On Thursday, media reports citing informed sources indicated that the two-year partnership between Apple and OpenAI has become strained. OpenAI has not realized the anticipated benefits from the collaboration and is now preparing for potential legal action. Lawyers for OpenAI are actively collaborating with an external law firm to explore a range of options that could be formally initiated in the near future. These options may include issuing a notice of breach to Apple, though a formal lawsuit may not be the initial step. OpenAI engaged this external firm within recent days to assist with the matter. OpenAI initially believed that integrating ChatGPT into Apple's software would drive more users to subscribe to the chatbot. It also anticipated deeper integration across more Apple applications and a prioritized placement within the Siri assistant. However, the reality is that Apple's utilization of OpenAI's technology within its operating system remains limited, and the related features are difficult for users to discover. An OpenAI executive, who spoke on condition of anonymity, stated, "We have done everything we could on the product side, but they have not. Worse still, they have not shown good faith." Following the news, Apple's stock price fell to its intraday low on Thursday, declining as much as 1.2% to $295.38. As of Wednesday's close, the stock had gained approximately 10% year-to-date, roughly in line with the S&P 500. For OpenAI, this rift exemplifies its increasingly fractious relationships within the tech industry. The company is currently engaged in litigation with co-founder Elon Musk and recently renegotiated its exclusive partnership agreement with its largest backer, Microsoft. Concurrently, Amazon.com is deepening its collaboration with Anthropic, an OpenAI competitor. Apple has its own concerns, including reservations about whether OpenAI is sufficiently prudent regarding user privacy protection. Additionally, OpenAI's recent push into hardware devices, led by former Apple executives, has also displeased Apple. According to sources, any legal action by OpenAI will likely wait until after the conclusion of the Musk trial, and no final decision has been made. OpenAI still hopes to resolve the dispute with Apple out of court.
**Partnership Falls Short of Expectations** Apple and OpenAI once appeared poised for a broad strategic partnership. In June 2024, OpenAI CEO Sam Altman personally attended the partnership launch event at Apple's campus, where Apple's head of software, Craig Federighi, referred to OpenAI as a "pioneer and market leader" in artificial intelligence. Under the agreement, users could invoke ChatGPT within Siri and utilize AI technology for text generation and environmental analysis via iPhone's visual intelligence features. The collaboration later expanded to include a ChatGPT image generation option in Apple's Image Playground app and support for analyzing on-screen content. Furthermore, iPhone users could directly subscribe to ChatGPT Plus through the iOS settings menu, with Apple taking a cut of the subscription revenue. OpenAI executives had expected this partnership to evolve into a significant revenue stream as the company geared up for an IPO. However, the relationship has deteriorated sharply, and OpenAI's attempts to renegotiate the terms have reached an impasse. User research commissioned by OpenAI indicated that Apple users prefer using the standalone ChatGPT app directly rather than accessing OpenAI's technology through Siri or other Apple services. Apple's integration design often requires users to explicitly mention "ChatGPT" when giving voice or text commands to Siri to receive an OpenAI response. The results are displayed in a small window with information more limited than in the standalone app. OpenAI executives also believe Apple has done far too little to promote the integrated feature within the iPhone, iPad, and Mac ecosystems. OpenAI initially anticipated the partnership would generate billions of dollars in annual subscription revenue, but the reality has fallen far short. OpenAI now even believes that Apple's implementation has damaged OpenAI's brand image among consumers. An OpenAI executive said, "When we first heard about this opportunity, it seemed very attractive—access to a massive user base and distribution within such a large mobile ecosystem." However, Apple was unwilling to disclose specific product details at the time. "They essentially said OpenAI had to trust them and take a leap of faith." The executive stated the deal ultimately proved to be a failure for OpenAI. The OpenAI executive added, "Apple has such strong market power that it can dictate terms arbitrarily. We trusted you once, and the outcome was not favorable."
**OpenAI's Exclusive Status Nearing Its End** According to prior media reports, OpenAI's exclusive status within Apple's software will end in the coming months—Apple plans to open its platform to a host of competitors. Users will then be able to install multiple AI chatbots from the App Store and invoke them within Siri to handle queries or complete image and text generation tasks. As part of this strategy, Apple is testing integrations with Anthropic's Claude and Alphabet's Gemini. The new Siri featuring this capability, included in the iOS 27 operating system, is expected to be unveiled at Apple's Worldwide Developers Conference on June 8. Notably, an OpenAI executive stated that Apple opening its platform to other AI providers is not the trigger for the potential legal action, as the original partnership agreement was never exclusive. In fact, the new Extensions integration system in iOS 27 might offer ChatGPT better exposure—users will see an AI model selector in the new system search interface, including options for Siri and external services like ChatGPT. Sources revealed that during negotiations in 2024, Apple positioned this partnership as being on par with its search collaboration with Alphabet in the Safari browser—a deal that generates tens of billions of dollars in annual revenue for both parties. The ChatGPT integration is separate from Apple's plans to enhance its underlying AI models using technology from the Gemini team at Alphabet. Apple finalized its agreement with Alphabet late last year, having previously considered a broader partnership with OpenAI, but OpenAI was not interested due to prior dissatisfaction with the initial collaboration.
**Hardware Competition Heightens Tensions** Simultaneously, OpenAI's expansion into hardware is exacerbating tensions between the companies. Last year, OpenAI acquired a next-generation device startup co-founded by former Apple Chief Design Officer Jony Ive. The project, led by former Apple executives Tang Tan and Evans Hankey, aims to develop an iPhone alternative. Furthermore, as previously reported, OpenAI has been poaching engineers from Apple's hardware team for over a year, offering equity compensation packages worth millions of dollars more than Apple's offers, which has deeply frustrated Apple executives. As early as 2024, Apple had concerns about ChatGPT's privacy standards. However, considering its own generative AI capabilities were far from mature, Apple felt it had no choice but to integrate the technology. Delays in the delivery of Apple's AI technology have become a significant blemish on the company's image. Earlier this month, Apple settled a class-action lawsuit for $250 million. The lawsuit accused Apple of falsely advertising new Siri features—some of which were promoted to consumers as far back as 2024 but have yet to be released.
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