Huge brand moat. Consumers around the world equate AI with ChatGPT. That kind of recognition is an extremely difficult thing to pull off, and also hard to unseat as long as they play their cards right.
"Brand moat" is not an actual economic concept. Moats indicate how easy/hard it is to switch to a competitor. If OpenAI does something user-adversarial, it takes two seconds to switch to Anthropic/Gemini (the exception being Enterprise contracts/lock-in, which is exactly why AI companies prioritize that). The entire reason that there are race-to-the-bottom price wars among LLM companies is that it's trivial for most people to switch to whatever's cheapest.
Brand loyalty and users not having sufficient incentive by default to switch to a competitor is something else. OpenAI has lost a lot of money to ensure no such incentive forms.
Moats, as noted in Google's "We Have no Moat, and Neither Does OpenAI" memo that made the discussion of moats relevant in AI circles, has a specific economic definition.
Switching costs only make sense to talk about for fully online businesses. The "switching cost" for McDonalds depends heavily on whether there's a Burger King nearby. If there isn't then your "switching cost" might now be a 30 minute drive, which is very much a moat.
That's not entirely true. They have a 'infinite' product moat - no one can reproduce a big mac. Essentially every AI model is now 'the same' (queue debate on this). The only way they can build a moat is by adding features beyond the model that lock people in.
The concept of ‘moat’ comes out of marketing - it was a concept in marketing for decades before Warren Buffett coined the term economic moat. Brand moat had been part of marketing for years and is a fully recognized and researched concept. It’s even been researched with fMRIs.
You may not see it, but OpenAI’s brand has value. To a large portion of the less technical world, ChatGPT is AI.
Nokia's global market share was ~50% in smartphones back in 2007. Remember that?
Comparing "brand moat" in real-world restaurant vs online services where there's no actual barrier to changing service is silly. Doubly silly when they're free users, so they're not customers. (And then there are also end-users when OpenAI is bundled or embedded, e.g. dating/chatbot services).
McDonald's has lock-in and inertia through its franchisees occupying key real-estate locations, media and film tie-ins, promotions etc. Those are physical moats, way beyond a conceptual "brand moat" (without being able to see how Hamilton Wright Helmer's book characterizes those).
