What Is ChatGPT, and How Does It Make Money?

ChatGPT, the free chatbot released in November 2022 by artificial intelligence (AI) research company OpenAI, has taken the internet by storm. In its first months of existence, ChatGPT inspired users to imagine a host of use cases for the model, including using ChatGPT to negotiate parking tickets, make workout plans, and even create bedtime stories for children. Some artificial intelligence experts believe that ChatGPT could revolutionize both the way that humans interact with chatbots and AI more broadly.

Below, we explore this new technology and how it is poised to begin making money.

What Is ChatGPT?

Put simply, ChatGPT is an AI model that engages in conversational dialogue. It is an example of a chatbot, akin to the automated chat services found on some companies’ customer service websites. It was developed by OpenAI, a tech research company dedicated to ensuring that artificial intelligence benefits all of humanity. The “GPT” in ChatGPT refers to “Generative Pre-training Transformer,” referring to the way that ChatGPT processes language.

What sets ChatGPT apart from chatbots over the last several decades, however, is that ChatGPT was trained using reinforcement learning from human feedback (RLHF). RLHF involves the use of human AI trainers and reward models to develop ChatGPT into a bot capable of challenging incorrect assumptions, answering follow-up questions, and admitting mistakes.

To put ChatGPT to the test, Investopedia asked it to “write a journalistic-style article explaining what ChatGPT is.” The bot responded that it was “designed to generate human-like text based on a given prompt or conversation.” It added that, because it is trained on a data set of human conversations, it can understand context and intent and is able to have more natural, intuitive conversations.

In its response to our prompt, ChatGPT said that its applications could include customer service bots, creation of content for social media or blogs, and translation of text from one language to another.

How Does ChatGPT Make Money

OpenAI, the company that created ChatGPT, has not yet monetized ChatGPT on a wide scale. A free version of ChatGPT remains available on OpenAI's website as of Feb. 23, 2023. However, the company does sell the application programming interface on a subscription basis to organizations looking to use the model for their own purposes, according to Investopedia’s query to ChatGPT itself.

On Feb. 1, 2023, OpenAI announced that it would launch a pilot version of a paid subscription plan called ChatGPT Plus for $20 per month. Subscribers will receive benefits including access to ChatGPT during peak times, faster response times, and priority access for new improvements and features. The company said this paid plan is available in the U.S. and that users will be invited from a waitlist "over the coming weeks." OpenAI will expand access to additional parts of the world over time.

The viral success of ChatGPT could be worth a huge amount to OpenAI, which was co-founded by Elon Musk. Within a week of its launch, the model had gained one million users. And two months after ChatGPT was released, OpenAI raised the possibility of selling existing shares in a tender offer that would place the value of the company at about $29 billion, making it among the most valuable startups.

Benefits of ChatGPT

As mentioned, there are numerous potential uses for ChatGPT. They range from more direct, chatbot-type functions to much more obscure applications, and it is likely that users will explore a host of other possible ways to utilize this technology in the future, including in search engines.

While chatbots have existed for many years, ChatGPT is viewed as a significant improvement on the intelligibility, fluidity, and thoroughness of prior models. One demonstration of the sophistication of ChatGPT provided by OpenAI includes a prompt that was designed to trick the bot: asking about when Christopher Columbus (supposedly) came to the United States in 2015. ChatGPT’s response easily avoided the trap, clarifying that while Columbus did not come to the U.S. in 2015, it can posit some of the ways he may have reacted to his visit if he had.

Disadvantages of ChatGPT

OpenAI lists some of the limitations of ChatGPT as it currently exists in its presentation of the model. These include that ChatGPT sometimes writes coherent but incorrect statements, that it makes assumptions about ambiguous queries, and that the model tends to be excessively verbose, among similar concerns.

In the first weeks of its public release, ChatGPT made headlines for its alleged use among students in creating AI-written papers and assignments. Concerns about the misuse of ChatGPT for academic cheating grew large enough that a computer science student at Princeton University created an app designed to identify and expose writing created by the bot.

For some, ChatGPT poses additional and more serious risks. For instance, some analysts have predicted that the bot could be used to make malware and phishing attacks more sophisticated, or that hackers may utilize the technology to develop their own AI models that may be less well-controlled. As concerns about misinformation have proliferated, some are especially sensitive to the possibility that ChatGPT could be used to create and share convincing but misleading material of a political nature.

Recent Developments

In January 2023, Microsoft Corp. (MSFT) announced it would invest $10 billion in ChatGPT creator OpenAI. The tech giant could use the technology undergirding ChatGPT to allow other companies to create their own customized chatbots. ChatGPT could also help to revitalize Microsoft's Bing search engine. Tech companies are focused on the use of ChatGPT and similar advanced chatbots as a replacement for traditional search models, with one vision for the future of chatbots holding that they will be able to provide a single definitive response to a search prompt, rather than a large list of links to websites.

Microsoft's move toward ChatGPT-based search is one threat to Alphabet Inc.'s (GOOG) $149-billion Google search engine. Alphabet executives have reportedly responded to news of ChatGPT and its potential to upend the process of searching for information online by issuing a "code red" and redirecting resources toward AI development. Google is expected to unveil close to two dozen new AI-based products in 2023.

Google is also launching its own chatbot to directly rival ChatGPT. Called Bard, the company's chatbot utilizes its preexisting large language model Lamda.

Microsoft has moved quickly to begin integrating ChatGPT into its offerings. On Feb. 1, the company announced a premium version of its Teams service that is powered by the chatbot. The service will be available for $7 per month in June and for $10 per month starting in July. The upgraded version of Teams will use ChatGPT to generate meeting notes, create templates, and recommend tasks.

The Bottom Line

ChatGPT is a powerful AI bot that engages in human-like dialogue based on a prompt. It is designed to respond in a natural, intuitive way and has numerous potential uses. The bot gained viral attention shortly after its release in November 2022 and achieved 1 million users within a few days.

However, there are concerns about the potential misuse of the bot by hackers, spreaders of misinformation, and other bad actors.

OpenAI, the maker of ChatGPT, has announced a paid subscription plan for a premium version of the chatbot and is considering a tender offer to value the company at $29 billion.