According to Gizmodo, a leaked internal memo from Monday shows OpenAI CEO Sam Altman has declared a “code red” at the company, refocusing all resources on improving ChatGPT and delaying other projects. This follows a “code orange” declared in October, when executives aimed to boost daily active users by 5% by year’s end. The new all-hands effort will delay work on previously announced AI agents for health and shopping, as well as a personal assistant called Pulse. It also pushes back advertising initiatives, which have been spotted in beta code for ChatGPT Search. The company is now targeting a release of a new reasoning model next week, which Altman claims beats the performance of Google’s praised Gemini 3 model.
OpenAI’s Panic Mode
Here’s the thing: declaring a “code red” is a massive admission. This isn’t just about competition; it’s about core product quality and user trust. They’ve been whipsawing for months. First, they tightened safety after backlash over harmful conversations. Then, in October, they said the “safer” chatbot wasn’t connecting and relaxed rules for more “personality” and adult content. Now, they’re hitting the panic button. It feels reactive, not strategic. The memo says the focus is on speed, reliability, personalization, and answering more questions. But that’s just table stakes now. When your CEO says you need to drop everything to make the basic product work better, it suggests the foundation might be shakier than anyone let on.
The Ads Question and Delayed Dreams
So what’s getting shelved? The big, futuristic stuff. AI agents that actually do things, like shop or manage health? Delayed. That’s a major shift from the grand assistant narrative they’ve been selling. And then there are the ads. Engineers found ad code in the Android app, specifically for ChatGPT Search. Nick Turley, head of ChatGPT, called Search a “big area of opportunity.” But now, that revenue play is on hold. Altman once called AI-plus-ads “uniquely unsettling,” but the company has clearly been toying with it. This delay tells me the “code red” is so severe that even potential revenue streams are less important than fixing the core experience. They can’t risk driving users away with ads if the product itself is struggling.
The New Model and The Google Fight
Now, the supposed savior: a new reasoning model next week. Altman is directly taking aim at Google’s Gemini 3, which got rave reviews last month. People like Marc Benioff said it outperforms ChatGPT “considerably.” That must sting. So OpenAI’s move is to rush out a counter-punch. But announcing it via a leaked crisis memo is… weird. It frames the new model as a defensive weapon, not an exciting innovation. The timing feels desperate. Can they really deliver a model that meaningfully beats Gemini on reasoning, speed, and reliability in this frantic scramble? I’m skeptical. This feels like a move to stop user defection and generate headlines, buying time for the deeper “code red” fixes.
What This Really Means
Basically, the AI chat gold rush is over. The phase of explosive growth and wow-factor is done. We’re now in the brutal, gritty phase of product execution, retention, and monetization. And OpenAI is showing the strain. Delaying agents and ads means their roadmap is in disarray. Their entire strategy is being re-written in real time because of competitive pressure and quality issues. The beneficiaries? Probably Google and other rivals, who get more breathing room. And maybe users, if this forced focus actually leads to a better, faster, more reliable ChatGPT. But the big takeaway is that even the market leader is fragile. When a “code red” memo leaks, it’s not just a plan. It’s a confession.
