OpenAI is feeling the pressure: an internal memo reveals how Sam Altman is reacting to Google's lead with Gemini 3 and the new model OpenAI plans to use to fight back.
According to a report from The Information, OpenAI CEO Sam Altman warned his staff in an internal memo that Google's recent progress in artificial intelligence could "create some temporary economic headwinds for our company." He expects "the vibes out there to be rough for a bit."
Altman's comments make it clear that OpenAI's technological lead over competitors like Google and Anthropic is shrinking. The memo followed reports that Google had developed a new AI that seemed to have leapfrogged OpenAI in its development methodology. That model is Gemini 3, which has in fact put Google in the number one spot across nearly all benchmarks.
Pre-training isn't dead, it's crucial
What's interesting is the role that pre-training played in Google's success. In his note, Altman admitted that Google has "been doing excellent work recently," especially in pre-training. This fundamental phase, where an AI model learns from vast amounts of data, seemed to have hit its limits. But Google's success shows that while massive performance leaps may not be on the immediate horizon, effective advantages can still be gained.
This is a particularly sore spot for OpenAI, as the company has reportedly struggled to make progress in pre-training. This prompted OpenAI to focus more on "reasoning" models. According to the report, these problems also became apparent during the development of GPT-5, where optimizations stopped working as the model was scaled up.
OpenAI works on a new model: Shallotpeat
In response to Google's progress, Altman assured his staff that OpenAI would catch up. A new language model codenamed "Shallotpeat" is currently in development. According to a person familiar with the matter, this model specifically aims to fix bugs that have occurred in the pre-training process.
The codename seems to be an indirect nod to this goal: shallots don't grow well in peat — the soil isn't ideal. In that sense, the model is probably intended to get better on difficult training ground because OpenAI wants to iron out the flaws in its pre-training basics and data.
Altman stressed that he wants to focus on "very ambitious bets," even if it means OpenAI gets "temporarily behind in the current regime." These bets likely include automating AI research itself to accelerate breakthroughs. "We need to stay focused through short-term competitive pressure," Altman said in the memo. He added that it's "critically important" for the majority of the research team to stay focused on achieving superintelligence.
