Key Points
- OpenAI has retained external legal counsel to evaluate potential breach-of-contract claims against Apple
- The Siri-ChatGPT collaboration has underperformed expectations, failing to generate anticipated subscriber growth or revenue
- Apple (AAPL) stock declined as much as 1.2% to $295.38 on Thursday following the disclosure
- The upcoming iOS 27 release will allow access to competing AI platforms such as Anthropic’s Claude and Google Gemini
- OpenAI’s $6.5B acquisition of Jony Ive’s hardware company has intensified concerns about future competition with Apple
The collaborative relationship between Apple and OpenAI appears to be deteriorating rapidly. According to a Bloomberg report, OpenAI has engaged outside legal representation to assess various legal remedies, potentially including issuing Apple a formal notice of contract breach.
Apple (AAPL) stock experienced a decline of up to 1.2%, hitting $295.38 on Thursday when the news emerged. Prior to this development, the stock had posted approximately 10% gains year-to-date through Wednesday’s trading session.
The collaboration, which was unveiled during Apple’s WWDC conference in June 2024, integrated ChatGPT functionality into Siri and the iPhone’s Visual Intelligence capability. The agreement also established a pathway for iPhone owners to subscribe to ChatGPT directly through iOS settings, with Apple receiving a revenue share from conversions.
OpenAI had projected that this arrangement could ultimately produce billions in annual subscription revenue. Those projections have not materialized.
Analysis conducted internally by OpenAI revealed that iPhone owners predominantly utilize the dedicated ChatGPT application rather than accessing it through Siri integration. The current implementation only activates ChatGPT when users specifically mention or type “ChatGPT,” and responses are confined to a restricted display area.
“We have done everything from a product perspective,” an unnamed OpenAI executive told Bloomberg. “They have not, and worse, they haven’t even made an honest effort.”
Both Apple and OpenAI have declined to provide official statements.
Growing Discord Between Tech Giants
The alliance has deteriorated from multiple angles. Apple has maintained persistent reservations regarding OpenAI’s handling of user privacy and data protection. Additionally, Apple leadership has grown increasingly concerned about OpenAI’s aggressive recruitment strategy targeting Apple’s hardware engineering talent, offering compensation packages exceeding Apple’s typical remuneration by millions.
OpenAI’s approximately $6.5 billion acquisition of Jony Ive’s hardware venture has positioned the company to potentially develop consumer devices that would directly challenge Apple’s iPhone.
Separately, Apple resolved a $250 million class action lawsuit earlier this month concerning allegations of misleading marketing about Siri’s artificial intelligence capabilities. Certain features promoted to consumers throughout 2024 remain unavailable.
According to Bloomberg’s sources, OpenAI’s efforts to renegotiate partnership terms have reached an impasse. Any formal litigation is expected to wait until after OpenAI’s current trial with Elon Musk reaches a conclusion.
Future Direction of the Partnership
Apple intends to broaden its ecosystem to accommodate multiple AI providers through iOS 27, anticipated to be announced at WWDC on June 8. The forthcoming Extensions framework will enable users to select from various AI models directly through Siri, including options like Anthropic’s Claude and Google Gemini.
OpenAI will remain available within this model selection interface, which could potentially enhance its discoverability on Apple platforms compared to the existing integration.
Apple currently compensates Google approximately $1 billion per year to leverage Gemini technology as the foundation for its broader artificial intelligence initiatives. OpenAI received a comparable offer but rejected it, having grown disillusioned with the partnership dynamics.
The Google-Gemini agreement was finalized late last year. CEO Tim Cook stated in February that the company selected Google because the technology represented “the most capable foundation” for Apple’s AI development strategy.
