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What does OpenAI do?

OpenAI is the most popular provider of generative AI models like GPT-4.

ai

Last updated: July 4, 2025

The TL;DR

OpenAI researches and builds Machine Learning models, and sells access to them.

  • Building ML models yourself to use day in and day out is really hard for companies without specialized expertise
  • For years, big companies (Google, AWS, etc.), and smaller startups too, have built businesses on selling access to their home grown models
  • OpenAI does the same: researches, builds, and sells access to powerful ML models like GPT and DALL-E
  • The company is a bit strange: they’re a combination of a non-profit and for-profit corporation

OpenAI has obviously been all over the news over the past few years, and is probably one of the most important companies in the world right now.

Terms Mentioned

Companies Mentioned

AWS logo

AWS

$AMZN
Algolia logo

Algolia

$PRIVATE

The core OpenAI product: selling model access

While OpenAI is a unique case study of a company, what most people forget (or don’t know) is that their business model is not particularly novel. Companies have been selling access to ML models for a while (probably 5+ years?), ranging from your typical big company stuff to smaller, more specialized startups.

When you buy an ML model, you’re not really getting the model itself – the provider needs to keep that proprietary so they can (a) make money on it, and (b) continually improve it. What you’re really getting is access to that model, usually via an API interface.

So with that in mind, OpenAI sells ML models, just like Google, or Algolia, or AssemblyAI, or any other number of startups in this space. Very simple! The main difference (outside of the research thing – see below) is that OpenAI’s models are really, really good.

The most popular OpenAI model is their GPT series, which you’ve probably heard of via ChatGPT. GPT is a text generation model – you give it a prompt, and it gives you back a sentence, paragraph, essay, whatever you ask for. The most recent version is GPT-4o, released a few months back.

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The business of wheeling and dealing ML models

While OpenAI is a unique case study of a company, what most people forget (or don’t know) is that their business model is not particularly novel. Companies have been selling access to ML models for a while (probably 5+ years?), ranging from your typical big company stuff to smaller, more specialized startups.

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