Apple Just Declared War On OpenAI

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**Ed Elson** (1:27)
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Welcome to Prof G Markets. I'm Ed Elson. It is July 14th. Let's check in on yesterday's market vitals. The major indices fell after the US and Iran clashed over the weekend. Brent Crude rose as President Trump resumed the Strait of Hormuz blockade and proposed a 20% toll on cargo. More on that later. That sent treasury yields rising as well, as traders priced in higher inflation. On CalShe, the odds of a rate hike before year end hit 67%.
Meanwhile, SK Hynex led a global chip sell-off. We will get to that later too. And finally, SpaceX shares dropped another 4%, nearing their IPO price of $135 per share.
Okay, what else is happening? Apple is suing OpenAI. The iPhone maker filed suit in federal court on Friday, accusing OpenAI of stealing trade secrets to build their own hardware business. Apple claims that hardware business is now, quote, rotten to its core by its illegal reliance on misappropriated trade secrets. Apple also alleges that OpenAI pushed job candidates to reveal confidential information during interviews. The company is seeking damages, asking the court to borrow OpenAI from using its trade secrets and to force the company to return its confidential materials. OpenAI responded in a statement saying, quote, We have no interest in other companies' trade secrets. This drama comes just as OpenAI prepares to launch its first hardware device, and of course, gears up for one of the most anticipated IPOs in history. Joining us to discuss this drama, we're speaking with Alex Kantrowitz, author of the Big Technology Newsletter and host of the Big Technology Podcast. Alex, thank you for joining me. The statement that really jumped out at me in this lawsuit is the one that I mentioned. The statement by Apple that OpenAI's hardware business is rotten to its core, that's pretty intense language, makes me think that this lawsuit is a big deal, but I don't know, what do you make of it?

**Alex Kantrowitz** (3:49)
Yeah, well, Apple, first of all, really sees the threat coming from OpenAI. If you think about where OpenAI sits, of course, it's working to expand an enterprise, but it hasn't given up on consumer. And where they're focusing in consumer are these bidirectional voice models. So instead of you taking a turn to AI, taking a turn to talk, it's a model that can listen and talk at the same time, which is going to make much more natural speech. And of course, that's the way that Siri is accessed by people is through conversations. So Apple certainly sees that OpenAI is developing a technology that could threaten its business. Of course, OpenAI has a billion users of ChatGPT according to some third parties. And so if you unleash that with all those users and maybe build your own device, that could be the thing that cuts off Apple's growth. So there was a great Wall Street Journal article today talking about how Apple has gone thermonuclear on companies coming for its business in the past. And of course, the most prime example is the Android makers in previous years. So this could be a replay of that for sure. It's not to say that Apple doesn't have a case against OpenAI. If you look at the filing, it seems like OpenAI is basically dead to rights on this one, where Apple has some of the most sloppily collected corporate espionage in the history of business on behalf of OpenAI, where OpenAI basically did some of this trade secret ceiling on Apple computers, which Apple was able to see.