Key Takeaways
- OpenAI has retained external legal counsel to examine potential breach-of-contract claims against Apple
- The Siri-ChatGPT integration has underperformed expectations, generating minimal new subscribers for OpenAI
- Shares of Apple declined up to 1.2%, touching $295.38 on Thursday following the disclosure
- The upcoming iOS 27 release will enable users to access competing AI platforms such as Google Gemini and Anthropic’s Claude
- OpenAI’s recent $6.5B acquisition of Jony Ive’s hardware company intensifies competitive pressures with Apple
The collaborative arrangement between Apple and OpenAI appears to be falling apart. According to a Bloomberg report, OpenAI has engaged external legal advisors to evaluate various legal pathways, including the possibility of issuing a formal breach-of-contract notification to Apple.
Shares of Apple retreated as much as 1.2% to $295.38 during Thursday’s trading session following publication of the report. Prior to this decline, the stock had posted approximately 10% gains year-to-date through Wednesday’s market close.
The collaboration was unveiled during Apple’s WWDC conference in June 2024, integrating ChatGPT capabilities into Siri and the Visual Intelligence functionality on iPhones. Additionally, the agreement provided iPhone owners with streamlined access to ChatGPT subscription options through iOS settings, with Apple receiving a revenue share.
OpenAI had projected the partnership could ultimately produce billions in annual subscription revenue. Those expectations have not materialized.
OpenAI’s internal analytics revealed that iPhone owners predominantly use the standalone ChatGPT application rather than accessing it through Siri. The integration activates ChatGPT only when users specifically mention or type “ChatGPT,” and responses display in a constrained interface.
“We have done everything from a product perspective,” a source from OpenAI’s executive team told Bloomberg. “They have not, and worse, they haven’t even made an honest effort.”
Both Apple and OpenAI representatives declined to provide statements.
Growing Discord Between Partners
The collaboration has deteriorated from multiple angles. Apple has maintained persistent concerns regarding OpenAI’s handling of user privacy matters. Additionally, Apple leadership has grown increasingly frustrated by OpenAI’s aggressive recruitment campaigns targeting Apple’s hardware engineering talent, offering compensation packages worth millions beyond Apple’s standard rates.
OpenAI’s approximately $6.5 billion acquisition of Jony Ive’s hardware venture has positioned the company as a potential direct competitor in the device market, further straining relations.
Separately, Apple resolved a $250 million class action complaint this month concerning allegations of misleading marketing around Siri’s artificial intelligence capabilities. Several features promoted to consumers throughout 2024 remain unreleased.
According to Bloomberg’s sources, OpenAI’s efforts to renegotiate terms have reached an impasse. Any formal legal proceedings are expected to wait until OpenAI’s current litigation with Elon Musk reaches conclusion.
Future Direction of Apple’s AI Strategy
Apple intends to expand access to multiple AI providers through iOS 27, anticipated to debut at WWDC on June 8. The new Extensions framework will allow users to select from various AI models directly through Siri, including offerings from Anthropic’s Claude and Google Gemini.
OpenAI’s technology will remain available within this model selection interface, potentially offering greater exposure on Apple devices than the current implementation provides.
Apple currently compensates Google approximately $1 billion per year for Gemini technology to support its comprehensive AI initiatives. OpenAI was presented with a comparable opportunity but rejected it, having grown disillusioned with the partnership’s trajectory.
The Google-Gemini arrangement was finalized late last year. During a February statement, CEO Tim Cook explained the company selected Google because its technology represented “the most capable foundation” for Apple’s artificial intelligence roadmap.
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