OpenAI CEO Sam Altman announced “code Red” The company is attempting to protect its market position against growing AI competition, particularly from Google.
Altman told staff that OpenAI should immediately shift resources to improving the quality, speed and reliability of ChatGPT, as reviewed by an internal memo. wall street journal And Information,
This instruction comes as per Google’s Gemini 3 will be released in Novemberwhich recently outperformed OpenAI models on key industry benchmarks and helped push Gemini usage to 650 million monthly active users.
To understand what this means for the AI race, I spoke to Paul Roetzer, founder and CEO of SmarterX and the Marketing AI Institute. Episode 184 of Artificial Intelligence Show,
an emergency pivot
“Code Red” signals immediate operational changes to OpenAI.
Reports indicate that the company is delaying several initiatives, including its advertising efforts, shopping and health agents, and a personal assistant feature called Pulse, to focus on its flagship ChatGPAT experience.
OpenAI said the company aims to improve its speed, reliability and personalization for its 800 million weekly users. The company is also reportedly developing a new AI model codenamed “Garlic” and possibly a separate new reasoning model set to be released as early as this week.
AI watchers don’t miss this irony. Three years ago, Google declared a Code Red in response to the launch of ChatGPT.
google flex
For Roetzer, this moment was inevitable given Google’s fundamental advantages.
“I think more than anything, Google is flexing its muscles,” Roetzer says.
While OpenAI got the first advantage with ChatGPT, Google has taken advantage of its massive infrastructure, including its TPU chips and data centers, over the past few years.
“They have the ability to operate on a very large scale,” Roetzer says. “They have great models. Now they’re winning the argument with Gemini 3. Their image generation editing model is better. Their video generation model is better. They have AI agents that are universal.
“Honestly, they’re just dominating.”
A big advantage for Google is its existing platforms and their vast reach: It can quickly deploy its updated AI across the company’s billions of devices and touchpoints, including YouTube, Workspace, and Android.
Financial pressure builds for OpenAI
Beyond the technology, OpenAI’s “Code Red” highlights a key gap in the business model.
Google is funding its massive AI build-out through existing, highly profitable core businesses. OpenAI, on the other hand, is burning cash to grow and survive.
“They have billions of dollars in reserves,” Roetzer says of Google. “They have a lot of money to put into this versus OpenAI, which is doing these complex financial deals and they have to keep raising huge amounts of money.”
While Google can afford to experiment and fail, OpenAI must show sustained growth to secure more funding or prepare for an IPO. This financial pressure is forcing OpenAI to make difficult choices.
“OpenAI is just scaring me,” Roetzer says. “They’re just trying to do so many things, competing in so many different areas that I worry they’re becoming too weak in what they’re trying to do.”
A renewed focus
Altman’s memo shows that OpenAI knows it has lost focus. By pausing commercials and other projects, he is attempting to streamline the company’s efforts.
However, Roetzer questions whether this will be enough, especially as competitors like Anthropic begin to find their footing with a more focused approach on security and coding capabilities.
Roetzer says the current dynamics make OpenAI a riskier bet than its rivals.
“To be honest, I’m probably really hesitant on OpenAI right now,” Roetzer says. “I think the risk profile for OpenAI is very, very high.”
Are the leaderboards being reshuffled?
All this change means we are entering a new phase of the AI arms race.
For years, OpenAI was the undisputed leader, setting the pace for everyone else to follow. But as we head towards 2026, Google has effectively leveraged its resources to level the playing field potentially lead,
OpenAI’s “Code Red” is an acknowledgment that they need to refocus and fight the competition. This is a tough task because one of the companies they are beating, Google, has deeper pockets, better infrastructure and new momentum.
“The power of all those pieces is starting to become very clear,” Roetzer says.
