OpenAI Could Run Out of Money in 18 Months as $142B Australian Plan Unravels

byCarl J. Hudson -
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OpenAI faces potential bankruptcy within 18 months despite burning $8 billion in 2025 alone, according to financial expert Sebastian Mallaby—even as the company promotes a $142 billion Australian economic opportunity and commits $73.3 billion to Project Southgate data centres through 2028 that may never materialise if the ChatGPT maker collapses like "WeWork on steroids."

Mallaby, senior fellow at the Council on Foreign Relations, predicts in a New York Times essay that OpenAI will exhaust cash reserves before its AI technology generates sustainable profits, forcing absorption by Microsoft, Amazon, or another "cash-rich behemoth" with existing revenue streams to subsidise losses Google, Meta, and Microsoft can sustain indefinitely.

Australia's $73.3B Data Centre Bet at Risk

The bankruptcy warning arrives weeks after OpenAI unveiled Project Southgate extensions to Tasmania and Melbourne with initial $4.5 billion investments and projections reaching $73.3 billion through 2028. The company simultaneously released an Australian economic blueprint claiming AI adoption could boost GDP by $142 billion annually by 2030.

However, Mallaby's analysis suggests these commitments may prove hollow if OpenAI cannot secure emergency funding beyond its record $40 billion March 2025 raise—already the largest private fundraising round in history, surpassing Saudi Aramco's $30 billion IPO.

"Even if OpenAI reneges on many of those promises and pays for others with its overvalued shares, the company must still find daunting sums of capital," Mallaby wrote. "However rich the eventual AI prize, the capital markets seem unlikely to deliver."

OpenAI claims 10 million Australians use ChatGPT weekly—40% of the population—and has inked two government contracts while employing local lobbyists to influence policy. The company partnered with Commonwealth Bank, Coles, and Wesfarmers to train 1.2 million Australian workers in AI skills through OpenAI Academy courses launching in 2026.

"This Is WeWork on Steroids"

A venture capital executive invested in an OpenAI rival told The Economist the company represents "the WeWork story on steroids," referencing the coworking firm that collapsed in 2023 after burning billions on real estate leases before investors lost faith in profitability timelines.

WeWork raised approximately $22 billion before bankruptcy. OpenAI has already consumed more than $8 billion in 2025 alone, with projections showing $17 billion in expenses for 2026 and $40 billion by 2028—numbers The Information obtained from internal company documents.

Unlike WeWork, OpenAI has committed to spending $1.4 trillion on data centres and compute infrastructure by 2030, creating contractual obligations that dwarf WeWork's comparatively modest lease commitments. The scale of capital requirements has never been tested in Silicon Valley history.

Mallaby argues the fundamental difference between OpenAI and its competitors dooms the company despite technological leadership. "While behemoths such as Google, Microsoft and Meta earn so much from legacy businesses that they can afford to spend hundreds of billions collectively as they build AI, free-standing developers such as OpenAI are in a different position."

Australian Business Adoption Accelerates Despite Warnings

Australia ranks among the top five countries globally for ChatGPT traffic, accounting for 2.21% of visits in August 2025—the fifth-highest share worldwide despite representing just 0.3% of global population. Only Japan, China, India, and the US generate more traffic.

Australian enterprises have embraced OpenAI technology faster than most jurisdictions. The company reports 92% of Fortune 500 companies use OpenAI products, with Australian divisions of global firms deploying ChatGPT Enterprise extensively across government, finance, retail, and healthcare sectors.

However, Professor Kimberlee Weatherall, co-director of the Centre for AI, Trust and Governance at the University of Sydney, questioned whether Australia should position itself merely as data centre infrastructure provider. "Let's be the place where everyone sticks their data centres in the middle of the desert," she said, characterising public discussion. "Which feels a little bit like, 'Let's be the world's mine, or let's be the world's farm to grow wheat.'"

Sam Altman Admits $200 Pro Loses Money

OpenAI CEO Sam Altman admitted in January 2026 that the company loses money on its $200 monthly ChatGPT Pro subscriptions because users consume more computational resources than anticipated. The revelation underscores fundamental unit economics problems plaguing the business model.

