OpenAI Turmoil Pushes Customers to Diversify

Executives at companies that use OpenAI’s software say they are increasingly looking to also use others’ technology to protect themselves from the risks of problems at any one. OpenAI’s competitors are using the opportunity to sign up wary customers.

After the November board coup that saw OpenAI Chief Executive Sam Altman removed and then reinstated, senior leaders at Walmart met to remind some internal tech team members that they shouldn’t go directly to OpenAI to build AI tools. Instead, they needed to stick with Walmart’s internally developed platform, which can swap in various AI models—including OpenAI’s—to make sure Walmart’s AI software won’t go down, according to a person familiar with the matter.

A Walmart spokeswoman said the company’s focus has always been on developing generative-AI tools that are compatible with many large language models.

Other companies worked quickly to make sure they were sheltered from potential fallout. Doug Merritt, the CEO of cloud networking company Aviatrix, was at a private event with former OpenAI board member Reid Hoffman when the Altman news came out.

Merritt immediately checked with his tech teams that his company’s AI tools weren’t OpenAI-dependent. Although his company uses OpenAI’s tech for some features, it also relies on other companies’ models.

“We’re still using ChatGPT,” Merritt said. “But I feel more comfortable that we haven’t proprietarily tied ourselves to it.”

OpenAI’s operating chief, Brad Lightcap, said in a statement that the company has “deep respect for the unique needs and aspirations of each customer.”

A company spokeswoman pointed to a blog post in November announcing Altman’s return as CEO, saying the company didn’t lose any customers during the period of management chaos.

Companies aren’t outright dropping their deals with OpenAI. But even moving some of their future work to competitors could start to erode OpenAI’s dominance as rivals—from Google and other giants to fellow startups such as Anthropic—are working to take away some of its momentum.

The problems at OpenAI “exposed an underlying concern that one choice isn’t sufficient in most use cases,” said Manyam Mallela, a co-founder of Blueshift, which sells AI marketing software that uses several types of AI.

Mallela said his company received calls in the days following the Altman-OpenAI board saga from concerned Blueshift clients. He told them that his company’s software allows them to switch between OpenAI and models developed by Amazon.com’s Amazon Web Services if they need AI backup.

“Not having access to that is almost like not having power,” he said.

The pressing need to consider backup reinforced a trend that had been playing out in recent months. Companies have been seeking to license AI software from several vendors and start using software that is cheaper and more task-specific than the powerful—and relatively expensive—tools from OpenAI.

OpenAI’s competitors were quick to pounce on the company’s shakiness. Amazon, whose cloud-computing business competes with OpenAI’s largest backer and exclusive cloud provider Microsoft, took a veiled swipe at both parties during its annual convention in Las Vegas in November.

Amazon Web Services CEO Adam Selipsky highlighted that his company provides access to several AI models, including ones made by OpenAI competitors Anthropic and Cohere as well as free, open-source software made by Meta Platforms called Llama 2.

“You don’t want a cloud provider who’s beholden primarily to one model provider,” Selipsky said at the convention, with the giant words “Choice Matters” projected behind him. “I think the events of the past 10 days have made that very clear,” he said of the turmoil at OpenAI.

Analysts and investors have seen AWS as a latecomer to the generative AI race. It introduced its new AI chatbot, aimed at businesses, at the convention a year after OpenAI’s ChatGPT.

Other competitors say there has been an uptick in outreach from clients who are already using OpenAI.

“The spike in enterprise inquiries after the recent events was obvious,” said Martin Kon, president of AI startup Cohere. “No one wants to be locked into one AI provider or cloud—especially now.”

OpenAI’s stumbles came at a time when its perch as the top model on the market was beginning to look more vulnerable.

By some metrics, the technology gap between OpenAI’s tech and its competitors might be shrinking.

When Google in December gave a public preview of its new generative AI model Gemini, the company said its technology would be less expensive and would outperform OpenAI’s for some tasks.

OpenAI isn’t standing still. The company is working on its next model, and Altman posted on X that OpenAI planned to have “remarkable progress to share in 2024.”

Companies have concluded that less-sophisticated models that are less creative than OpenAI’s are a better fit for some jobs.

Some tech workers who have used GPT-4 say that for generating technical instructions such as user manuals, models like Anthropic’s Claude 2 worked better. OpenAI’s tech wrote instructions that needed a lot of editing because they were too flowery, they said.

Microsoft has been expanding its offerings beyond OpenAI. While the startup has an exclusive arrangement with Microsoft to host and train its technology, the software giant also has been working with Meta and Cohere to offer their software on its cloud.

Microsoft CEO Satya Nadella, who played a pivotal role in getting Altman reinstated at OpenAI, used the saga to affirm Microsoft’s close relationship with the startup.

He has been increasingly looking for ways to use the less-sophisticated AI that Microsoft’s own research team has been building in-house. It has experimented with shifting some AI work onto those less-expensive models that it developed.

Microsoft said its investment in small models doesn’t negate its reliance on OpenAI’s tech for other tasks.

The prospect of OpenAI potentially giving up ground after a head start would match what happened with other major technology shifts including cloud computing. In that sector, Amazon took an early lead—one it still holds—but other well-funded competitors such as Microsoft and Alphabet’s Google have been closing the gap.

“Competitors will take market share,” from OpenAI, said Abhas Ricky, chief strategy officer at cloud data company Cloudera. “It will play out like the cloud played out.”

Miles Kruppa contributed to this article.

Write to Tom Dotan at tom.dotan@wsj.com