OpenAI CEO Sam Altman declared a “code red” at the company in an effort to defend its market position against growing AI competition, particularly from Google.
Altman told employees that OpenAI must immediately shift resources to improve the quality, speed, and reliability of ChatGPT, according to internal memos reviewed by The Wall Street Journal and The Information.
This directive comes on the heels of Google’s November release of Gemini 3, which recently surpassed OpenAI models on key industry benchmarks and helped drive Gemini’s usage to 650 million monthly active users.
To understand what this means for the AI race, I spoke with SmarterX and Marketing AI Institute founder and CEO Paul Roetzer on Episode 184 of The Artificial Intelligence Show.
An Emergency Pivot
The “code red” signals immediate operational changes at OpenAI.
Reports indicate that the company is delaying several initiatives, including its advertising efforts, shopping and health agents, and a personalized assistant feature called Pulse, to focus on its flagship ChatGPT experience.
The company’s aim is to improve its speed, reliability, and personalization for its 800 million weekly users, OpenAI said. The company also is reportedly developing a new AI model codenamed, “garlic,” and possibly a separate new reasoning model scheduled for release as early as this week.
The irony isn’t lost on AI watchers. Three years ago, it was Google declaring a code red in response to the launch of ChatGPT.
Google’s Flex
For Roetzer, this moment was inevitable given Google’s fundamental advantages.
“I think more than anything it's Google flexing its muscles,” Roetzer says.
While OpenAI had the first-mover advantage with ChatGPT, Google has spent the last few years leveraging its massive infrastructure, including its TPU chips and data centers, to catch up.
“They have the capacity to do things at a much larger scale,” Roetzer says. “They have great models. Now they're winning at reasoning with Gemini 3. Their image generation editing model is better. Their video generation model is better. They have AI agents that are universal.
“They're just dominating, honestly.”
A big advantage for Google is its existing platforms and their enormous reach: It can deploy its updated AI instantly across billions of the company’s devices and touchpoints, including YouTube, Workspace and Android.
Financial Pressure Builds for OpenAI
Beyond the technology, OpenAI’s “code red” highlights a stark difference in business models.
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 a war chest of tens of billions of dollars,” Roetzer says of Google, “They have a lot of money to pour into this vs. OpenAI, which is doing these complex financial deals and has to keep raising massive amounts of money.”
While Google can afford to experiment and fail, OpenAI has to show constant 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,” says Roetzer. “They're just trying to do so many things, compete in so many different fields that I worry they're just getting too frayed in what they're trying to set out to do.”
A Renewed Focus
Altman’s memo suggests that OpenAI knows it has lost focus. By pausing ads and other projects, he’s attempting to streamline the company’s efforts.
Roetzer questions if it will be enough, though, especially as competitors such as Anthropic begin to find their stride with a more focused approach on safety and coding capabilities.
Roetzer notes that the current dynamics make OpenAI a riskier bet than its rivals right now.
“I'm probably really hesitant on OpenAI at the moment, honestly,” Roetzer says. “I think the risk profile for OpenAI is very, very high.”
Is the Leaderboard Reshuffling?
All of this shakeup means that we are entering a new phase of the AI arms race.
For years, OpenAI was the undisputed leader, setting the pace that everyone else had to follow. But as we head into 2026, Google has effectively leveraged its resources to level the playing field and potentially take the lead.
OpenAI’s “code red” is an acknowledgement they need to refocus and fight back the competition. That’s a tough task as one of the companies they're beating back, Google, has deep pockets, better infrastructure, and renewed momentum.
“It’s starting to become very apparent the power of all of those pieces,’’ Roetzer says.
Mike Kaput
As Chief Content Officer, Mike Kaput uses content marketing, marketing strategy, and marketing technology to grow and scale traffic, leads, and revenue for Marketing AI Institute. Mike is the co-author of Marketing Artificial Intelligence: AI, Marketing and the Future of Business (Matt Holt Books, 2022). See Mike's full bio.