OpenAI’s Individual Consumers Driving Revenue Growth, Good news and bad news for Google…Google’s Cloud Growth Signals Good News for Amazon and Microsoft, European Court Upholds €2.4 Billion Fine Against Google in Landmark Case and Reddit Credits AI For First Profit In Its History
Welcome to Hashtag Trending. I’m your host, Jim Love. Let’s get into it.
OpenAI’s Individual Consumers Driving Revenue Growth
OpenAI’s Chief Financial Officer Sarah Friar expressed some surprise at the rapid growth in sales to individual consumers, which has significantly contributed to the company’s revenue. In a recent interview, Friar revealed that ChatGPT has 250 million active weekly users, with an unexpectedly large portion of revenue coming from individual consumer subscriptions rather than enterprises.
Friar highlighted the impressive growth in consumer adoption, noting that OpenAI is successfully converting 5% to 6% of its free users into paying subscribers.
OpenAI’s enterprise offerings remain robust, with one million paid users for its enterprise and team versions. She gave the example of financial planners who are using OpenAI’s large language models to enhance client services, creating better financial advice and outcomes. She noted that other industries, such as education and healthcare, are also major users of OpenAI’s technology.
Friar also hinted at a surprising potential shift in OpenAI’s business model, including adding advertisements alongside the current subscription-based offerings. She provided an example where ads could complement user queries, such as providing store locations when searching for specific products. However, she acknowledged that ads may not always be appropriate depending on the user’s activity.
Regarding pricing, Friar indicated that OpenAI is looking at pricing models, and aims to ensure that its pricing reflects the value users receive, while also making it accessible for newcomers. She gave the example of the “o1” version of the GPT model that provides specialized services comparable to human paralegals but at a fraction of the cost.
Friar also touched on artificial general intelligence (AGI), noting, “You have in your pocket human intelligence that is PhD level.” She suggested that CEO Sam Altman would be more optimistic about when AGI might be achieved, pointing to recent internal developments that combine different AI models to provide sophisticated, human-like intelligence in users’ devices.
Google’s Cloud Growth Signals Good News for Amazon and Microsoft
Google-parent Alphabet’s impressive cloud sales growth in the July-September quarter is a positive sign not only for Google but also for other major cloud players like Microsoft and Amazon. As overall cloud growth has shown signs of slowing, Google’s 35% surge in Google Cloud revenue—the fastest pace in eight quarters—suggests that demand for AI-driven cloud services remains strong.
The unexpected jump in Google’s cloud business is especially encouraging for Amazon Web Services (AWS) and Microsoft’s Azure, which are set to report their results soon. According to Angelo Zino, senior equity analyst at CFRA Research, Google is likely to have the best cloud growth numbers among the big three this quarter. Despite being the smallest of the three cloud providers, Google’s strong growth reflects a growing appetite for AI-powered cloud computing across industries.
Google Cloud’s success is largely fueled by its AI capabilities, such as its custom Tensor Processing Units and the integration of AI tools like the generative chatbot Gemini. These advancements have helped differentiate Google from Azure and AWS, attracting customers seeking powerful AI tools for a range of applications—from cybersecurity to AI-driven code generation. Analysts like Bob O’Donnell from TECHnalysis Research note that Google’s focus on AI has made it a compelling choice for enterprises looking to harness the potential of AI in their operations.
This is the fourth consecutive quarter of growth acceleration for Google Cloud, and analysts see it as an indication of broader market dynamics. Google has been heavily investing in its cloud infrastructure, including global data centers, and integrating AI into its offerings. These efforts are paying off, with customers increasing their spending on AI services like Vertex AI, which allows businesses to use Google’s models or develop their own. The growth suggests that the cloud market, driven by AI needs, continues to have untapped potential that benefits not only Google but also other cloud giants.
Gil Luria, head of technology research at D.A. Davidson, highlighted that Google’s cloud performance exceeded expectations, demonstrating how effectively the company has translated its AI advancements into revenue growth. And this unexpected boost in cloud growth is good news for the overall industry, implying that companies like Amazon and Microsoft could also benefit from increased demand for AI-enhanced cloud services.
European Court Upholds €2.4 Billion Fine Against Google in Landmark Case
But Google got some bad news relating to a british couple’s 15-year legal battle against Google’s search practices. Europe’s highest court upholding a €2.4 billion fine against Google. This decision marks a significant victory for small businesses fighting anti-competitive behavior in the digital marketplace.
The case began when Shivaun and Adam Raff, founders of the price comparison website Foundem, saw their site pushed deep into Google’s search results by the company’s automated spam filters on its launch day in 2006. Despite receiving industry recognition, Foundem struggled to regain visibility, leading the Raffs to take their complaint to regulators. In 2010, a European Commission investigation revealed that Google had been promoting its own comparison shopping service while demoting competitors, leading to the initial fine in 2017.
After years of appeals, the European Court of Justice upheld the fine in September 2024, rejecting Google’s final attempt to overturn the ruling. This victory for the Raffs validates the challenges small businesses face when competing against large tech companies. Despite Foundem’s closure in 2016, the ruling has already influenced new digital marketplace regulations, including the EU’s Digital Markets Act.
Google maintains that it has complied with the European Commission’s requirements since 2017, stating that the changes have successfully generated billions of clicks for over 800 comparison shopping services. However, the September 2024 ruling and a newly launched investigation under the Digital Markets Act suggest that Google’s practices will continue to face scrutiny.
While the outcome came too late to save Foundem, the Raffs are now pursuing a civil damages claim against Google, scheduled for 2026. This ruling not only underscores the regulatory oversight of Google’s search practices but also sets a lasting precedent that may help level the playing field for smaller players in the digital economy.
Reddit Credits AI For First Profit In Its History
And Reddit has reported its first-ever profit, marking a major milestone for the social media platform. The company posted a $29.9 million profit for the third quarter, alongside $348.4 million in revenue—a 68% increase year over year.
Daily users on Reddit grew by 47% over the past year, reaching 97.2 million, with the platform surpassing 100 million users on some days during the quarter. Advertising revenue was a key contributor, growing to $315.1 million, while data licensing deals with companies like Google and OpenAI also helped boost earnings.
CEO Steve Huffman credited the rise in users to Reddit’s AI-powered translation feature, which now supports multiple languages and plans to expand further. Huffman emphasized Reddit’s influence, highlighting that it was the sixth most Googled term in the U.S. this year.
And that’s our show for today.
Reach me at editorial@technewsday.ca
I’m your host Jim Love, have a Thrilling Thursday.
