OpenAI Is Failing: How ChatGPT Is Being Quietly Overtaken

This isn't speculation. This is what's happening right now, in December 2025. OpenAI — the company that started the AI revolution — is watching its lead evaporate in real-time while competitors close in from every direction.

The "Code Red" memo wasn't just corporate theater. It was an admission that the AI race has fundamentally changed — and OpenAI is no longer winning.

The "Code Red" Panic

On December 2, 2025, Sam Altman sent an 8-week emergency plan to all OpenAI staff. The message: drop everything else. ChatGPT is the only priority. Health initiatives, shopping features, advertising experiments — all shelved.

What Triggered Code Red

ChatGPT Traffic Is Declining

ChatGPT recorded 5.844 billion visits in November — falling below the 6 billion benchmark it hit in October. This is the second month-on-month decline in 2025. The growth story is over.

Enterprise Market Share Collapsed

According to Menlo Ventures, OpenAI's enterprise market share has fallen to just 27%. Anthropic now leads at 40%. Google's Gemini has risen to 21%. In the most profitable segment of the AI market, OpenAI is now in second place.

Gemini's Explosive Growth

Google's Gemini app now has 650 million monthly active users — up from 450 million in July. That's 44% growth in 5 months. ChatGPT has 800 million weekly users, but the gap is closing fast.

The December Model Wars

The past month has been chaos. OpenAI, Google, and Anthropic have all released major models within days of each other — and OpenAI keeps losing.

GPT-5.1

Late November

OpenAI released GPT-5.1 with fanfare. Within days, it was eclipsed by Google's Gemini 3.0, which outranked it on nearly every benchmark. Embarrassing.

GPT-5.2

December 11

Less than a month later, OpenAI rushed out GPT-5.2 — a clear panic response. It edges out competitors on some benchmarks, but the margins are razor-thin. On SWE-bench Verified (coding), GPT-5.2 scores 80.0%. Claude Opus 4.5 scores 80.9%.

Gemini 3.0 → 3 Flash

December 17

Google isn't slowing down. Just days after GPT-5.2, they released Gemini 3 Flash — a smaller, faster model that outperforms Gemini 3 Pro on coding benchmarks. Google is iterating faster than OpenAI can respond.

Claude Opus 4.5

December 17

Hours after Google's announcement, Anthropic dropped Claude Opus 4.5. Developers are already calling it "the new gold standard for software engineering." It leads on SWE-bench (80.9%) and Terminal-bench 2.0 (59.3%). OpenAI's crown is gone.

"The relentless release cycle reflects the cut-throat nature of competition at the leading edge of the model race where any company can quickly go from leader to also-ran." — Axios, December 2025

The New Leaders

🔵

Anthropic (Claude)

Enterprise Leader

40% enterprise market share — up from challenger to market leader. Claude Opus 4.5 now leads on coding benchmarks. Founded by ex-OpenAI researchers who saw the writing on the wall years ago.

80.9% SWE-bench40% enterprise shareSafety-focused

🔴

Google (Gemini)

Fastest Growing

650 million monthly users — up 44% since July. Gemini 3.0 eclipsed GPT-5.1. Gemini 3 Flash beats its own Pro model on coding. And Google has something no one else has: integration into Search, Android, Gmail, Docs, and YouTube.

650M MAU21% enterprise shareInfinite distribution

🟣

Meta (Llama)

Open Source

Llama 3.1 405B is open source and competitive with GPT-4. Meta is commoditizing the entire LLM market. Why pay OpenAI when you can run a comparable model on your own infrastructure for free?

Free to useSelf-hostableNo vendor lock-in

⚫

xAI (Grok) + DeepSeek

Dark Horses

xAI raised $6B and has real-time Twitter/X data. DeepSeek is emerging from China with competitive models. The field isn't just Google and Anthropic — it's a whole ecosystem of well-funded challengers.

Real-time data$6B+ fundingMoving fast

The $830 Billion Delusion

This week, OpenAI announced it's seeking to raise $100 billion at an $830 billion valuation. Let that sink in.

$830B

Target valuation — up 66% from October's $500B secondary sale. This would make OpenAI more valuable than Meta.

$20B

Annual run-rate revenue. Impressive, but nowhere near enough to justify an $830B valuation (that's a 41x revenue multiple).

2029

When OpenAI expects to become profitable. Four years away. Until then: burn, raise, burn, raise.

$14B

Projected deficit they need to bridge with external capital. Hence the desperate fundraising.

Recent moves reek of desperation:

→Disney invested $1B (Dec 11) — a licensing deal, not a vote of confidence

→Courting Amazon for $10B — to get access to Amazon's AI chips (their compute is constrained)

→"Stargate" infrastructure project — $100B for compute with SoftBank and Oracle

→New Chief Revenue Officer — building enterprise sales from scratch (years behind Anthropic)

Compare this to Google, which funds Gemini from $300B annual revenue, or Meta, which treats Llama as a strategic moat. OpenAI is an AI company that can't afford its own AI infrastructure.

There Is No Moat

In a leaked Google memo, an engineer wrote: "We have no moat. And neither does OpenAI." That was 2023. In 2025, it's no longer a prediction — it's observable fact.

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Data advantage?

Google has Search, YouTube, and Gmail. Meta has Facebook and Instagram. OpenAI has ChatGPT conversations they can't legally train on.

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Model advantage?

GPT-5.2 edges out on some benchmarks, loses on others. Claude Opus 4.5 leads on coding. Gemini 3 is competitive across the board. The models are essentially at parity.

→

Compute advantage?

Microsoft provides compute, but Google has TPUs, Meta has massive GPU clusters, and xAI is building a 100,000 GPU supercluster. OpenAI is courting Amazon for chips — they're compute-constrained.

→

Distribution advantage?

ChatGPT is a website and app. Google has 4.3 billion users across Search, Android, Chrome, Gmail, Docs. There's no competition.

What Comes Next

OpenAI won't disappear overnight. But the trajectory is unmistakable:

Now (Q1 2026)

The $100B raise either succeeds (giving OpenAI runway) or fails (triggering a crisis). Enterprise customers continue shifting to Anthropic. ChatGPT growth remains flat while Gemini accelerates.

Medium-term (2026-2027)

Google's distribution advantage becomes overwhelming. Gemini is embedded in every Google product. Enterprise market share settles: Anthropic 45%, Google 30%, OpenAI 20%. The valuation collapses to reality.

Long-term (2028+)

Microsoft acquires OpenAI outright or the company restructures. The ChatGPT brand survives as a Microsoft product. The "OpenAI" that started the revolution ceases to exist as an independent entity.

The "Code Red" memo wasn't the start of a comeback. It was the moment OpenAI admitted what everyone else already knew: they're not leading anymore. They're chasing.

"The graveyard of tech is filled with companies that won the first battle and lost the war."

OpenAI started the AI revolution. That doesn't mean they get to finish it.