OpenAI, a leader in artificial intelligence, is exploring the opportunity to set up operations in Israel after years of consideration. Unlike a traditional research and development hub, this initial initiative will focus on business development to foster connections with the local tech community.
Recent reports from Calcalist reveal that OpenAI has hired a senior executive from Amazon, who previously led AWS for Startups in Israel. This new hire will oversee operations in the EMEA region, which includes Europe, the Middle East, and Africa, while primarily concentrating on the Israeli market. He will report to a manager based in London.
The company behind ChatGPT is aiming to integrate into the Israeli tech ecosystem in a manner reminiscent of cloud service providers. These firms typically engage with local startups early in their development, nurturing these relationships as the startups scale and increase their revenue.
OpenAI plans to host a startup event in Israel in collaboration with AWS at the end of the month, where they will showcase their enterprise services. Their careers page also lists a position for an account manager focusing on the Israeli tech landscape. Officially based in Paris, this role is expected to involve working directly from Israel and reporting to European management. If things progress positively, OpenAI may later seek a senior executive to run a sales office specifically in Israel.
OpenAI’s strategy for international expansion has generally prioritized marketing and business development before establishing R&D facilities, a pattern similar to their entry into India last year, where they swiftly expanded and expect a fully operational office by 2025.
While the establishment of a business development office in Israel is not equivalent to a dedicated R&D center like those set up by Amazon, Google, Apple, Microsoft, or Nvidia, which employ thousands in the country, it signifies an important step. Google, for instance, began with a focus on business before expanding its R&D efforts.
Currently, OpenAI operates only two R&D centers outside the U.S.—a primary location in London and another in Zurich, recognized as a significant AI hub due to its academic institutions. The move into Israel highlights the value OpenAI sees in this thriving tech environment. Despite not having developed its own large language model, Israel is recognized as a global leader in AI utilization, especially in enterprise applications.
Recent data from Anthropic, OpenAI's competitive rival, shows Israel leading globally in per-capita use of Claude, Anthropic’s AI tool, surpassing other advanced nations. The report emphasized Israel's rapid adoption of AI technologies within its workforce, reflecting the innovative spirit of the local ecosystem.
A recent Bank of America analysis outlined Israel's position in the global AI landscape, noting that while it lags behind in infrastructure and public sector investment, it stands out for its robust private sector involvement. LinkedIn data places Israel first in AI talent concentration and third in investment in AI firms from 2013 to 2025, amounting to $19 billion.
With numerous startups utilizing language models, OpenAI is keen to tap into this burgeoning market. The popularity of Claude and Google's Gemini in Israel has led to potential market disadvantages for OpenAI.
Establishing a foothold in Israel could not only enhance OpenAI's language model through increased user interaction but also lead to lucrative business opportunities as these startup companies grow, mirroring the substantial cloud contracts awarded to Israeli tech firms over the last decade.
Amid plans for a Wall Street IPO next year, OpenAI faces stiff competition from Anthropic, which has outpaced it in enterprise-market penetration and international reach. Despite being the first to release a widely available AI application, OpenAI has seen Anthropic gaining ground in revenue per client and European and East Asian expansion, with offices in Germany, Japan, and South Korea.
As a result, Anthropic is anticipated to surpass OpenAI in annualized revenue this year, nearing $50 billion, compared to OpenAI's current $25 billion, despite the latter's larger user base. Both companies are not yet profitable, although Anthropic appears to be managing its finances more efficiently.
In a notable shift, Anthropic's valuation has recently exceeded OpenAI's for the first time, hitting $965 billion against OpenAI's $852 billion. Following this trajectory, Anthropic is expected to go public ahead of OpenAI, which has postponed its initial public offering until 2027, moving away from its initial goal of late 2026 due to uncertainties regarding achieving a valuation exceeding $1 trillion.
