OpenAI is making a strong play for the consumer market with the hiring of Instacart’s CEO to oversee its applications business — a signal that the company is more than just an artificial intelligence (AI) model builder.
Earlier this week, OpenAI CEO Sam Altman announced that Fidji Simo, who already sits on OpenAI and Shopify’s boards, will become the company’s CEO of Applications, the division responsible for turning its research and models into products that directly benefit users.
The new Applications unit will bring together “a group of existing business and operational teams responsible for how our research reaches and benefits the world,” according to Altman’s blog post, and Simo is “uniquely qualified to lead this group.”
Simo will officially join OpenAI later this year, reporting to Altman.
“OpenAI clearly wants to own the consumer platform,” Julia Huang, founding partner at Vesey Ventures, told PYMNTS. “They have a great shot at doing it and Fidji’s experience at Instacart in bringing together merchants and consumers would be really valuable.”
Huang added, “The challenge to Google is clear already in search,” since people have been moving to AI chatbots for searches. “I think this will be a play to close the loop around the whole transaction.”
Last week, Visa, Mastercard and PayPal announced separate initiatives to deploy agentic commerce, where an AI agent will autonomously pay for transactions on behalf of users.
As part of the initiative, Visa said it is working with AI chatbot makers OpenAI, Perplexity, Anthropic and Microsoft to deploy the capability.
Meanwhile, other AI model companies such as Perplexity are adding shopping capabilities into their chatbots, amid a competitive race to lead in product discovery — and eventually purchases as well.
Read more: OpenAI Turns ChatGPT Into Shopping Assistant With New Commerce Features
Consumer Push Enters New Phase
The pivot to shopping comes as ChatGPT’s popularity continues to grow. Just 2½ years old, ChatGPT now has 500 million weekly users worldwide, Altman disclosed during a congressional hearing on Thursday (May 8).
ChatGPT.com is now the fifth most visited website in the world, Altman added, citing statistics from SimilarWeb. Google.com is on top, followed by YouTube, Facebook and Instagram.
With this many eyeballs, it’s no wonder OpenAI is accelerating plans for its consumer business.
“This is a power move,” said Jeanel Alvarado, CEO of research firm Retailboss. “The CEO of Instacart has a track record of building killer consumer apps. OpenAI is walking straight into Google’s backyard and challenging Google’s search, ads and AI-powered tools.”
Alvarado told PYMNTS that OpenAI may be gearing up to “supercharge AI-powered shopping experiences. Think more intelligent shopping and product recommendations, ultra-personalized customer journeys, and behind-the-scenes AI that keeps shelves stocked just right.”
OpenAI recently improved its shopping results for ChatGPT. The company disclosed that when ChatGPT displays a selection of products with links to retailers, these are selected “independently and are not ads.”
That means retailers do not pay OpenAI to display their products first in ChatGPT searches. Instead, ChatGPT chooses products when it is “relevant to the user’s intent” based on the user prompt, prior ‘custom’ instructions from the user and other user data it recalls.
From Research to Retail
At OpenAI, adding Simo to the leadership team to oversee applications is a sign that the company sees this market as potentially becoming even bigger than the AI model market.
“The OpenAI hire of Fidji Simo signals a strategic recognition that controlling the application layer might matter more than the model layer alone,” said Dev Nag, a Stanford researcher and CEO of AI startup QueryPal, which is backed by Sequoia Capital, the VC firm that was an early investor in Apple, Google, YouTube, Instagram and many more.
“While everyone fixates on model quality improvements, the real moats are forming around user experience, data feedback loops, and the ability to execute real-world actions like shopping,” Nag told PYMNTS.
Zohar Gilad, CEO of shopping optimization platform Fast Simon, said Simo will give OpenAI “a front-row seat to what merchants need next.”
Nearly 40% of product discovery today still begins on search engines, but that’s changing, Gilad told PYMNTS. “Simo’s leadership will help OpenAI build faster, more commerce-aware applications that keep brands visible as product discovery expands to new platforms.”
