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ChatGPT’s recent explosive growth has led some to believe that “network effects are kicking in.” As it picks up users, it gains more data, which then helps it produce a better product (data network effects similar to those that power Google search but weaker in this case). And there’s increasingly shared benefit between users and builders of GPTs (cross-side network effects similar to the ones between iPhone users and app developers but, again, weaker). Network effects are a key piece of OpenAI’s effort to secure its position at the top of the market for the type of generative AI products known as large language models (LLMs)—and a key argument for the company’s recent $300 billion valuation.
