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President Donald Trump signs a proclamation from the Oval Office at the White House.
by CORY SMITH | The National News Desk
(TNND) — An artificial intelligence price war between OpenAI and Anthropic might be brewing, with The Wall Street Journal reporting that OpenAI, the maker of ChatGPT, is considering "drastic" price cuts for business clients.
The report cited unnamed people familiar with the matter and said OpenAI was expecting Anthropic to cut its prices, too.
The Journal recently reported that companies using AI are feeling the strain on their budgets and are looking for ways to pull back their AI usage or to use the powerful new technology with more purpose and efficiency.
OpenAI CEO Sam Altman acknowledged the cost concerns he’s hearing from customers, with some corporate users blowing through their annual AI budgets in a fraction of their fiscal years.
“That went from, at the beginning of this year, an issue that never came up, people were totally happy with the amount they were spending, to all of a sudden a huge issue,” Altman said during an “Intelligence at Work” event earlier this month.
Altman said OpenAI is working on ways to offer business customers “more value for less spend.”
The possible price cuts relate to enterprise offerings from OpenAI. These are AI tools used by client companies with the intent of making their own products, services or workflows better or more efficient.
The possible price cuts, which the Journal framed as “significant” in scope, don’t appear likely to affect the flat monthly fees individual users pay for upgraded versions of ChatGPT.
The cuts would apply to the cost of AI tokens used by OpenAI business clients.
Many of OpenAI's enterprise customers pay based on token usage, meaning their costs rise the more employees put in prompts and get responses. It’s similar to how utility customers pay for the amount of electricity or water they use.
“The best way to describe it is just the measure of computational resources required to perform an operation in a large language model,” said Anton Dahbura, an AI expert and the co-director of the Johns Hopkins Institute for Assured Autonomy.
OpenAI said at the recent event that is serves 2 million business customers.
And Altman said that the company’s top token consumer uses about 100 billion a month – a rapid rise from about 100,000 a month for the token leader just around six years ago.
“Let's not forget that this is still early-stage technology, even though it's being deployed and adopted on a grand scale,” Dahbura said.
Companies are experimenting with different applications of AI, evaluating costs, and determining where the technology delivers the greatest value, Dahbura said.
He described it as a "settling-in” phase that’s approaching a “chaotic period,” where early adopters respond to what’s worked and what hasn’t.
“And so, there are large-scale adjustments, especially as companies are looking at their bills for using the technology,” Dahbura said.
The Journal reported that some companies are seeing their AI bills double or triple as they get a handle on their usage.
Brookings Metro senior fellow Mark Muro, an expert in the digital economy, questioned what price cuts would mean for OpenAI and Anthropic as both tech firms look to go public.
“With their gargantuan spending on development, training, and data centers, soft pricing and a possible price war raises new questions about their ability to monetize,” Muro said via email. “And yet a potential price war points to deeper problems: Do these companies have moats? Aren’t they essentially selling the same product? I think that’s a fundamental question as the companies power forward. That the products are interchangeable and easily switched makes them more like social media apps, and so susceptible to brutal competition at a time they are needing to continue spending.”
Dahbura said he wouldn’t expect a price war to slow AI development or adoption.
He said business demand remains strong, and investor capital, not customer revenue, remains the major driver of growth for the AI developers.
“Where there's a legitimate business case, I think that that progression will happen anyway,” Dahbura said.
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