# VC10X Pulse - CODE RED🚨 at OpenAI - Is this the beginning of the end for Chatgpt?

An episode of [VC10X - Investing, Venture Capital, Asset Management, Family Office, Wealth Management](https://invisiblenetwork.ai/podcast/1632806986), 4 Dec 2025, 5:07.

Audio: https://anchor.fm/s/a453ddd4/podcast/play/112119499/https%3A%2F%2Fd3ctxlq1ktw2nl.cloudfront.net%2Fstaging%2F2025-11-4%2F413724011-44100-2-18459df1b6207.mp3

Two years ago, Google declared a "Code Red" because of ChatGPT. Now, the tables have turned. On December 1st, 2025, Sam Altman sent a panic memo to OpenAI staff, declaring a "Code Red" to fix ChatGPT as traffic plunges for the first time in history. In this deep dive, we break down why OpenAI is suddenly losing the AI war to Google's Gemini and the viral "Nano Banana" tool. We analyze the 6% user drop that terrified Sam Altman, the massive $500 Billion valuation bubble that could burst, and why OpenAI's lack of a "moat" is finally catching up to them. KEY TAKEAWAYS ✅ Why ChatGPT traffic is down 6% in just two weeks ✅ The viral success of Google's "Nano Banana Pro" vs. OpenAI's expensive Sora ✅ The risk behind OpenAI's $500 Billion valuation and $20B ARR target ✅ Why top talent like Mira Murati is leaving OpenAI ✅ How Google's infrastructure advantage (TPUs, Data Centers) is finally winning TIMESTAMPS: (0:00) - Intro (0:51) - Why the sudden panic? (1:23) - Nano Banana Pro threat (1:39) - Google's infrastructure edge (2:01) - The burden of massive valuation (2:28) - Heavy reliance on consumer subscriptions (2:50) - Chaos in product roadmap (3:39) - Empire strikes back (4:21) - Is this the end for Chatgpt? SOURCES & DATA - SimilarWeb Traffic Data: ChatGPT down 6% daily active users - The Information: "Sam Altman Declares Code Red" - Valuation Data: OpenAI at $500B vs SpaceX at ~$200B SUBSCRIBE FOR MORE VC & STARTUP STRATEGY VC10X breaks down the most important stories in tech, startups, and investing every week. If you want actionable insights to help you build or invest in the next great company, subscribe now. LET'S CONNECT Website: https://VC10X.com X / Twitter: https://x.com/choubeysahab LinkedIn: https://linkedin.com/in/choubeysahab COMMENT BELOW Have you switched to Gemini or are you loyal to ChatGPT? Let us know in the comments. #OpenAI #ChatGPT #GoogleGemini #SamAltman #ArtificialIntelligence #TechNews #VentureCapital #CodeRed #StartupStrategy

