OpenAI Customers Exploring Alternatives Amid Company Crisis

OpenAI Customers Exploring Alternatives Amid Company Crisis
Image Credit: Maginative

OpenAI is potentially facing an exodus of customers after the controversial firing of CEO Sam Altman last week, according to multiple reports. Rival AI companies like Anthropic, Google Cloud, and Cohere are aggressively courting OpenAI's clients, sensing an opportunity to steal business amid the leadership turmoil.

Over 100 current OpenAI customers reached out to Anthropic over the weekend alone, according to a source familiar with the situation. Anthropic has raised billions in recent months from tech giants Amazon and Google. Other OpenAI users contacted Google Cloud and Cohere, an emerging AI startup competitor.

The internal dynamics at OpenAI further complicate the picture. A majority of the staff, including key figures like Mira Murati and cofounder John Schulman, have threatened to resign and join Microsoft, adding to the organizational turmoil. This unrest, combined with the board’s focus on prioritizing “safety” over rapid tech advancement, raises questions about the company's ability to retain its pioneering edge in AI.

OpenAI's investors still hope Altman may return as CEO, but customers are not willing to wait for a resolution. Even before Altman's firing, major customer Morgan Stanley had started shifting more of its AI software to rely on Microsoft's Azure cloud, which hosts a version of OpenAI's GPT model. Morgan Stanley has also been in talks with Anthropic, signaling it is keeping options open with other AI providers.

The crisis seems to have accelerated Morgan Stanley's diversification, as the bank worries how Altman's abrupt removal and potential data privacy issues that could impact operations. As one of OpenAI's earliest and largest enterprise clients, Morgan Stanley's relationship was largely credited to Altman himself.

Microsoft is poised to gain the most from OpenAI's troubles. It has invested over $10 billion in OpenAI for rights to its tech, which Microsoft resells through Azure in direct competition with OpenAI. Lately Microsoft has pitched Azure to OpenAI customers as more secure and compliant.

Smaller customers, too, are reassessing their reliance on a single platform. Rabi Gupta, CEO of EvaBot, exemplifies this trend, exploring alternatives like Anthropic, Google’s Bard, and Meta Platforms’ Llama 2. This diversification strategy reflects a broader industry shift towards more resilient business models.

However, not all OpenAI customers are immediately impacted. Waseem Daher, CEO of Pilot, notes that while the unfolding drama at OpenAI is concerning, the practical effects on his business have been minimal so far. This sentiment suggests that while strategic shifts are underway, the immediate operational impact on some clients may be limited.

Competitors like AWS and Anthropic immediately mobilized sales teams to poach OpenAI's top accounts after Altman's firing. AWS now has a dedicated team responding to OpenAI customer outreach and identifying targets like Morgan Stanley, Snap and Jane Street.

While OpenAI's technology still functionally works, clients seem unwilling to stick around simply because the "APIs still work," as one CEO put it. The startup now faces a battle to retain customers and rebuild trust in its leadership. But with competitors circling, that trust may already be fractured beyond repair.

Update 2:41PM: In a post on X (formerly Twitter), Altman expressed optimism that "we have more unity and commitment and focus than ever before." He also emphasized his and Microsoft CEO Satya Nadella's "top priority remains to ensure OpenAI continues to thrive."

These public reassurances appear aimed at calming anxious OpenAI customers considering alternatives. While competitors mobilized sales teams to target OpenAI clients after Altman's removal, his remarks insisting on "continuity of operations" and the durability of the Microsoft partnership seem crafted to assuage client concerns.

Of course, some uncertainty remains about OpenAI's direction going forward. Smaller customers are still exploring other options as a precaution. Competitors obviously see an opportunity to pounce while OpenAI is in flux.

But Altman's insistences that "we are all going to work together" suggest OpenAI is laser-focused on maintaining client trust throughout this rocky transition. Only time will tell if his public reassurances are enough to retain customers being courted aggressively by rivals in the midst of the leadership shakeup. For now, OpenAI is projecting confidence that its partnerships and products will endure.

Let’s stay in touch. Get the latest AI news from Maginative in your inbox.