The main silicon valley business model (over at least my profession life) follows this rough pattern:
0) get enough money to start stage 1,
1) make product,
2) build userbase,
3) monetize (investors, bootstrap, acquisition, however)
After a bit of googling, I couldn't find out how many paying users ChatGPT has, but many touting the number of users (100M). MSFT invested $13B [0] into OpenAI (650M paying-user-months @ $20/mo). OpenAI doesn't have a durable moat, so they are incentivized to monitze what they have (users, earned media hype, and their models/services) sooner rather than later. If 20% of their touted users are paying users (with the simplifying assumptions that subscriptions exactly offset churn and ignoring all operational costs), MSFT's investment is 2 yrs 8.5 mos of ChatGPT income and there's a 100% chance that something better will come out in the near future that eats OpenAI's market share. And OpenAI knows this.
Per crunchbase, OpenAI has raised $11.3B from VCs [1], and they've also secured $13B from MSFT, and in contrast, paying subs/API users provide steady pocket change. The numbers make it clear that OpenAI's strategy should prioritize MSFT before paying subs, but let's posit OpenAI decided to prioritize paying subs. If that were the case, they would want to gain as many paying subs as possible before a viable (or most likely superior) substitute appears, so it wouldn't make sense to slow growth by degrading the product in the short window before substitutes arrive (at which point they could cut costs and milk their paying subs, assuming they don't have a new product to release and recapture the lead). Further it would be completely irrational to create a viable substitute if paying subs and users were vital to the business strategy. Yet OpenAI has both seeded a substitute (bing+copilot) and degraded their own service. This would be incoherent if paying subs were the strategy, but it becomes perfectly coherent if the goal is to sell their userbase to MSFT. Degrading ChatGPT both cuts costs and makes substitutes like bing or copilot more attractive, so churning users may migrate to those products (one of which had so little market share that it was a punchline).
Call it a conspiracy or just call it a business deal, this is the only cogent explanation I see for the observable facts.
0) get enough money to start stage 1, 1) make product, 2) build userbase, 3) monetize (investors, bootstrap, acquisition, however)
After a bit of googling, I couldn't find out how many paying users ChatGPT has, but many touting the number of users (100M). MSFT invested $13B [0] into OpenAI (650M paying-user-months @ $20/mo). OpenAI doesn't have a durable moat, so they are incentivized to monitze what they have (users, earned media hype, and their models/services) sooner rather than later. If 20% of their touted users are paying users (with the simplifying assumptions that subscriptions exactly offset churn and ignoring all operational costs), MSFT's investment is 2 yrs 8.5 mos of ChatGPT income and there's a 100% chance that something better will come out in the near future that eats OpenAI's market share. And OpenAI knows this.
Per crunchbase, OpenAI has raised $11.3B from VCs [1], and they've also secured $13B from MSFT, and in contrast, paying subs/API users provide steady pocket change. The numbers make it clear that OpenAI's strategy should prioritize MSFT before paying subs, but let's posit OpenAI decided to prioritize paying subs. If that were the case, they would want to gain as many paying subs as possible before a viable (or most likely superior) substitute appears, so it wouldn't make sense to slow growth by degrading the product in the short window before substitutes arrive (at which point they could cut costs and milk their paying subs, assuming they don't have a new product to release and recapture the lead). Further it would be completely irrational to create a viable substitute if paying subs and users were vital to the business strategy. Yet OpenAI has both seeded a substitute (bing+copilot) and degraded their own service. This would be incoherent if paying subs were the strategy, but it becomes perfectly coherent if the goal is to sell their userbase to MSFT. Degrading ChatGPT both cuts costs and makes substitutes like bing or copilot more attractive, so churning users may migrate to those products (one of which had so little market share that it was a punchline).
Call it a conspiracy or just call it a business deal, this is the only cogent explanation I see for the observable facts.
[0] https://www.bloomberg.com/news/features/2023-06-15/microsoft...
[1] https://www.crunchbase.com/organization/openai