OpenAI is the world’s hottest startup.
It set the stage for the generative AI boom with the launch of ChatGPT in November 2022. The company is also powering Microsoft's push into the space via a multiyear, multibillion-dollar investment.
OpenAI is now valued at as much as $86 billion, according to Bloomberg. And with its latest product — the generative AI video platform Sora — making waves, CEO Sam Altman and company are riding higher than ever.
But OpenAI's success has also come with the typical downsides that accompany any market leader in a burgeoning field.
The company faces many headwinds ranging from lawsuits and government investigations to increasing competition from established players like Google.
And some of those could pose an existential threat to OpenAI as it's currently constituted.
Lawsuits OpenAI's latest trouble comes from a familiar place: co-founder Elon Musk.
Last week, the Tesla CEO filed a lawsuit against the generative AI company, claiming it is in breach of contract by using its technology to grow its for-profit arm rather than for the benefit of humanity. After helping to found OpenAI in 2015, Musk left the company in 2018 over disagreements about the company’s future and, last year, founded an AI company of his own called x.AI.
Musk wants OpenAI to make all of its technologies public and to prevent it from making any money for Microsoft, which uses OpenAI’s models for its various AI Copilot offerings.
The New York Times is also suing the company — as well as Microsoft — claiming that the companies are benefiting from the use of the Times' copyrighted material. The Intercept, Raw Story, and AlterNet are also suing the firm, saying it used their data to train its models.
Regulators OpenAI is also facing regulatory scrutiny in the US and abroad.
According to the Wall Street Journal, the SEC has launched a probe into whether or not OpenAI misled investors. The inquiry followed the OpenAI board's decision to fire Altman in November, saying he hadn't been consistently candid with its members. OpenAI rehired Altman less than two weeks after he was removed. The FTC is also looking into OpenAI and its dealings with Microsoft, as well as those of its rivals, as the commission examines the potential impact of major cloud providers investing heavily in generative AI companies. The FTC is looking at Amazon and Google’s investments in OpenAI competitor Anthropic. Overseas, the UK's Competition and Markets Authority is seeking comments from the public with regards to whether OpenAI and Microsoft's deal should be considered a relevant merger situation and what kind of impact that will have on competition in the market. Meanwhile, the European Commission is looking into whether Microsoft and OpenAI's relationship is reviewable under the EU's Merger Regulation.
Competition is growing OpenAI is also staring down increasing competition from some of its biggest rivals.
On Monday, Anthropic announced its Claude 3 family of large language models. According to the company, its largest model, Claude 3 Opus, can take on OpenAI's GPT-4. Google is also aiming to take on OpenAI with its Gemini family of models. Apple is also looking to get into the generative AI market, with Tim Cook saying that the company is investing heavily in the technology. OpenAI's challenges, of course, aren't necessarily a sign that the company is in any immediate danger. Lawsuits and regulatory actions can take years to wind their way through the courts, if they even get that far.
And with Microsoft in its corner, the company has huge financial resources to fund its research into larger, more powerful AI models.
But the company has quickly found that sitting at the top of the AI mountain can be a lonely, and sometimes vulnerable, place to be. | 
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