What Drove OpenAI’s ‘Code Red’ for ChatGPT

SPEAKER_1 (0:01)

Instagram Teen Accounts default teens into automatic protections for who can contact them and the content they can see. Explore Teen Accounts and all of our ongoing work to protect teens online at instagram.com/teenaccounts.

Alex Ossola (0:18)

What investors expect ahead of the Federal Reserve's decision on interest rates tomorrow. Plus, why OpenAI declared a code red to focus on ChatGPT and what that means for its future.

Sam Schechner (0:30)

It feels like just the conversation around AI chatbots has suddenly said, hey, Google. And that's been a real challenge for the company.

Alex Ossola (0:39)

And President Trump says Ukraine is losing and that the country should accept a US peace plan. It's Tuesday, December 9th. I'm Alex Ossola for The Wall Street Journal. This is the PM Edition of What's News, the top headlines and business stories that move the world today. Today, Federal Reserve officials gathered for their final two-day rate-setting meeting of the year. They won't announce their decision until tomorrow, but they're expected to cut rates by a quarter point, though as many as half the policymakers have signaled that they oppose a cut. Officials have been unusually divided over whether a weaker jobs market or worsening inflation would be harder to fix if the Fed makes the wrong choice now. Some outside the Fed think that a quarter point rate cut doesn't go far enough, including President Trump. Another of those people is Kevin Hassett, the director of the White House National Economic Council, who is widely believed to be Trump's pick to take over as Fed chair next year. Here's Hassett speaking this morning at the WSJ CEO Council Summit. Journalist Poppy Harlow asked him whether he'd substantially lower interest rates if he became the Fed chair.

Kevin Hassett (1:53)

If the data suggests that we could do it, then like right now, I think there's plenty of room to do it.

Poppy Harlow (1:57)

Plenty of room, which plenty is more than 25 points. Correct.

Alex Ossola (2:01)

Hassett says he would rely on his own judgment if he were the Fed chair and not bow to political pressure when deciding on policy.

Poppy Harlow (2:07)

So the loyalty, if you're Fed chair, would be to what the president wants or your economic independent judgment?

Kevin Hassett (2:16)

Yeah, to my judgment, which I think the president trusts, and a firm commitment to not be partisan. And I worry that the Fed has been partisan.

Alex Ossola (2:25)

But tomorrow, investors expect the Fed to signal caution about cutting rates further in 2026 And in today's trading, major US indexes were mixed. The Nasdaq and the S&P were almost unchanged, while the Dow fell 0.4%. The worst performer in the Dow was JP Morgan Chase, whose shares slid 4.7% after an executive predicted higher expenses next year. It was the steepest decline in the bank's shares since April. In commodities trading, silver prices closed above $60 a troy ounce for the first time. Its gains have outpaced gold this year, making silver the hottest commodity of 2025

OpenAI is the world's most valuable startup, and it's got a lot going on. Besides its popular ChatGPT chatbot, it's got the image generator Dolly and the text-to-video product Sora. It's also working towards artificial general intelligence, broadly defined as being able to outthink humans at almost all tasks. But last week, CEO Sam Altman put out a memo declaring a Code Red effort to improve the quality of ChatGPT and pushing for a pause on other projects. I'm joined now by Sam Schechner, who covers tech for The Journal. Sam, what triggered this decision for OpenAI, and what changes is it making now?

Sam Schechner (3:44)

The most direct cause of this Code Red has been the immediate threat from Google. Last month, the release of Gemini 3, its new model, blew past OpenAI on a closely watched third-party leaderboard of AI tools. It feels like just the conversation around AI chatbots has suddenly said, hey, Google. And that's been a real challenge for the company, leading Sam Altman to put out a company-wide memo saying, okay, we need to pour resources back into ChatGPT, our core consumer product. And he's summoning people from other teams to work on improving that product.

Alex Ossola (4:24)

How has ChatGPT been doing, not only in terms of its lead in the AI race, but also its relationship with users?

Sam Schechner (4:33)

It is a runaway consumer success. More than 800 million people every week are using ChatGPT, and it's a lot of what's driven the valuation of the company. Behind some of that success is the fact that ChatGPT has built sometimes emotional relationship with users. People tend to love it, and there's actually one model in particular that kind of epitomizes that, which was the default model until earlier this year. It's called ChatGPT 4.0. One of the really unique and special things about 4 is that it was trained using something called User Feedback Signals.