After writing about how OpenAI might just be the AOL of the post AI Internet, I couldn’t resist commenting on The Information’s scoop this morning about OpenAI hitting the big red panic button. It’s now a Valley ritual to call an official emergency whenever you’ve made massive management mistakes that almost kill your company. Remember Sundar’s code red back when ChatGPT launched? Seems Sam Altman is now returning the favor. He’s worried Google’s Gemini is about to lap ChatGPT, and has told his staff to drop everything and focus entirely on improving OpenAI’s core product.
But Altman has a problem. When Google calls a Code Red, it has tens of billions of dollars in cash flow and access to public equity and bond markets to back its play. OpenAI has already overtaxed its ability to raise capital, so to do more on its core product, it has to do less somewhere else – and that means pulling back from its efforts to develop an advertising platform (and, oh by the way, “agents” – which I’ve been skeptical about ever since they became a thing). This, in turn, means OpenAI will fall even further behind when it comes to monetizing its offerings with the Internet’s most reliable driver of profits.
It’s been clear for at least two years that OpenAI must launch ads – but now the company finds itself so far behind, it may never catch up. I can’t imagine how Fidji Simo feels about all this – she ran monetization at Facebook, after all, and was brought in to OpenAI just months ago to do the same there. Now instead of triumphantly delivering OpenAI’s most important new revenue stream, she must instead find a way to compete with Google’s reinvigorated Gemini chatbot. Not a fun pivot just six months into the new gig.
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Really interesting analysis — and honestly, this “Code Red whiplash” is becoming a predictable pattern in Silicon Valley. What stands out most here is the structural asymmetry: Google can afford to hit pause, redirect thousands of engineers, and burn billions chasing an AI moment. OpenAI, for all its influence, simply doesn’t have that luxury.
Pulling resources away from ads and agents might help them sprint in the short term, but it also exposes a deeper strategic problem: you can’t build a sustainable business on breakthroughs alone. Google’s advantage isn’t just Gemini, it’s the monetization machine behind it — search, ads, and distribution at planetary scale.
And your point about Fidji Simo is spot on. Bringing in a world-class monetization exec and then shelving the very thing she was hired to build does not signal strategic coherence. It signals triage.
If Gemini really is about to leapfrog ChatGPT, this feels less like a bold pivot and more like a company forced into retrenchment because it never built the economic engine it needed. The AOL comparison might end up looking generous.