What is ChatGPT? The AI Natural Language Processing Tool Explained

Has ChatGPT ever not been in the news since its launch in November 2022? The dominant name in generative AI, the company has more than 300 million weekly users and has taken the world by storm, generating both excitement for the future and concern.

After the release of GPT-3 to the general public, technology experts and policymakers sounded the alarm about AI misuse.

In this article, we will explore the history and technology behind ChatGPT.

What is ChatGPT?

Developed by San Francisco-based OpenAI, ChatGPT is an AI system designed to understand and generate conversational dialogue. The name “ChatGPT” refers to Generative Pre-training Transformer, a machine learning approach that enables the AI to process and generate human-sounding text.

Since ChatGPT’s public launch in 2022, competition in AI has intensified, with major companies, including Microsoft, Apple, Meta, Amazon, Nvidia, and Google, shifting focus to artificial intelligence.

Who created ChatGPT?

OpenAI, the company behind ChatGPT, has changed significantly since its founding in 2015 by Sam Altman, Elon Musk, Greg Brockman, and others as a non-profit artificial intelligence research lab that aims to ensure that artificial general intelligence benefits all of humanity when it arrives.

In 2019, OpenAI shifted to a “capped-profit” model to attract investment and scale its AI research. Since then, the AI developer has completed five major funding rounds, totaling over $49 billion. Now one of the most valuable AI companies in the world, OpenAI’s rapid expansion has fueled tensions between Musk and Altman.

Musk has taken credit for creating OpenAI and accused OpenAI of straying from its mission, while Altman has called him “a bully.” In August 2024, Musk sued OpenAI and Altman, alleging fraud. He argued that his $44 million investment was based on the understanding that OpenAI would remain a non-profit but that Altman had secretly planned to transition it into a for-profit company.

The rivalry between Musk and Altman escalated in February 2025 when a Musk-led group offered to buy OpenAI for $97 billion. As OpenAI moves further into the corporate sphere, the battle over AI’s future—and who controls it—continues to intensify.

How does ChatGPT work?

ChatGPT works by predicting the most likely next words in a conversation based on patterns learned from vast amounts of data. It processes what you type, understands the context, and generates a natural and relevant response.

It doesn’t think or have opinions—it uses probabilities to create coherent replies. The more context it has, the better it can refine its answers, making interactions with it feel like a real conversation.

Key features of GPT models

• Transformer Architecture: Unlike older Recurrent Neural Network models that process words one at a time, GPT’s transformer design analyzes entire sentences at once, making it faster and more efficient.
• Self-Supervised Learning: GPT models teach themselves language by predicting missing words in massive datasets—no human labeling required.
• Fine-Tuning for Specific Tasks: After pre-training, models can be refined for chatbots, translation, code generation, sentiment analysis, and more.
• Few-Shot Learning: GPT can adapt to new tasks, learning from just a few examples.

These aspects are important because they make GPT models fast, adaptable, and efficient for various applications.

Timeline of OpenAI and ChatGPT

• December 2015 – OpenAI is founded as a not for profit company.
• July 2018 – OpenAI releases GPT-1.
• February 2019 – GPT-2 is introduced but initially withheld due to concerns about misuse.
• March 2019 – Microsoft invests $1 billion in OpenAI, valuing the company at the same amount.
• May 2020 – GPT-3 is released, significantly improving text generation.
• November 2022  – ChatGPT is launched to the public and quickly becomes a sensation.
• December 2022 – ChatGPT reaches 1 million users.
• January 2023 – Microsoft invests another $10 billion in OpenAI, valuing the company at $29 billion. ChatGPT crosses 100 million monthly active users.
• March 2023 – GPT-4 debuts, improving accuracy and reasoning.
• November 2023 –  The OpenAI Board fires CEO Sam Altman for not being “Consistently Candid.” Altman was rehired a week later.
• May 2024 – OpenAI releases GPT-4o, a multimodal AI model with improved speed and capabilities.
• June 2024 – Apple taps OpenAI to bring AI upgrade to Siri. That same month Altman said OpenAI is considering switching to a for-profit model.
• September 2024 – OpenAI launches the o1 model with enhanced reasoning capabilities and multimodal support.
• October 2024 – OpenAI closed another funding round of $6.6 billion, bringing the company’s valuation to $157 billion.
• December 2024 – OpenAI rolls out ChatGPT’s video capabilities
• January 2025 – OpenAI launches Operator, an AI assistant that can perform real-world tasks.
• February 2025 – Elon Musk leads a consortium in an attempt to buy OpenAI. That same month, OpenAI releases GPT-4.5, which Altman describes as a “giant, expensive model.”

