Key Takeaways
- OpenAI has retained external legal counsel to examine potential breach-of-contract claims against Apple
- The Siri-ChatGPT partnership has failed to generate anticipated subscription revenue or user engagement
- Apple (AAPL) shares declined 1.2% to $295.38 on Thursday following the disclosure
- Apple’s upcoming iOS 27 will enable users to choose from multiple AI services, including Claude and Gemini
- OpenAI’s $6.5B acquisition of Jony Ive’s hardware company intensifies competitive tensions with Apple
The collaboration between Apple and OpenAI appears to be falling apart. According to Bloomberg, OpenAI has hired external legal representation to evaluate potential legal remedies, including issuing a formal breach-of-contract notification to Apple.
Shares of Apple declined by as much as 1.2% to $295.38 on Thursday following the news. Prior to this development, the stock had gained approximately 10% year-to-date through Wednesday’s trading session.
The partnership, unveiled during Apple’s Worldwide Developers Conference in June 2024, integrated ChatGPT functionality into Siri and the Visual Intelligence capabilities of the iPhone. The arrangement also provided iPhone owners with direct access to ChatGPT subscription sign-ups through iOS system preferences, with Apple receiving a revenue share.
OpenAI anticipated the partnership could ultimately produce billions in annual subscription revenue. Those projections have failed to materialize.
OpenAI’s internal analytics revealed that iPhone owners predominantly use the dedicated ChatGPT application rather than accessing it through Siri. The Siri integration only triggers ChatGPT responses when users explicitly speak or type “ChatGPT,” and even then, answers display in a constrained, minimal interface.
“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 declined to provide statements.
Growing Friction Between Tech Giants
The partnership has deteriorated from multiple angles. Apple has maintained persistent reservations about OpenAI’s handling of user privacy and data security. Additionally, Apple leadership has grown increasingly concerned about OpenAI’s aggressive recruitment efforts targeting its hardware engineering talent, with compensation packages exceeding Apple’s offerings by millions.
OpenAI’s acquisition of Jony Ive’s hardware venture for approximately $6.5 billion has positioned the AI company as a potential direct competitor in the consumer device market.
Earlier this month, Apple reached a $250 million settlement in a class action lawsuit alleging misleading marketing regarding Siri’s artificial intelligence capabilities. Several features promoted to consumers in 2024 remain unavailable.
According to Bloomberg, OpenAI’s efforts to renegotiate the agreement have reached an impasse. Any formal litigation is expected to wait until OpenAI’s current legal proceedings with Elon Musk reach a conclusion.
Apple’s Future AI Strategy
Apple intends to diversify its AI providers with iOS 27, anticipated to debut at WWDC on June 8. The new Extensions framework will allow users to select from various AI models directly within Siri, including Anthropic’s Claude and Google Gemini.
OpenAI will remain among the available options in this model selection interface, which may actually enhance its prominence on Apple devices compared to the current implementation.
Apple is reportedly paying Google approximately $1 billion per year to leverage Gemini technology as the foundation for its broader artificial intelligence initiatives. OpenAI was presented with a comparable opportunity but declined, having grown disillusioned with the partnership.
The Google-Apple agreement for Gemini integration was finalized late last year. In February, CEO Tim Cook explained the company selected Google because leadership believed it provided “the most capable foundation” for Apple’s AI development efforts.
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