## Transcript

[0:00] Two years ago, the launch of ChatGPT forced Google to declare
[0:03] a code raid. It was the moment Silicon Valley
[0:06] decided that Google was too slow, too old, and too boring to
[0:10] compete in the AIH. But on Monday, December 1st,
[0:14] 2025, the tables turned completely.
[0:17] Sam Mortman just sent a memo to Open AI Staff declaring his own
[0:20] code raid. He told employees that they are
[0:23] at a critical time and need to immediately improve ChatGPT
[0:27] because they are losing ground to rivals.
[0:30] This isn't just a motivational speech, it's a panic button.
[0:34] Traffic is down, top researchers are quitting, and for the first
[0:37] time in history, ChatGPT is no longer the undisputed king of
[0:41] AI. So is this the beginning of the
[0:43] end for Open AI, or is it just a bump in the road to $500
[0:47] billion? Let's find out.
[0:51] First, let's look at the numbers that scared Sam Ortman.
[0:55] According to data from similar web, in the two weeks since
[0:58] Google launched Gemini 3 and their new Widal 2 Nano Banana
[1:02] Pro, Chat GPTS traffic has taken a serious hit.
[1:06] Daily active users are down 6%. Now that might sound like a
[1:10] small number, but for a hyper growth company priced at
[1:13] perfection, a 6% drop is a disaster.
[1:17] It means users aren't just curious about the competition,
[1:20] they are switching. And the reason?
[1:23] It's not just about intelligence, it's about fun.
[1:26] Google's Nano Banana Pro has taken over the Internet.
[1:29] It's the widel consumer friendly creative tool that's driving
[1:33] millions of downloads. Meanwhile, Open the Eyes
[1:35] competitor Sora is still totaled and expensive to run.
[1:39] Google is using its massive infrastructure advantage to
[1:42] offer fun wire AI features for free, while Open AI is
[1:47] struggling to keep up with the compute cost.
[1:49] The result? Gemini is number one on the App
[1:52] Store and chat DVD is bleeding users.
[1:55] The traffic drop is terrifying because of 1 #500 billion
[1:59] dollars. Open AI recently hit a valuation
[2:02] of $500 billion, surpassing huge companies like SpaceX.
[2:07] But here is the trap. That valuation is built on the
[2:10] assumption that ChatGPT will be the Google of AI, the default
[2:14] tool that everyone uses. Open AI is currently burning
[2:17] about $8.5 billion a year. To survive, they need to hit $20
[2:22] billion in annual recording revenue by the end of this year.
[2:25] But unlike Microsoft or Google, Open AI relies heavily on
[2:29] consumer subscriptions that $20.00 a month you pay for
[2:32] ChatGPT. Plus, consumers are fickle.
[2:35] They have no loyalty if Gemini is free and better they cancel
[2:39] ChatGPT in a heartbeat. Open AI doesn't have an
[2:42] ecosystem like iOS or Android to lock you in.
[2:46] Their mode is shrinking every day.
[2:49] The panic inside Open AI is also causing chaos in the product
[2:52] road map. According to the Information,
[2:54] Sam Altman has delayed major initiatives like the advertising
[2:58] platform and the highly anticipated operator agent to
[3:02] focus entirely on fixing ChatGPT or making it the undisputed king
[3:06] it needs to be. This all handsome deck movement
[3:10] signals that the core product is broken or not up to the mark
[3:14] with a fierce competition that there is and it's hurting
[3:18] morale. We have already seen a massive
[3:21] brain drain this year at Open AI.
[3:23] Mira Murati, the former CTO, left to start her own company.
[3:27] Top researchers are defecting to Meta and Anthropic.
[3:30] When you declare code red, you are telling your smartest
[3:33] engineers that the ship is taking on water and we need to
[3:36] do something. What we are watching is the
[3:39] classic Empire Strikes Back moment.
[3:41] For two years, Google look like a dinosaur, but they spend their
[3:45] time building the ultimate weapon infrastructure.
[3:48] Google has its own chips, Dpus, they own the data centres, they
[3:52] own the distribution that is through Android and Chrome.
[3:56] This allows them to launch products like Gemini 3 and Nano
[3:58] Banana at a scale Open AI simply cannot afford.
[4:02] They can subsidise the cost of AI to win market share while
[4:05] Open AI has to charge you $20 to pay their server bills.
[4:09] The Code Red proves that Google strategy is working.
[4:13] They have successfully turned AI into a commodity war, a war
[4:17] where the guy with the biggest servers usually wins.
[4:21] So is this the end of ChatGPT? No, it's still the most famous
[4:25] AI brand in the world, and the one with the most users and also
[4:29] the one with the most to lose. But the era of open AI dominance
[4:33] seems to be over. They are no longer the only game
[4:37] in town. The next three months will
[4:39] determine if Open AI is the next Google or the next Myspace.
[4:44] The first mover who defined the category only to be crushed by a
[4:47] better, faster rival. Sam Alpen knows this.
[4:50] That's why he pushed the button. What do you think?
[4:53] Have you switched to Gemini or are you still sticking with Chat
[4:56] CPT? Let me know in the comments.
[4:59] We'll be back next week with another hot topic from the front
[5:02] lines of global investing, VC10X.

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