Apple vs. OpenAI

**Ryan Knutson** (0:06)
Last year, OpenAI released a promotional video featuring CEO Sam Alden.

**SPEAKER_2** (0:12)
I think we have the opportunity here to kind of completely reimagine what it means to use a computer.

**Ryan Knutson** (0:19)
In it, he's chatting with the famous product designer, Johnny Ive.

**SPEAKER_3** (0:23)
Sam is a rare visionary.

**Ryan Knutson** (0:27)
He shoulders- Johnny Ive used to be synonymous with Apple, but here he was cozying up with the CEO of OpenAI.

**SPEAKER_2** (0:36)
Johnny is the deepest thinker of anyone I've ever met. What that leads him to be able to come up with is unmatched.

**Ryan Knutson** (0:53)
This video is kind of a love fest, but it was also an announcement. OpenAI was getting into hardware. It was going to make an AI device.
And Johnny Ive, who spent almost 30 years at Apple, was gonna lead the team to do this.

**Rolfe Winkler** (1:07)
To basically displace Apple, to create a family of devices that will be built for the age of AI, that will be different from our smartphones, something new to build our lives around.

**Ryan Knutson** (1:22)
Our colleague Rolfe Winkler covers the tech industry. And he says OpenAI has been hiring a lot of former Apple employees, and putting them to work on top secret AI devices.
Now, Apple is sending OpenAI a warning. On Friday, it filed a lawsuit.

**Rolfe Winkler** (1:42)
In a nutshell, Apple is accusing OpenAI of stealing its trade secrets.

**Ryan Knutson** (1:50)
Welcome to The Journal, our show about money, business and power. I'm Ryan Knutson. It's Wednesday, July 15th.
Coming up on the show, Apple versus OpenAI.

**SPEAKER_5** (2:16)
This episode is presented by Accenture. When you're advertising operations fall out of sync, everything else follows. Spotify and Accenture are working together to reinvent the rhythm of ad sales, using automation, analytics and smarter workflows to simplify campaign delivery and access better data across the business. The result? Less time spent on operations, more time connecting brands with the moments and fandoms that matter most. Learn more at accenture.com/spotify.

**SPEAKER_6** (2:46)
This episode is brought to you by Optum.
Healthcare doesn't always work great. If you ever waited on a refill or couldn't schedule an appointment, you get it. That's what Optum is changing. They're using data and technology to integrate patient care, pharmacy and everything else, so healthcare is connected, not complicated. That means cheaper prescriptions that are easier to get, and care that looks at the whole person, how you need it. Optum is making healthcare work as one for everyone. Learn more at business.optum.com.

**Ryan Knutson** (3:23)
All right, so OpenAI makes a chat bot, ChatGPT. Why does it want to make a device?

**Rolfe Winkler** (3:28)
Why does OpenAI want its own family of devices? For a few reasons. One, they want to control their own destiny, right? If you want to reach consumers today, particularly in the United States, and the ones that have the most money to spend, the consumers with the biggest wallets, you have to go through the iPhone.
You're a tech company, it doesn't matter how big you are. You want to reach your customer base, you have to go through the app store. And that means you're in Apple's domain, you're controlled by them, and you're limited in what you can do.

**Ryan Knutson** (4:03)
And in most cases, apps have to pay Apple a percentage of their revenue.

**Rolfe Winkler** (4:07)
Huge amounts of money.
And if you're OpenAI, when you download ChatGPT through the app store, and a consumer signs up for a subscription, you pay them between 15 to 30 percent of your revenue. It's a big chunk of money. They want to have an AI family of devices that are, you know, built for the age of AI, that aren't built for the age of apps and app stores.

**Ryan Knutson** (4:34)
To get around Apple and gain control of its own destiny, OpenAI set out to make this family of devices. One of the first things it did was acquire Johnny Ive's startup, which he founded after leaving Apple.
And OpenAI didn't stop there. It also started poaching Apple employees directly.

**Rolfe Winkler** (4:52)
The people who are the best at designing hardware work at Apple. They know the best processes, they know the best suppliers, they have the biggest brains for this kind of stuff.

**Ryan Knutson** (5:04)
Apple was paying attention to all this. And last week, it took a swing.
So let's talk about this lawsuit now. Walk me through the allegations.

**Rolfe Winkler** (5:15)
So there is a junior employee named Cheng Liu, who among other things left Apple. And when he was trying to recruit another friend out of Apple, use that person's laptop to basically log into Apple servers and take material, allegedly.