According to Thurrott.com, OpenAI CEO Sam Altman declared a “code red” alert to employees on Monday after being caught off guard by Google’s rapid progress with its Gemini AI models. In a memo, Altman stated the company is delaying multiple product initiatives, including advertising, AI agents for health and shopping, and a new “Pulse” personal assistant. The immediate focus is now on improving ChatGPT’s day-to-day experience, specifically its personalization, speed, reliability, and ability to answer questions. In reaction, OpenAI is pushing for temporary team transfers and holding daily calls to accelerate work, with plans to release a new reasoning model next week intended to outperform Google’s latest Gemini. This comes just after Google announced it’s rolling out its most intelligent model, Gemini 3, to AI Mode in Search across about 120 countries.
OpenAI’s Scramble
Here’s the thing: this “code red” feels like a significant moment. OpenAI has been the undisputed frontrunner in the consumer AI race since ChatGPT launched. But being first doesn’t mean you win. Altman’s memo is basically an admission that the core product, ChatGPT, isn’t good enough anymore. It’s slow, it’s unreliable, and it lacks the deep personalization users are starting to expect. So they’re hitting pause on everything else—even revenue-generating projects like ads—to go back to basics. That’s a huge deal. It shows the competition is no longer theoretical; it’s here, and it’s forcing a reactive, defensive posture. Daily calls and team shuffles? That’s emergency mode.
Google’s Structural Advantage
Now, look at what OpenAI is up against. Google isn’t just launching a chatbot; it’s integrating Gemini directly into its empire. Bringing Gemini 3 to Search in 120 countries is a distribution move OpenAI can only dream of. Think about it: billions of queries a day, now with an AI answer right at the top. And that’s just Search. Workspace, Home, TV—Gemini is being woven into the fabric of the internet and people’s daily digital routines. Google’s comeback from the shaky Bard launch has been impressive. They have the infrastructure, the cash, and most importantly, the existing user bases in products people already use. OpenAI’s 800 million weekly users for ChatGPT is massive, but it’s a destination. Google’s AI is becoming part of the journey.
The Profitability Problem
And this leads to the brutal, underlying issue: money. OpenAI is reportedly still not profitable, burning billions on compute to stay ahead. Delaying ads and paid features might help the product, but it hurts the bottom line. How long can they keep this up? Google can subsidize AI development for years with its search ad revenue. OpenAI doesn’t have that luxury. They’re in a brutal arms race with a competitor that has deeper pockets and a built-in distribution network. The promise of a new “reasoning model” next week is a tactical shot across the bow, but is it enough? The pressure isn’t just technological; it’s financial. Without a surge in paid ChatGPT Plus users or another major revenue stream, the “code red” might be about more than just features.
