Introduction to AI Competition
According to media reports, OpenAI plans to unveil a new artificial intelligence reasoning model that reportedly outperforms Google’s newest and most advanced family of AI models, Gemini 3. Online tech magazine cites industry insiders who claim that the launch is intended to counteract Google’s recent advances in cutting-edge thinking, deep multimodal understanding of text, images, and videos, and Gemini 3’s powerful coding capabilities.
Google’s Gemini 3
Google’s parent company Alphabet introduced Gemini 3 in November and boasted benchmark results that beat OpenAI’s flagship model, ChatGPT, in key categories. The result shook OpenAI, which has been considered an industry frontrunner since ChatGPT’s debut in 2022, changing public consciousness about generative AI and briefly upsetting competitors. Now OpenAI’s lead is no longer secure.
A “Code Red” Moment for OpenAI
The response within OpenAI was urgent: CEO Sam Altman reportedly declared a "code red" in an internal message, instructing teams to focus on improving the quality of ChatGPT and delaying other products as a result. According to Altman, ChatGPT attracts more than 800 million users weekly. But Alphabet can deploy Gemini, its most profitable product, directly into Google Search.
Competition and Revenue
While Google generates revenue across a broad portfolio of activities, OpenAI needs to monetize its AI models directly. It is currently based on premium ChatGPT subscriptions and enterprise licenses. Microsoft, a major shareholder, also pays to embed OpenAI technology into its products. Still, Altman has acknowledged that the company is not yet profitable. OpenAI does not publish financial data, but investors were told over the summer that 2030 could be the first profitable year for OpenAI.
Massive AI Investment Needs
Training and operating state-of-the-art AI systems requires huge expenditures on data center capacity. Google plans to invest up to $93 billion in AI this year alone, with “significant increases” planned in the coming years. Parent company Alphabet’s revenue topped $100 billion in the fourth quarter, largely driven by advertising and growing cloud demand. Google also has an advantage in hardware, as its proprietary AI chips support model training in the company’s own data centers, avoiding the need to purchase more expensive semiconductors from AI chip leader Nvidia.
The Competition Goes Beyond Big Tech
The race for AI leadership is now no longer limited to the two contenders from Silicon Valley. Competition has increased significantly since 2022, with strong challengers for the best model like Anthropic alongside incumbents like Google. Open source models from the USA, China, and Europe – including from the European startup Mistral – are also gaining in importance. These systems are smaller and cheaper than OpenAI’s offerings and are designed for targeted applications rather than broad functionality.
Global AI Market
China’s AI companies are also making progress. In September, search engine provider Baidu unveiled its DeepSeek model, claiming performance comparable to ChatGPT-5 and Google’s Gemini 2.5 Pro. Analysts say the country is again using aggressive pricing strategies to undermine competition in foreign markets – a tactic previously used in solar, steel, and electric vehicles. Nvidia CEO Jensen Huang warned in November that China was “nanoseconds behind America in AI.”
Future of AI
The formation of a divergent ecosystem across the industry is expected as the market splits between “smaller, customizable open source models that are cheap to run and the large, sophisticated proprietary models.” Still, analysts don’t expect a winner-takes-all outcome. The more artificial intelligence becomes available, the more user applications will emerge.
