Alphabet’s Google (GOOGL) has decisively shaken up the artificial intelligence race, putting ChatGPT-developer OpenAI (PC:OPAIQ) in real danger of losing its crown. Google launched its Gemini 3 AI model last month, immediately winning rave reviews and, critically, beating OpenAI’s latest GPT-5.1 on key benchmarking tests.
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This technical setback is creating a crisis for OpenAI and its biggest partners, Oracle (ORCL) and Microsoft (MSFT). In response, OpenAI has declared a company-wide “code red” effort, forcing a massive reallocation of resources and threatening to derail its timeline for monetization and massive spending commitments.
Google’s AI Model Overtakes GPT-5.1
Google’s Gemini 3 model surpassed OpenAI’s GPT-5.1 on general intelligence and coding-specific tasks. This technical victory has forced an internal panic at the start-up. According to an internal memo by OpenAI CEO Sam Altman, the company has declared a “code red” to improve ChatGPT.
To address this challenge, OpenAI will immediately redirect resources and delay other key initiatives. These stalled projects include advertising, AI agents for health and shopping, and a personal assistant feature, which are all crucial for future revenue generation.
OpenAI’s $1 Trillion Spending Commitments Face Risk
The panic at OpenAI immediately creates a major problem for its financial backers and partners, Oracle and Microsoft. OpenAI has made massive spending commitments that total more than $1 trillion.
These commitments include a colossal $300 billion cloud-computing deal with Oracle and a $250 billion arrangement with Microsoft. The worry is that the necessary “code red” effort will push back the start-up’s timeline for making a profit and raise serious questions about its ability to fund these historic commitments.
Gemini’s User Growth Outpaces ChatGPT
While ChatGPT still has a higher total number of weekly active users (800 million), Google’s Gemini is gaining ground rapidly. Gemini’s monthly active users surged from 450 million to over 650 million.
Adding to the pressure, Google’s AI is reportedly set to power Apple’s (AAPL) digital assistant Siri from early next year. This significant partnership, combined with competition from Chinese rivals like DeepSeek, means OpenAI has a difficult and expensive task ahead to keep its market dominance.
Key Takeaway
Google’s Gemini 3 has effectively usurped OpenAI’s technical lead, forcing the ChatGPT-developer to declare a “code red”. This internal crisis directly threatens its massive financial deals with Oracle and Microsoft by delaying the critical monetization strategies needed to fund its trillion-dollar spending obligations.
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