OpenAI gets zero payment in the Apple deal, chooses exposure

At its recently concluded annual developer conference WWDC24, Apple announced a partnership with OpenAI to integrate its AI technology into its ecosystem.

As part of the collaboration, Apple will use OpenAI's GPT-4o model to power several features in the iOS 18, iPadOS 18 and macOS Sequoia updates, making up its Apple Intelligence.

One key highlight is the integration of OpenAI's ChatGPT technology into Apple's Siri voice assistant. An integration that promises to significantly enhance Siri's capabilities to handle more complex tasks and actions, making it a more valuable tool for everyday use.

Users will also benefit from AI-powered writing tools that can create stories, rewrite existing text, and offer proofreading assistance all without having to log into or pay for ChatGPT. However, a paid "Plus" tier unlocks additional benefits.

But, while it is easy to imagine a huge amount of money exchanging hands in the deal between the duo, no money was involved in the Apple-OpenAI deal according to a Bloomberg report.

Instead, Apple sees the value in promoting OpenAI's brand and technology to millions of its devices, considering it "equal to or greater than any monetary payment."

On the other hand, while the lack of a financial exchange might seem like an unwise financial decision for OpenAI, the strategy seems clear. The partnership with Apple could help solidify its position as the de facto leader in the AI landscape.

Moreover, OpenAI can still profit by encouraging Apple users to subscribe to ChatGPT Plus for $20 a month. Apple, in turn, will earn a commission on subscriptions made through its devices.

This collaboration with OpenAI is part of a larger strategy by Apple to generate more earnings from AI. Reports indicate Apple is exploring similar revenue-sharing agreements with other AI companies. Talks are underway with Google to potentially integrate their "Gemini" technology and with Anthropic to offer their "Claude" AI chatbot as an option for users.

Overall, the Apple-OpenAI partnership signifies a significant development in the AI landscape. This strategic alliance has the potential to benefit both companies while pushing the boundaries of AI innovation for consumers.