Apple’s Feud With OpenAI Is Far More Than an Intellectual Property Dispute

On July 10 Apple filed a case at the federal District Court for the Northern District of California, making some serious allegations against OpenAI, its onetime AI partner for Siri and the biggest name in artificial intelligence. In the suit, Apple claimed the company, from engineers to senior leaders, had worked to steal corporate secrets from Apple, as OpenAI, under the leadership of CEO Sam Altman, builds its own hardware division. The complaint brings four claims under the federal Defend Trade Secrets Act and two for breach of contract, and names two former Apple men: an electrical engineer of eight years, Chang Liu, and OpenAI’s chief hardware officer, Tang Yew Tan, who spent 24 years at Apple and left as its vice president of product design for the iPhone and Watch.These are scandalous claims, but they hide a lot of question marks — even if they turn out to be true — and more context than anyone is stating. For example, does any evidence show that Mr. Liu acted on orders when he got into Apple’s file storage after he had left, or was he just a moron? If he was, then the claims of a companywide policy of intellectual property theft from Apple seem to be true only if you believe in Apple’s expansive self-definition of intellectual property: that it doesn’t only own what its staff made, but their ideas and jobs, in perpetuity. Apple doesn’t like competitors poaching its talent, and OpenAI has been doing that extensively. Along with buying the hardware company io — co-founded by the famed former Apple designer Jony Ive, and by Mr. Tan — it has poached more than 400 staff from Apple, by Apple’s own count. Nothing about that is illegal, but it’s obvious both why OpenAI adopted such hiring practices, and why Apple would be annoyed and suspect foul play.Among the unresolved questions: What were the secrets OpenAI received in the named interaction? Were they shared beyond the people in question? And were any of them useful useful? Apple hopes discovery will give it some concrete answers, but nothing guarantees those answers will be scandalous.Another section of the lawsuit says Mr. Tan asked Apple staffers interviewing at OpenAI to bring in “actual parts” they had been working on, for “show and tell.” If that policy applied only to Apple, and solicited secret components, then it’s lawsuit-worthy — but explaining the work you have been doing is reportedly a normal part of hardware interviews.The fundamental fight though is that OpenAI, like many companies before it and driven by its CEO Sam Altman, wants to break the Apple-dominated hardware status quo. It is hoping and trying to invent the next, post-smartphone, AI-centric form of computer so that it controls both the hardware and the software, and, most importantly, doesn’t have to pay Apple a tax on any subscription or ad revenue it earns on iPhones. Apple takes 30 percent of most App Store sales, and 15 percent from small developers and from subscriptions after a subscriber’s first year.Apple — which watched Facebook’s and Amazon’s attempts at iPhone alternatives flop — wants to stop this. It has a particular loathing for companies that copy its work — as it demonstrated in the seven-year Samsung lawsuit, which ended in a 2018 settlement — and the AI industry has cost it dearly, robbing it of its place as TSMC’s biggest customer, forcing it to raise Mac and iPad prices in June as memory costs soared, and making it look a late arrival. Microsoft has implemented AI terribly, but at least it invested early. Apple is only now bringing out an upgraded Siri, which fulfills just part of what it promised in 2024 and leans on Google’s Gemini to do it, and it has seemed opposed to the whole shift throughout.

Apple’s Feud With OpenAI Is Far More Than an Intellectual Property Dispute

Apple’s Feud With OpenAI Is Far More Than an Intellectual Property Dispute

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