ChatGPT Is Getting Ads. That Tells You Everything You Need to Know.

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“I kind of think of ads as a last resort for us as a business model.”

That was Sam Altman in late 2024, barely a year ago. This week, that last resort arrived.

OpenAI has officially announced that ChatGPT will begin running ads. They will appear only on the free tier and the lowest paid tier, labeled clearly as sponsored, triggered only when “relevant” to user prompts. Higher-priced subscriptions will remain ad-free, for now.

If you have followed OpenAI’s trajectory closely, this was not shocking. It was inevitable.

Just days before the announcement, an essay by Sebastian Mallaby in the New York Times laid out the math bluntly. OpenAI, he argued, is burning cash at a pace that could exhaust even its historic funding within 18 months. As early as 2027.

The numbers support the concern. In 2025 alone, OpenAI reportedly spent roughly $8 billion, without posting a profit. Even with Sam Altman’s record-breaking fundraising ability, the economics of training and running frontier models are brutal. Compute costs do not scale gently. They compound.

So ads were never really a philosophical question. They were a balance sheet question. And history suggests how this story usually ends.

Every major consumer tech platform has followed the same arc.

First, be magical for users. Then, use that goodwill to crush competitors. Once users are locked in, pivot toward monetizing business customers. Ads multiply. Quality erodes. The experience worsens. This pattern has a name: enshittification, a term coined by journalist and tech critic Cory Doctorow.

Facebook. Instagram. Amazon. YouTube. Streaming platforms. The playbook barely changes. What makes AI different is not the strategy. It is the dependency.

Until now, interactions with ChatGPT rested on a quiet but powerful assumption: answers were not influenced by sponsors.

If you asked for restaurant recommendations, the model synthesized reviews, blogs, forums, and public critique. Messy, imperfect, but largely organic. The user trusted that OpenAI had no incentive to push one option over another.

Ads fracture that trust.

Even if OpenAI insists that ads will not influence responses, the mere presence of sponsored placements changes the psychological contract. The user now has to ask a new question alongside their prompt: Is this here because it’s good, or because someone paid?

Once that doubt creeps in, it is very hard to remove.

ChatGPT is a superpower if you know how to use it correctly.

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This is where Google’s strategy becomes interesting. Google has publicly stated that it will not place ads inside Gemini, at least for now. Dan Taylor, Google’s vice president of global ads, has said ads do not fit Gemini’s role as an AI assistant focused on helping users create, analyze, and complete tasks.

This is not altruism. It is positioning.

Google can afford patience. Its core businesses generate roughly $30 billion in profit every quarter. Gemini does not need to pay for itself tomorrow. ChatGPT does.

Distribution also works in Google’s favor. Gemini is embedded across search, Workspace, Android, and AI overviews. You do not seek it out. You encounter it. ChatGPT, by contrast, lives and dies by direct engagement.

According to data from Similarweb, ChatGPT saw a 22% drop in average daily visits between December and January. Even after the decline, ChatGPT still pulls around 160 million daily visits, far ahead of Gemini’s 55 to 60 million. But the direction matters more than the absolute.

Gemini has cushion. ChatGPT has pressure.

That pressure reportedly triggered a “code red” memo inside OpenAI late last year, as competition intensified and Google’s latest Gemini models began outperforming OpenAI on multiple benchmarks. Google’s image generator, nicknamed Nano Banana, further accelerated user adoption.

OpenAI responded by delaying other products and focusing obsessively on improving ChatGPT’s day-to-day experience and personalization. Which brings us to the paradox.

ChatGPT needs to improve fast enough to lock in users. ChatGPT also needs to monetize fast enough to survive. Those goals increasingly conflict.

Out of roughly 800 million users, only a small fraction pay. Ads are the most obvious lever. But ads risk degrading the very experience that made ChatGPT indispensable.

Altman insists this will be different. In a post following the announcement, he said OpenAI would not accept money to influence answers, would not share conversations with advertisers, and would aim to make ads genuinely useful. He even cited Instagram as an example of ads helping him discover things he liked.

That may be sincere. It may also be optimistic.

The ads will not just appear on the free tier. They are also being introduced on the lowest paid tier, pushing users toward more expensive subscriptions to preserve quality. That is straight out of the enshittification playbook.

We have seen this movie before. Instagram’s feed. YouTube’s mid-rolls. Prime Video and Hotstar introducing ads on paid plans. Quality becomes a premium feature. Now imagine that logic applied to ChatGPT.

Every recommendation accompanied by sponsored alternatives. Every search subtly framed by commerce. Ads taking up screen real estate inside a conversational interface meant to feel neutral and helpful. Some early demo images already suggest the ads are intrusive.

There is another tension here that has not received enough attention. If ChatGPT’s organic answer suggests Product A, but the ad promotes Product B, the mismatch undermines advertiser value. If ads cannot influence answers, their effectiveness is unclear. If they do influence answers, trust collapses.

Neither outcome is ideal. Which is why ads are unlikely to be OpenAI’s long-term savior. They are a bridge, not a destination.

Mallaby’s essay ends on a sobering note. If OpenAI continues burning cash faster than it can convert users into revenue, it may not survive independently long enough to fulfill its promise. In that scenario, the most likely outcome is absorption.

By its longtime partner Microsoft. Or, more dramatically, by Google itself. Either would mark the end of OpenAI as a standalone consumer platform. ChatGPT would live on, but as a feature, not a frontier.

Ads are not the real story here. They are a symptom. They tell us that the economics of AI assistants are harder than the magic suggests, that trust is now being monetized, and that the race is entering its most dangerous phase.

ChatGPT is still extraordinary. But this week made one thing clear. The age of AI innocence is over.

Interested in learning more about AI? Check out our previous coverage here:

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Peeyush and Mohit

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