Sam Altman’s ChatGPT Bubble Shows First Signs of Popping
The generative A.I. hype has seen its first signs of cooling, as ChatGPT recorded its first user decline since launch and the company behind it, OpenAI, was hit with a class action lawsuit alleging copyright infringement.
ChatGPT is accessible through its website or a mobile app. In June, traffic to the chatbot’s website globally fell 9.7 percent from the previous month, and unique visitors dropped by 5.7 percent, according to web analytics firm Similarweb. It marks the first user decline since the ChatGPT’s launch in November 2022.
Downloads of ChatGPT’s iPhone app, launched in May, has also fallen sharply since peaking in early June. iPhone downloads of ChatGPT in the U.S. were down 38 percent in June from the previous month, according to a report last week by the Bank of America, citing Sensor Tower data. U.S. Downloads of Microsoft’s Bing app, which includes a ChatGPT-based chatbot, fell just as much in June, the BoA report said.
Until last week, ChatGPT had been the fastest-growing consumer app in history, amassing 100 million monthly active users within two months. (This record has been broken by Meta’s newly launched Threads.) The app is widely used by students, copywriters, computer coders and other white-collar workers.
OpenAI didn’t respond to an inquiry about its user count.
The waning interest in ChatGPT is likely a result of the onset of summer breaks in the U.S., tightening regulations on A.I. in Europe, and the rise of competing apps. User visits to ChatGPT’s top rival, Google’s Bard, was also down in June but less severely. Traffic to Bard’s website fell by 1.4 percent last month from May, according to Similarweb data.
“The initial excitement and intrigue [of ChatGPT] has inevitably cooled, but this doesn’t necessarily mean that interest or development is falling. The future for A.I. still looks bright and vibrant,” Alysia Silberg, a seed-stage tech investor and the founder of VC firm Street Global, told Observer.
Adding to OpenAI CEO Sam Altman’s headaches are emerging legal risks around the company’s core technology. On Friday (July 7), comedian Sarah Silverman and novelists Richard Kadrey and Christopher Golden filed a class action suit against OpenAI for allegedly using their copyrighted work without permission to train its language models.
In a separate suit on Friday, the writers also sued Meta, the parent company of Facebook, Instagram and Threads. Meta hasn’t released an A.I. chatbot, but has been working on one using these writers’ copyrighted content, the suit alleges.
OpenAI was most recently valued at $29 billion. User decline and legal challenges could impact OpenAI’s and other A.I. companies’ market worth in the short term, said Street Global’s Silberg, “as they present elements of risk and uncertainty.”
“However, investors understand the rapidly evolving nature of A.I. and expect some level of volatility,” she added. “The crucial factor for investors is how these companies navigate these challenges. A company’s resilience and adaptability in the face of legal and market changes can provide a clearer indicator of its long-term prospects.”