How is ChatGPT used?

ChatGPT has expanded beyond text-based responses and now includes several powerful multimodal capabilities:

• Text Generation & Summarization – Creates articles, reports, scripts, summaries, and more.
• Image Creation (DALL·E Integration) – Generates AI-created images based on text descriptions, modifies existing images, and creates variations.
• Code Generation and Debugging – Writes, explains, and fixes code in multiple programming languages.
• Document and Data Analysis – Processes PDFs, spreadsheets, and other documents for insights and data extraction.
• Mathematical and Scientific Computing – Solves complex math and science problems, running Python code for analysis.
• Chart and Graph Creation – Visualizes data through charts and graphs.

While not a feature of ChatGPT itself, OpenAI has given users access to its powerful video generator model, Sora. The company launched Sora in beta in February 2024 and made it publicly available in December 2024.

What are the limitations of ChatGPT?

While ChatGPT is a powerful AI tool, it has several limitations:

• Potential for incorrect information – It can provide misleading or inaccurate answers, also known as hallucinations, especially on complex topics.
• Context retention issues – It struggles with maintaining long conversations, sometimes losing track of details.
• Bias in responses – Its answers can reflect biases in its training data.

In April 2023, in an example of a hallucination episode, ChatGPT accused Jonathan Turley, a prominent law professor, of committing sexual assault—a completely fabricated claim. Making matters worse, ChatGPT generated a fake Washington Post article link to support its claim.

How much does ChatGPT cost?

While ChatGPT is free to use, a subscription is required to access more advanced tools, such as Sora, creating custom GPTs, and voice modes.

Tiers include:

• $20 monthly for a ChatGPT Plus subscription
• $200 month for a ChatGPT Pro subscription

The more expensive Pro subscription includes extended access to Sora (OpenAI’s text-to-video AI generator), unlimited access to advanced voices, and unlimited access to all of OpenAI’s reasoning models.

The future of ChatGPT

Sam Altman has repeatedly claimed that Artificial General Intelligence is on the near horizon. With the Trump administration investing $500 billion in AI development, it may be closer than we think.

However, the promises of GPT-5, which many suspect will be the model that unlocks AGI, have yet to come to fruition.

In February 2025, Altman unveiled an updated roadmap to streamline OpenAI’s product lineup, merging its scattered AI models into a single unified system. The first step came later that month, with the release of GPT-4.5, which Altman billed as a “different kind of intelligence,” while conceding that it was a “giant, expensive model.”

As OpenAI continues to develop ChatGPT, more rivals are coming online to challenge the companies’ dominance. In January, China-based hedge fund High-Flyer Quantitative Investment Management released the free and open-source DeepSeek R1, which sent shockwaves through the AI industry, claiming that its model matched ChatGPT’s performance while costing a fraction of what American companies spend on AI development.

After DeepSeek sent tech stocks into a tailspin, Musk offered to buy OpenAI for $97 billion. Altman declined the offer and instead offered to buy Twitter for $9.74 billion.

Meanwhile, Altman is convinced that AGI is coming and that OpenAI and ChatGPT will be driving it.

“Look forward to bringing you all AGI and beyond,” he tweeted in January 2025.