Spending on ChatGPT subscriptions stalls in Europe

But the deals keep coming for OpenAI

An advisory document from Deutsche Bank warns that growth in ChatGPT spending in Europe has stalled. It's only a section of the global market but it's the latest in a growing number of red flags on AI spending.

An advisory document for Deutsche Bank clients has warned that European spending on ChatGPT has stalled since May. The finding is based on anonymised financial data gathered from the UK, Germany, Italy, France and Spain by dbDataInsights, the Deutsche Bank Research Institute.

Key to the advisory is the critical challenge for OpenAI and its investors, namely that as the number of monthly users of the service grows, the numbers paying for it is not. Sam Altman announced last week that ChatGPT has hit the 800 million weekly user mark, an increase of 300 million since March. This sounds great until you realise that about 299 million of the extra users won't be paying, so every single one of the millions of queries they run, will be costing OpenAI money.

According to the Deutsche Bank Research the value of OpenAI subscriptions has flatlined since May. A similar slowdown occurred last year over the summer, but the trend picked up strongly in September. This year, that didn't happen.

For comparison, spending on AI subscriptions in the Deutsche Bank sample is almost half that of Spotify and a quarter as much as Netflix. Whilst spending on CHatGPT subscription would overtake that of spending on these services by May 2020 and February 2028 respectively based on its current trend, these findings cast doubt on whether that's going to be soon enough given the eye watering cost of the compute involved for the growing number of free users, and the vast scale of the money OpenAI has committed to spending in the next two years.

OpenAI said last month in a call to investors that it planned to spend $115 billion through to 2029, as it becomes the biggest customer on the planet for those renting space in vast datacentres filled with GPUs. The company projects $13bn in total revenue this year which is a tripling of last year revenues but still seems small when viewed in light of the $1tn spending commitments and deals announced over the last few weeks with Nvidia, AMD, Oracle and most recently Broadcom.

The IMF, Bank of England and JP Morgan CEO Jamie Dimon have all recently voiced concern about the sustainability of spending on AI, and the degree to which Big Tech is propping up the US economy. Tech growth has fuelled 80% of US stock market growth yesterday, and comments from Harvard economist Jason Furman reported yesterday indicate that if datacentres were removed from the growth calculations, the US economy would have grown by only 0.1% this year.