Why Will OpenAI Ultimately Be No Match for Google?

The AI industry is undergoing a silent upheaval. As the focus shifts from which model is smarter to who can deliver useful information at the lowest cost, OpenAI's early advantage is rapidly being dismantled by Google's profound engineering expertise and ecosystem barriers.

1. Cost Advantage: TPU's Dimensionality Reduction Compared to GPU
In inference economics, computing power costs determine survival. OpenAI relies on general-purpose NVIDIA GPUs, while Google holds self-developed TPUs. The advantage is mainly reflected in the inference stage.

GPUs are essentially versatile tools, designed to support rendering and scientific computing, which retain a lot of inefficiencies. TPUs are pure killers built specifically for inference. Their pulsating array architecture allows data to flow directly between processing units without the frequent read/write operations in HBM memory that GPUs require. This low-power, high-bandwidth feature enables Google to handle long-context inference at a fraction of the cost of competitors. The tiny cost advantage per inference accumulates over time, resulting in hundreds of millions of dollars in annual savings.

2. Business Model: Subscription vs. Dimensionality-Reduced Free Access
OpenAI operates like a traditional software company, maintaining a $20/month subscription fee to cover expensive inference costs.

Recently, OpenAI introduced a low-cost ad-supported subscription, which inadvertently provided Google with better ideas and helped educate users. Gemini offers free education accounts for a year at a lower price long-term. Google's strategy is to pass costs onto users, strengthen ecosystem lock-in, increase user engagement, and improve ad targeting accuracy. The longer users stay, the more opportunities there are to display high-value ads.

Users are not loyal to the models themselves but face high switching costs for data and workflows. Integrating Gemini into Gmail, Docs, Android, and YouTube makes AI an invisible part of the environment. Users don’t need to leave their workflow to open a separate chat window. This seamless experience is something isolated ChatGPT can never match.

3. Advertising Endgame: OpenAI Paving the Way for Google
This is a painfully logical point: OpenAI might just be the pioneer paving the way for Google's advertising empire.

OpenAI's biggest contribution so far may be cultivating users' habits of obtaining information through dialogue. To survive, OpenAI has launched low-cost versions and introduced ads (pure subscription models cannot sustain the high computational costs).

And this plays right into Google's hands, as 80% of Google's revenue comes from advertising. While OpenAI struggles to educate users to accept AI ads, Google already has the most mature ad engine and distribution network.

With comprehensive insights into user search habits, email content, location, and viewing preferences, Google's AI-generated ads will be several times more accurate than OpenAI's. Google doesn't need to profit directly from selling AI; it uses AI to make its existing advertising business more profitable.

4. The Final Blow: Cooling of OpenAI's Collaboration with Apple
OpenAI was once seen as the savior of Apple Intelligence, but with the advancement of new agreements between Google and Apple, OpenAI's role is being marginalized. In the OS-level competition, Google, with its Android system, knows how to embed AI into the core of the system. Without hardware, an OS, or a search entry point, OpenAI faces the risk of being plugin-based and marginalized.

Summary
OpenAI is engaged in a tough positional battle, trying to build a new empire from scratch. Meanwhile, Google, with its infrastructure advantage, is wielding heavy punches through inference cost reductions and its ad ecosystem, dragging this war into its strongest terrain of consumption. OpenAI is accelerating, but it may just be paving the way for Google.