OpenAI, at the center of the artificial intelligence-driven transformation, announced that it had reached an annual revenue run rate of $1 billion in less than 200 days after its advertising unit, ChatGPT Ads, began operations. Alongside corporate agreements, individual subscriptions and API access fees, the company aims to finance the free access tier offered to more than 1 billion weekly active users through the advertising model it has introduced. On the day this financial result was announced, an important change was also made to the access model in Europe. By making the Ads Manager platform directly available, OpenAI enabled small and medium-sized businesses in Europe, India, the Middle East and North Africa to purchase advertising without the need for an agency intermediary.
As revenues rose, regulatory pressure from the European Union also increased. The European Commission officially classified ChatGPT as a “Very Large Online Search Engine” (VLOSE) under the Digital Services Act (DSA).
The classification is based on the 159.1 million monthly active users reported by the artificial intelligence platform across the EU. This figure is more than three times the critical threshold of 45 million users that triggers additional obligations under the legislation. Under the decision, OpenAI has been given four months to fully comply with the strict rules in the EU’s schedule of stringent safety reviews for ChatGPT, Reddit and Roblox.
Transparency Obligations and Data Oversight
The platform’s classification as a search engine brings significant transparency requirements regarding advertising activities. OpenAI will be required to establish an advertising archive that keeps all advertisements it publishes publicly accessible for at least one year. The archive must include complete technical information, including the content of the advertisement, the party that made the payment, the length of time it remained active, the targeting parameters and the number of people reached by the advertisement.
In today’s advertising ecosystem, where cost-per-click (CPC) and performance-based bidding methods have come to the fore, this transparency archive is of great importance for the market to be overseen.
However, there is a notable gap in the legal regulations. In the Digital Services Act, provisions concerning the prohibition of advertisements profiled using sensitive personal data primarily cover online platform providers. ChatGPT’s classification as a search engine raises the question of how sensitive information shared by users during conversations will be used to personalize advertisements. In the process overseen by Ireland’s Digital Services Coordinator, it is not yet clear within which limits targeting mechanisms that use artificial intelligence’s dialogue history will be used.
OpenAI states that its advertising system has no direct effect on responses, that chat data is not transferred to advertisers and that advertisements are clearly separated from system responses. However, the fact that users share with dialogue-based systems the kinds of personal information they would not enter into standard search engines is intensifying debates over whether this data will be used to personalize advertisements.
As it expands its reach network through Ads Manager, the company plans to introduce new formats and measurement tools in the coming period.