OpenAI's Growing Challenges Narrow Its IPO Window

There is an element in OpenAI's 'challenges' of "we should all have such problems." It's valuation remains somewhere between $933 and $852 billion. So, yeah, everything is relative. 

That said, leaked financials revealed a $20 billion plus operating loss in 2025 and its plans continue to reflect an aspirational optimism. Arch-rival Anthropic has surpassed it reputationally - and to some extent, operationally - especially with business users. A cooling relationship with Microsoft and a 'thermonuclear' trade secrets lawsuit from Apple suggest that other Big Tech companies are no longer afraid to confront or alienate CEO Sam Altman and OpenAI's investors, implying Silicon Valley's leaders have plenty of AI options, like the increasingly effective and considerably less expensive Chinese models. So, rather than dictating the shape of the AI equity market, OpenAI now has to tread carefully because it cannot afford to be (further) upstaged by Anthropic, nor have its IPO be labelled 'disappointing.' These are, most emphatically, first world problems. But when you live and work in that world, they are still problems. JL

Asa Fitch reports in the Wall Street Journal:

OpenAI's IPO listing now faces reservations about large financial losses and questions about leadership. The company’s ChatGPT is no longer the clear AI market leader and OpenAI has been surpassed in its valuation by competitor Anthropic. Another headache arose with Apple’s lawsuit against OpenAI, accusing it of stealing trade secrets. That trade-secret suit echoes what Jobs dubbed a “thermonuclear war” against Google over its Android phone-operating system, which Jobs saw as a ripoff of Apple’s iOS. The suit could be designed to slow OpenAI down by injecting legal concerns into its hiring efforts and to rattle investors. Altman and OpenAI’s board of directors might be better served to wait until next year. But next year may also be too late. By then, Anthropic will have made its debut on the market (it filed to go public before OpenAI did), cementing OpenAI’s status as an erstwhile leader that fell behind.

OpenAI is in an IPO pickle.

A year ago, the idea of an OpenAI listing would have had Wall Street salivating, with relatively few reservations about its large financial losses or questions about its leadership.

After surviving an attempted ouster two years prior, chief Sam Altman had carved OpenAI into his nascent industry’s undisputed king and hitched himself closely to the much wealthier Microsoft to bankroll growth.

Things are now looking decidedly less clear-cut. The Microsoft relationship has grown more distant, the company’s ChatGPT is no longer the clear AI market leader and OpenAI has been surpassed in its private-market valuation by competitor Anthropic. OpenAI won a court battle with Elon Musk in May, but the lawsuit exposed some of the company’s not-so-pretty inner workings.

Another headache arose on Friday with Apple’s lawsuit against OpenAI, accusing it of stealing trade secrets. That could rattle investors even if the suit doesn’t go anywhere. AI devices competing with Apple’s iPhones are a big part of OpenAI’s growth strategy.

OpenAI filed IPO paperwork with regulators last month. And there are strong reasons for the company to move as quickly as possible. Perhaps most important, to prevent Anthropic from getting a bigger piece of the investor-capital pie with its own planned IPO.

Yet OpenAI’s challenges might also warrant pause. At the least, it would be less than ideal to launch an IPO before finding a replacement for Altman’s number-two executive, who is leaving for medical reasons.

In a perfect world, Altman and OpenAI’s board of directors might be better served to wait until next year, or at least until the dust settles from the latest legal challenges and leadership changes.

But next year may also be too late. By then, Anthropic will likely have made its debut on the market (it filed to go public before OpenAI did last month), cementing OpenAI’s status as an erstwhile leader that fell behind.

Neither choice—moving fast or waiting—is without peril. But as its challenges grow, so does the argument for OpenAI to move quickly and raise what money it can—before its troubles really catch up to it.

---

Apple’s OpenAI Lawsuit Draws From a Familiar Playbook

Apple CEO Tim Cook. Carlos Barria/Reuters

Steve Jobs did it. Now Tim Cook is suing in a bid to protect Apple’s dominance in hand-held devices as the chief executive prepares to depart in September. Apple’s trade-secret suit against OpenAI echoes what Jobs dubbed a “thermonuclear war” against Google over its Android phone-operating system, which Jobs saw as a ripoff of Apple’s iOS. The suit isn’t likely to alter OpenAI’s AI-device plans—Altman posted on X that he was “not afraid” of Apple—but it could be designed to slow OpenAI down by injecting legal concerns into its hiring efforts.