑up questions
Smarter personalization: Replies that better reflect previous context and user preferences

It also means users will probably see fewer experimental shopping features or ad‑like elements in the short term, preserving a cleaner, more utility‑focused experience.

Implications for Advertisers and the AI Industry

For advertisers, the delay is a mixed signal. On one hand, it slows access to a new, high‑intent channel where people actively ask about products and services. On the other, it suggests that when ads eventually arrive, they may be better integrated into a mature, trusted product rather than rushed into a still‑evolving interface.

For the wider AI industry, OpenAI’s move underlines that product quality and user trust still matter more than short‑term ad revenue, even for highly funded players. It also shows how quickly competition can force strategy changes, with benchmark performance, user engagement, and infrastructure costs all pushing companies to rethink priorities.