ChatGPT requires at least 8 Nvidia A100 GPUs per instance, with more sophisticated models demanding exponentially greater computing power. Hardware costs represent approximately 75% of OpenAI's total revenue, leaving minimal margin for research, development, staff compensation, and infrastructure expansion.

The company reached $10 billion in annual recurring revenue by June 2025, with approximately 15 million paying subscribers. However, revenue growth has slowed dramatically as user willingness to pay for ChatGPT subscriptions plateaus and competition from Google's Gemini and Anthropic's Claude intensifies.

Google's Gemini Captures Market Share

OpenAI declared "code red" in December after Apple announced a multi-year partnership with Google to power Siri using Gemini models—a watershed validation pushing Alphabet past $4 trillion market capitalisation while OpenAI's private valuation stagnated at $157 billion despite $40 billion in fresh capital.

TD Cowen research shows Gemini's monthly active user penetration climbed from 24% to 26% between July and October 2025, while ChatGPT declined from 36% to 35%. Google's strategic integration across Search, Android, Gmail, Maps, and YouTube creates distribution advantages OpenAI cannot match without acquiring profitable businesses.

Mallaby notes that generative AI differs fundamentally from previous software successes because of extreme capital intensity. "Businesses usually take decades to deploy new technologies successfully," he wrote, arguing AI has made "striking" progress in three years but faces a decade-long monetisation timeline.

Australian Projects Could Collapse in Domino Effect

If OpenAI exhausts cash reserves as Mallaby predicts, Australian commitments would likely evaporate in bankruptcy proceedings. Project Southgate's $73.3 billion infrastructure roadmap, training partnerships with major employers, and government contracts would terminate if Microsoft or Amazon acquires OpenAI's intellectual property but not its contractual obligations.

"The probable result is that OpenAI will be absorbed by Microsoft, Amazon or another cash-rich behemoth," Mallaby wrote. "OpenAI's investors would take a hit. Chipmakers and data centre builders that signed deals with Mr. Altman would scramble for new customers."

Firmus Technologies, OpenAI's Australian data centre partner, promotes Project Southgate as renewable energy-powered computing infrastructure supporting sovereign AI capabilities. The company's website emphasises long-term partnerships, though contracts likely include force majeure clauses enabling termination if OpenAI ceases operations.

Australian Government Contracts at Risk

OpenAI secured two government contracts in 2025, though neither contract value nor specific departments have been publicly disclosed. The company has deployed lobbyists to influence Australian AI policy, including advocacy for reduced regulatory barriers to data centre construction and streamlined planning approvals for computing infrastructure.

Opposition to Project Southgate has emerged from environmental groups concerned about water consumption for cooling systems in drought-prone regions and energy grid capacity in states transitioning away from coal power. Tasmania's proposed facility faces particular scrutiny given the island state's constrained electricity infrastructure despite abundant renewable generation.

The Australian Computer Society, which collaborated on OpenAI's economic blueprint, emphasised that Australia "must build world-class compute infrastructure and accelerate the development of advanced digital skills." However, the report's $142 billion GDP projection assumes OpenAI remains operational to provide AI services powering productivity gains.

"OpenAI Failure Wouldn't Indict AI"

Despite predicting OpenAI's collapse, Mallaby remains bullish on artificial intelligence overall. "An OpenAI failure wouldn't be an indictment of AI," he wrote. "It would be merely the end of the most hype-driven builder of it."

The distinction matters for Australian policymakers weighing infrastructure commitments. Google, Microsoft, Meta, and Anthropic all possess revenue-generating businesses capable of subsidising AI research indefinitely. They represent stable partners for sovereign data centre investments, whereas OpenAI's survival depends entirely on investor confidence and monetisation timelines remaining undefined.

For Australia's 10 million weekly ChatGPT users and 1.2 million workers enrolled in OpenAI Academy training, the company's potential bankruptcy within 18 months would prove disruptive but not catastrophic. Google's Gemini, Anthropic's Claude, and other alternatives would absorb displaced users, though Australia-specific partnerships and infrastructure commitments would require renegotiation.

The fundamental question Mallaby poses—whether capital markets can finance AI development at the required scale—remains unanswered. For Australia betting $73.3 billion on OpenAI's Project Southgate, the answer may arrive within 18 months, determining whether the nation backed a world-changing company or the most expensive hype machine in technology history.

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