Facing fierce competition from Alphabet, OpenAI CEO Sam Altman has taken decisive action. After acknowledging "temporary economic headwinds," he declared the highest-level "Code Red" status within the company.

According to an internal memo obtained today, Altman officially announced the "Code Red" state to all employees on Monday (December 1). He stated bluntly, "We are at a critical moment for ChatGPT."

Confronted with Alphabet's aggressive counterattack through Gemini and signs of slowing growth, OpenAI has urgently adjusted its strategy: postponing new commercialization projects, including advertising and AI Agents, to reallocate all core resources toward optimizing ChatGPT's user experience and performance. This move marks a forced shift in OpenAI's strategic focus from "exploring diversified monetization" back to "defending core territory."

**Strategic Pivot: Sacrificing Short-Term Revenue to Protect 800M Users** To address the crisis, Altman issued clear directives—prioritizing ChatGPT above all else:

- **Delaying Ad Monetization**: Despite testing shopping ads leveraging ChatGPT's millions of search users, this promising revenue stream has been halted. - **Slowing New Projects**: Development of "AI Agents" for automating shopping and health tasks, as well as the personalized morning briefing project "Pulse," has been postponed.

During the "Code Red" period, OpenAI identified five core priorities to solidify its base of 800M weekly active users: 1. **Personalization**: Customizing interactions for over 800M weekly users. 2. **Image Generation**: Enhancing Imagegen to compete with Alphabet's Nano Banana Pro, enabling users to create images ranging from interior designs to animated real-life photos. 3. **Model Behavior**: Optimizing performance to surpass competitors on benchmarks like LMArena. 4. **Speed & Reliability**: Improving ChatGPT's response time and stability. 5. **Reducing Overrefusals**: Minimizing instances where the model rejects legitimate queries.

**$100B Gamble: The Battle for Future Funding** This "Code Red" isn’t just about product defense—it’s a fight for survival in the capital markets. OpenAI expects to spend hundreds of billions on R&D and computing resources in the coming years. Current projections show ChatGPT’s subscription revenue reaching $10B this year, $20B in 2025, and $35B by 2027. However, sustaining this vision requires raising ~$100B. Altman knows that failing to counter Alphabet’s momentum now—and proving ChatGPT remains the world’s top AI product—could cripple future fundraising.

**New Model Launch: A Test for Funding Prospects** Despite pressure, OpenAI is advancing its tech. Altman revealed plans to release a new reasoning model next week, internally rated as "ahead of Gemini 3." However, he admitted more work is needed to improve ChatGPT’s overall "experience." The performance of this model and ChatGPT’s optimization will be pivotal for securing future funding.

**Heated Competition and Growth Concerns** The "Code Red" was triggered by intensifying competition and growth worries. Three years ago, ChatGPT’s debut forced Alphabet into its own "Code Red" to protect its search business. Now, the tables appear to be turning.

In October, Alphabet disclosed Gemini’s monthly active users surged from 450M in July to 650M. It also integrated an "AI mode" into its search app, making it more chatbot-like. While Gemini still trails ChatGPT in total users, its rapid growth is notable. Meanwhile, models from rivals like Anthropic have gained developer acclaim.

Against this backdrop, Altman warned employees of Alphabet’s resurgence potentially impacting finances. CFO Sarah Friar also hinted at slowing growth to investors—a red flag for a company reliant on massive funding to sustain operations and innovation.