Written by Brook Schaaf

OpenAI’s Sam Altman is often attacked by critics as a conniver. No less a figure than arch-rival Elon Musk has referred to him as “Scam Altman.” However true or untrue, relevant or not these allegations are, Altman is a visionary figure in a rarefied space. And whatever its ultimate utility, ChatGPT has already changed the world in a permanent way, provided the company doesn’t go bust, as predicted by doomsayers like Ed Zitron.

Why bust? Not because of an AI bubble, per se, but because of its dramatic profitability gap, which conventional wisdom holds shall be filled mostly with advertising alongside subscriber revenue and data sales. Ari Paparo said as much on a Marketecture episode: “There is no example of a global… consumer product that doesn’t have advertising as part of it in the tech world… if they have market share, they will be able to monetize it… AdWords monetized [got traction] really quickly as soon as they launched it.” He anticipates that LLM advertising dollars will come at the expense of search. As Ryan Hudson of ZeroClick.ai has anticipated, ChatGPT will therefore build its own walled garden.

But just what form will this advertising take? Mike Mallazzo of PayPal Honey (and Zero Clicks newsletter) often muses on the challenge: “Elegantly serving ads in multifaceted, anthropomorphic experiences like ChatGPT is the hardest design problem of this era and will require true first principles thinking.” He adds that the magic of the core product will not be risked, and so far, that seems to be true. Indeed, on the heels of the pre-Thanksgiving announcement of shopping research and just-observed ads in an Android beta, Altman declared a “code red,” meaning a delay in ChatGPT’s advertising initiative to counter a resurgent Google Gemini. (Kind of the opposite outcome from Google’s own infamous “code yellow” in 2019, which added more advertising.) This delay and the wringing of hands notwithstanding, ads are inevitable. My hunch is that, like AdWords before it, the final form will be obvious only in hindsight.

More compelling to me is Altman’s approach to disrupting the current walled garden bi-umvirate (excluding Amazon’s retail media network), as Facebook previously muscled in on Google’s turf. (OpenAI surely solicited Sheryl Sandberg.) In an interview with Tyler Cowen, Altman evinced what I can only describe as disdain toward the existing paradigm: “Ads on a Google search are dependent on Google doing badly… You’re like, ‘That thing is not quite aligned with me.’” Discussing an alternative model, he added, “Most companies like OpenAI will make more money at a lower margin.” 

In researching my forthcoming book, I have become convinced that the walled gardens are highly effective in getting advertisers to spend past the point of diminishing returns and that ChatGPT has an opportunity to enter the market exactly here, where its Big Tech competitors are doing “badly.” And this entryway is not going to close; however good Gemini 3 may be, ChatGPT owns the answer engine modality and its disruptive potential. 

If it takes a thief to catch a thief, perhaps it takes a schemer to foil a scheme.

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