OpenAI CEO Sam Altman has issued a ‘code red’ warning for its employees after Google’s Gemini AI model overtook it in key areas. Two years after ChatGPT blindsided Google and forced the search giant into a ‘code red, the tables have now turned dramatically. Google’s Gemini 3, which is showing no interest in slowing down, has now triggered a panic internally at OpenAI, compelling Altman to ask employees to immediately halt work on new revenue-generating features and focus entirely on fixing ChatGPT’s performance issues.
The directive, which was first reported by The Wall Street Journal and The Information, mandates that OpenAI should redirect all resources away from developing advertising, AI shopping assistants, health agents, and its personal assistant (Pulse), all in a bid to keep up with Google.
Google’s ‘Full Stack’ advantage spells trouble for OpenAI
Google’s comeback in the AI race is attributed to a fundamental advantage that OpenAI currently lacks – full vertical integration. While OpenAI relies heavily on Microsoft’s Azure cloud infrastructure and expensive Nvidia chips, Google controls the ‘full stack,’ giving it an edge in cost and deployment.
DeepMind builds the models and uses proprietary TPU chips (Tensor Processing Units) to train them cost-effectively. Google Cloud hosts the setup efficiently, and the models are seamlessly delivered across Google Search, YouTube, Gmail, and 3 billion Android devices.
Google’s user base for Gemini has skyrocketed, and web analytics show that users are now spending more time interacting with Gemini than ChatGPT, thanks to easy availability and viral trends like the Nano Banana image generation. Furthermore, industry benchmarks indicate that the Gemini 3 model is now outperforming OpenAI’s flagship GPT-5 model, thus handing it an advantage.
To add to OpenAI’s woes is the competition. OpenAI is also being squeezed by competitors, as Anthropic’s Opus 4.5 model has reportedly beaten GPT-5 in key tests, further affecting OpenAI’s lead.
OpenAI is looking at financial pressures
Due to the harsh financial realities, the company needs to achieve massive growth by burning billions of dollars quarterly on computing costs, just to reach profitability targets of approximately $200 billion in annual revenue by 2030. In contrast, Google, which commands $120 billion in annual revenue, can afford to offer advanced models for free, thus undercutting OpenAI’s monetisation strategy.
Google’s custom silicon chip is also affecting the AI supply chain globally. Nvidia’s stock plummeted after reports came out, revealing that Facebook parent Meta Platforms is in advanced talks to purchase billions of dollars’ worth of Google’s TPU chips instead of Nvidia’s standard GPUs. Meta is a major customer of both OpenAI and Nvidia, and this development threatens to wipe out a major portion of the chipmaker’s revenue.
Altman, however, told his employees that OpenAI is releasing a new reasoning model next week, and performance-wise, it should surpass Gemini 3.
