Apple Paying OpenAI With Distribution, Not Cash

When will Apple and OpenAI’s new partnership make money for either company?

According to a report Wednesday (June 12) from Bloomberg News, not right away.

As covered here, Apple announced earlier this week that it would integrate OpenAI’s artificial intelligence (AI) model ChatGPT into its Siri digital assistant, with ChatGPT4o added to iOS, macOS, and iPadOS, “ready to tag in when Siri taps out.”

Sources close to the matter told Bloomberg that — rather than paying OpenAI as part of the agreement — the company believes that exposing OpenAI’s brand and product to hundreds of millions of devices is of equal if not greater value than a monetary deal.

For its part, Apple can offer an advanced chatbot to users, which will potentially drive them to spend more time with their devices and spring for upgrades.

The report notes that the partnership — as it stands now — could cost OpenAI, as it needs to pay Microsoft to host ChatGPT on that company’s cloud network. The more users ChatGPT gets, the greater OpenAI’s expenses, with the integration into iPhones threatening to balloon the company’s computing budget.

And while ChatGPT will come for free on Apple products, the companies could still earn revenue by turning free users into paying ones, the report argues. If users subscribe to OpenAI on an Apple device via the ChatGPT app, that transaction goes through Apple’s payment platform, giving the tech giant a percentage.

Meanwhile, PYMNTS wrote earlier this week that the partnership between the two companies is similar to the ones playing out among banks and FinTechs.

“The classic dilemma of whether to build an in-house solution, buy a ready-made product or form a partnership to integrate new technologies has been a cornerstone of business development for decades, but the importance of partnering with third-party vendors has increasingly come to the forefront,” PYMNTS wrote.

“The fast-paced evolution of technology and the rising complexity of consumer expectations adds layers of intricacy to this decision.”

Also this week, PYMNTS spoke with industry experts about the Private Cloud Compute service that is part of Apple’s AI ecosystem.

Yannik Schrade, CEO and co-founder of computing startup Arcium, said the service is a “step in the right direction” for Apple, but just a first step.

“Trusted hardware-based confidential computing has been around for quite some time and is a field that, due to the complexity of ensuring actual hardware-based security, has in itself seen a lot of exploits, vulnerabilities and data breaches,” he noted. “Those systems still require trust in third parties, which, in the ideal case, would not be required from users.”