OpenAI discloses new momentum in ad business

Summary

CNBC's Kate Rooney reports that OpenAI's new advertising business reached a $1 billion annualized run rate less than 200 days after launch, up from about $100 million in March. OpenAI frames the ramp as proof of a diversified business model ahead of an IPO and a way to monetize its large ChatGPT user base. The report highlights potential competitive pressure on Google and Meta in digital advertising and also covers OpenAI cutting off coding startup Cursor amid the Altman-Musk feud.

• OpenAI's ad business hit a $1 billion annualized run rate under 200 days after launch, up from about $100 million in March.
• Ads are now available in more than 40 countries and expanding across India, Europe, the Middle East and Africa.
• OpenAI says the ad ramp shows a diversified business model ahead of an IPO and helps justify data center spending.
• The ad tier is a way to monetize 1 billion weekly active ChatGPT users via a free, ad-supported offering.
• Rooney notes OpenAI could become a real competitor with Google and Meta for digital ad dollars.
• Private-market investors are said to care more about OpenAI's stickier, higher-margin enterprise business.
• OpenAI cut off coding startup Cursor access, citing concerns that Elon Musk's companies won't abide by contract terms.