OpenAI Has a Golden Chance to Outshine Its Competitors. All It Has to Do Is Launch an Unlimited, Ad-Supported Version of ChatGPT

Google has long demonstrated to the world that substantial revenues can be generated by offering products for free. Over the past 25 years, the company has leveraged the idea that if you’re not paying for the product, you’re the product. Google provides excellent services such as Gmail, Maps, Search, and YouTube at no cost. However, it has one big condition: It collects user information to display targeted ads.

Users have been compensated in a way. Despite ongoing privacy debates, many of them have willingly accepted this model. Several other companies, such as Spotify and Netflix, follow suit, offering free or lower-cost versions of their services in exchange for displaying ads. However, the AI sector hasn’t yet widely embraced this approach.

For instance, OpenAI employs a classic freemium model, which means that the free version of ChatGPT allows access to some features but with limitations. Users can only make a certain number of requests each day and don’t have access to experimental or advanced models and functions (like Operator). When they do, it’s typically very restricted (such as DeepResearch). Users must pay to fully “unlock” these capabilities, and the cost can sometimes be quite high.

Getting ahead in the AI sector with ChatGPT and continuously improving it has proven successful. OpenAI now boasts 400 million weekly active users, reflecting a 33% increase in just three months.

ChatGPT has established itself as “the people’s AI,” similar to what Google achieved with its search engine. However, Google eventually monetized its success by offering a free service inundated with ads. The critical question is whether a similar path will be followed in the realm of AI.

Many believe this development is inevitable. Perplexity was among the first to highlight this possibility. The question is no longer whether but when ads will appear in chatbot interactions.

“OpenAI has moved too slowly: The company should absolutely have an ad-supported version by now… It is very much in OpenAI’s competitive interest to make it cost-effective to give free users the best models, and that means advertising,” expert Ben Thompson writes in a Stratechery post.

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Like Google, OpenAI is likely to follow a similar path by offering a complete, free product that includes ads. As demonstrated by Google’s success with its platforms, this approach may be one of the most effective ways to reach a broad audience of users who prefer free options over paid ones.

Thompson also points out that providing a free, ad-supported version “maximizes the addressable market while still making it possible to continually increase the average revenue per user.” However, this doesn’t prevent OpenAI from offering premium subscriptions. In fact, like many other companies in the sector, the combination of ads and subscriptions appears to be the clear model for consumer content companies.

On a different level, there’s the enterprise market. Google offers subscriptions such as Google One, aimed at individuals, and Google Workspace, which is more business-focused. These services provide features including business email accounts, storage, enterprise support, and special controls. Essentially, they build on Google’s free services but offer an ad-free experience tailored for businesses.

OpenAI can adopt a similar strategy. It’s already doing this with its Pro, Teams, and Enterprise plans, which are designed for enterprise environments and will continue to be relevant. However, the AI startup has a golden chance to attract a much larger user base, even one that may be accepting of ads.

Image | Nik

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