Anthropic, OpenAI dominate paid AI app market with 89% share
What's the story
Anthropic and OpenAI together account for the majority of the paid artificial intelligence (AI) app market, a new survey has revealed. The report by The Information states that while over 30 major private start-ups offer paid AI services, most of the revenue is dominated by these two giants. Together, they accounted for a whopping 89% of the total annualized revenue generated by these companies.
Revenue surge
OpenAI alone contributes $55 billion to total
The survey found that 34 major private start-ups offering AI app services or model access generated a combined annualized revenue of $80 billion this month. The figure is a whopping 112% jump from six months ago, excluding public companies like Google and Microsoft. OpenAI alone contributed $55 billion to this total, while Anthropic brought in $15 billion.
Market share
Cursor, Cognition and ElevenLabs among other players
Among the other players, Cursor made $2.7 billion, while Cognition and ElevenLabs each brought in $500 million. Notably, xAI, the brainchild of Tesla CEO Elon Musk, didn't make it to the top five list. However, these numbers include revenue generated by Microsoft, AWS, and Google Cloud through reselling models from OpenAI and Anthropic.
Investment impact
Investment landscape reflects same 2-horse race
The AI market's two-horse race is further strengthened by a concentration of capital in the investment market. OpenAI raised $122 billion in March this year at a valuation of $852 billion. Meanwhile, Anthropic's valuation has skyrocketed from an initial $380 billion to $900 billion due to the rapid growth of enterprise products like Claude Cowork and Claude Code.
Future prospects
Both companies looking to improve profitability ahead of IPOs
Both Anthropic and OpenAI are also looking to improve their profitability ahead of planned initial public offerings (IPOs) by the end of this year. They are normalizing prices, doubling token prices for new models, or limiting access to coding tools under flat-rate plans. Major venture capital firms such as Sequoia Capital, Founders Fund, Iconiq, and Insight Partners are employing a "dual-bet strategy" by investing in both companies simultaneously.