Senator Elizabeth Warren sent a letter to Sam Altman and OpenAI, seeking assurances that it will not seek a bailout from the federal government.
The letter comes as the Wall Street Journal reports that OpenAI may seek to hold an IPO in the 4th quarter this year, in part to compete with Anthropic’s expected IPO.
Writes the WSJ: “The $500 billion startup is holding informal talks with Wall Street banks about a potential initial public offering, people familiar with the matter said, and is growing its finance team. That includes the hire of a new chief accounting officer, Ajmere Dale, and a new corporate business finance officer, Cynthia Gaylor, who will oversee investor relations.”
It also comes at a time when some prominent financial experts, such as ex-Fidelity fund manager George Noble, have predicted OpenAI’s demise.
But OpenAI is “losing billions of dollars every year.” And it faces potentially massive damages liability if either Elon Musk or the slew of copyright holders, including the New York Times, prevails in their lawsuits against OpenAI.
OpenAI has tried to downplay the risk of exposure in the Musk lawsuit, saying it’s no more than $38 million, not the $109 billion Musk’s expert calculated.
But, even if OpenAI is right, that still leaves the more than dozen copyright suits OpenAI faces in the MDL litigation and the Northern District of California, all of which can involve billions of dollars in damages, if not over a trillion.
At least in discovery, OpenAI has not fared well in the litigation disputes:
That doesn’t mean that OpenAI cannot escape a catastrophic ruling in Musk v. Altman or In re OpenAI Copyright Infringement Litigation.
But those cases present legal risks that add to OpenAI’s uncertain future.
In terms of its business model, OpenAI appears to be massively spending on a wide array of projects, from ChatGPT to Sora, from apps geared to individual to, more recently, apps for enterprise. A kitchen sink approach. By contrast, Anthropic has focused more narrowly on Claude Code and enterprise applications, such as for writing computer code.
Similarly, OpenAI has enlisted more than 80 attorneys for its defense in the MDL litigation, sparing no expense.
But, as George Noble contends, the financials of OpenAI are at least open to question. Is the business model sustainable, much less profitable?
OpenAI’s business model appears to be to spend its way to success. But, with fierce competition from Google and Anthropic (and Google is an investor in Anthropic), it’s unclear whether that kind of unbridled spending will pan out.