May 21, 2025
Harvard Business Review recently published an article co-authored by Andrei Hagiu, Professor of Information Systems, discussing how ChatGPT’s rapid growth has sparked debate about whether it can leverage network effects to dominate the generative AI space, especially in the market for large language models (LLMs).
While ChatGPT has seen rapid growth due to its product quality and brand, its data network effects are relatively weak, user interactions don’t provide the clear, scalable feedback needed to significantly improve the product for all users, unlike platforms like Google Search. The greater opportunity lies in cross-side network effects between users and third-party GPT developers. Currently, these effects are limited because most GPTs don’t require ChatGPT to function, and ChatGPT lacks built-in tools for transactions. However, OpenAI could strengthen these effects by turning the GPT Store into a true AI app marketplace and evolving ChatGPT into a universal platform or operating system for generative AI.
As Andrei Hagiu explains, such a marketplace could unlock significant value by integrating discovery and transaction capabilities: “Like Amazon or Booking.com, the value here would come from both discovery and transaction benefits: Users can browse, compare, and pay for a wide variety of GPTs through a single interface, using a single login, consistent user interface, and stored interaction and transaction history.”
If successful, this strategy could position ChatGPT as a foundational platform, like Apple’s iOS, justifying or even exceeding its $300 billion valuation.
