OpenAI Sora dead, new funding "Ponzi scheme" ... is the end of OpenAI nigh, and will Microsoft end up picking up the pieces?

The death of Sora, a big restructure, and "Scam Altman" begin catching on — as analysts brand its new funding efforts a Ponzi scheme. Why does it feel like OpenAI is in chaos right now?

Microsoft was an early investor in OpenAI, and won itself some exclusivity to the firm's AI models, notably ChatGPT, which powers things like Microsoft Copilot and Github Copilot. However, over time, the two partners have overseen an increasingly fractured relationship. The core reason is money: OpenAI doesn't make any, and needs to keep raising new funds purely to keep the lights on. Microsoft's partnership with OpenAI has increasingly been seen as a limiting factor on the latter's ability to generate cash. OpenAI has been skirting around the edges of its contracts with Microsoft to the point where Microsoft has reportedly been considering suing the former for $50 billion.

As paymasters start asking for returns, AI companies are increasingly putting their focus on coding tools, which is arguably one of the few areas where AI can truly deliver a definitive, high-quality productivity boost. Microsoft and Claude are both front-runners in this area, and OpenAI's own Codex tool has found itself far behind the rest of the pack.

ChatGPT itself is still a huge operation with hundreds of millions of monthly active users, but the good old room-bound elephant remains: the firm makes no money whatsoever, and it has increasingly come across as erratic and chaotic in attempts to find real revenue.

OpenAI just killed "Sora," its terrible AI-generated video app, which flooded the internet with low-quality AI garbage. Drawing immediate ire from copyright holders like Disney, OpenAI granted favorable investment terms to some companies in exchange for IP rights. With the death of Sora, Disney has now pulled out of a $1 billion investment in OpenAI.

It's left Sam Altman scrambling to once again raise new cash. The latest rumors suggest OpenAI is offering a "guaranteed" 17.5% return to private equity firms (via Reuters), far higher than is deemed typical for the sector, alongside preferential access to future AI models.

The fact that OpenAI is still pre-profitability, it really does feel like another Hail Mary type situation here. OpenAI accumulated losses in the tens of billions and is projected to lose further billions throughout 2026. It's not quite a Ponzi scheme (paying old investors with new investors' money with no real underlying business activity), but guaranteeing returns in a business model that is by no means guaranteed to ever make money is definitely a vibe.

Indeed, the chaos seems to be compounding at OpenAI. Whether it's the mothballed hardware venture, the flop of Sora, the introduction of in-chat ads despite previously warning against it, and cancellation of other features like its "Adult Mode," OpenAI increasingly seems like it's on the cusp of a meltdown, as AI as a business model continues to be questionable at best.

Costs are spiralling across the board, and companies that have remained focused and nimble seem to be reaping the benefits right now. Claude AI, for example, focused mostly on coding practices and toolkits, and Microsoft itself is scaling back AI integrations in favor of a focus on enterprise compliance and coding productivity. Google's focus on infrastructure optimization has also helped it catch up after a rocky start, too.

Microsoft has perpetual licenses to pre-AGI ChatGPT models, and OpenAI's entire stack presently runs on Microsoft Azure. Microsoft owns 27% of the for-profit arm of OpenAI, now supposedly worth around $135 billion. But OpenAI's odd structure, with a non-profit arm controlling the assets and IP, OpenAI's collapse wouldn't simply end up in an automatic Microsoft takeover — regulatory scrutiny notwithstanding.

Either way, it increasingly looks like OpenAI could be headed for a spectacular implosion, with AI tools consolidating around a subset of specific use cases — a far cry from the utopic visions of space travel and human immortality often sold by the likes of Sam Altman. NVIDIA's Jensen Huang is already talking as if "AGI" has been achieved by today's clunky models, which are certainly not offering the sci-fi-like vision of genuine intelligence that investors are often sold on. It could be that our infrastructure simply isn't up to the task of providing AI with the economical means to proliferate beyond what it is now — a powerful coding auto-complete tool at best, and an ugly slop-generation machine at worst.

In any case, based on the chaos of today's OpenAI, I don't think Sam Altman's version of the company will end up at the forefront of whatever the AI industry ends up becoming.

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OpenAI is looking for outside investors and flouting its contractual obligations, and Microsoft is likely sensing blood in the water ... will Microsoft and OpenAI eventually break up?

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