Deep Dive: The Real Reason Apple Sued OpenAI

**Zaid** (0:00)
Welcome back to The Rundown for another weekend deep dive. Today, we are talking about Apple declaring war on OpenAI. Last Friday, Apple filed a lawsuit accusing OpenAI of stealing its trade secrets, and there are some wild accusations in this 41 page filing. We're talking everything from a former Apple employee keeping a company laptop, to downloading secret documents, and even bringing Apple parts to an OpenAI job interview. So in today's episode, we'll break down how Apple and OpenAI went from partners to courtroom enemies, the wildest allegations in the lawsuit, what Apple is really trying to accomplish here with this lawsuit, and why this fight could be about something much bigger than just stolen files. We got a great one for you today.
Let's dive in.
Just two years ago, Apple and OpenAI were partners at Apple's WWDC conference in June of 2024 Apple announced that ChatGPT would be integrated into Apple Intelligence and Siri. Now, this was a big deal because up until then, Apple was severely lacking when it comes to their AI strategy. So many people thought that this partnership would help put Apple back on the map. Sam Altman was actually sitting in the audience during this announcement. In that presentation, Apple called OpenAI a pioneer and market leader in AI. So at the time, this looked like a pretty important partnership for both companies, because again, Apple desperately needed help with their AI strategy, and OpenAI got ChatGPT into the hands of hundreds of millions of iPhone users. But this partnership didn't really deliver for either side, because the integration of ChatGPT into Siri was very clunky. When this integration was first announced, I was so excited, because I thought that it would actually make Siri useful, but I mean, it was so bad that I pretty much never used it. And by the way, OpenAI was also pretty unhappy with this integration. According to Bloomberg, they even considered legal action against Apple earlier this year over that partnership. So that kind of paints the picture of where the relationship with Apple and OpenAI were. Tensions were already building behind the scenes. And then the nail in the coffin was when Apple announced that its new AI powered Siri, which comes out in a couple months, would run on Google's Gemini model, which ultimately ended the relationship with OpenAI. But here's the thing, it wasn't just that their software relationship was falling apart. Apple also started treating OpenAI as a threat, because OpenAI was quietly making moves to compete with Apple on hardware. And they were doing it by hiring people that used to work at Apple. At the center of all this is a guy named Tang Tan. Tan spent 24 years at Apple and worked his way up to Vice President of Product Design, where he oversaw products like the iPhone and Apple Watch. But in late 2023, Tan told Apple that he was leaving. Now, typically when someone resigns at Apple, they're shown the door on that day. But Apple, in a rare move, let him stick around until February of 2024 to help transition the hardware division. Meanwhile, according to Bloomberg, Tan was already working behind the scenes with former Apple Design legend, Jony Ive, on a new AI hardware company called IO Product. On a side note, that is an absolutely terrible name for a company. Anyways, you fast forward to May of 2025, and the tech industry was shocked when OpenAI announced that they were acquiring IO for $6.5 billion, and they made Tang Tan OpenAI's chief hardware officer. And right after that, OpenAI started hiring aggressively from Apple. According to Apple's lawsuit, more than 400 former Apple employees now work at OpenAI. We're talking to everyone from hardware engineers to designers, for people that worked on the iPhone, Apple Watch and AirPods. And Apple says that this went way beyond just normal recruiting. They say that OpenAI was actively stealing Apple's trade secrets to give their new hardware division a jumpstart. And that brings us to the 41-page lawsuit that was filed in federal court. So let's get into some of these shocking allegations.
All right, so let's get into the actual lawsuit, because Apple was making some pretty insane allegations. The main character of this lawsuit is a guy named Chang Liu. Liu spent eight years at Apple as a senior electrical engineer working on the iPhone. Then in January of this year, he left Apple to work at OpenAI's hardware team. Now, when you leave Apple, or any big tech company for that matter, there's usually a standard exit process. You know, you return your company-issued device, you might do an exit interview, and you might sign some documents on your way out. Well, according to the lawsuit, Liu just didn't do any of that. He ghosted Apple's security team completely, and he kept at least one Apple-owned MacBook. Now, this is where things get kind of weird, because a few weeks after leaving Apple, Liu discovered that there was a bug in Apple's system that still gave him access to Apple's internal file servers, even though he was now employed by a direct competitor. Now, if you're ever in a situation that you have access to your old company's confidential files, there's usually one right answer here. You should just report it to the company and move on with your life. What you probably shouldn't do is what Liu allegedly did, which is text your friend who still worked at Apple, quote, LOL, I found out I can still access the network storage, so funny. Now keep in mind, Chang Liu did this on his Apple-issued laptop. You would think that this guy would be one of the smartest people in Silicon Valley, but you gotta admit, this was a pretty dumb move. Of course, Apple was gonna find out that he was accessing the servers if he was using an Apple-issued laptop. Now, a quick sidebar here, Apple having a bug that allows an ex-employee to access through internal file systems is a valid concern. This is a $4 trillion company we're talking about. Not to mention, Apple probably should have disabled this employee's Apple-issued laptop in the first place, but regardless, Chang Liu probably shouldn't have done what he did. One of the conspiracy theories that I have is that Apple might have let him do this to kind of set this trap for this lawsuit. Anyways, according to Apple, once Liu found out that he had access to Apple's internal files, he spent weeks downloading dozens of confidential files. You know, I'm talking engineering presentations, technical specs, details about unreleased products, including one compilation of over a thousand pages of technical documents. And again, he was doing this while working for OpenAI. But the lawsuit doesn't just stop at Liu. Apple was also going after Tang Tan. They claimed that he was using OpenAI's job interviews to get information from Apple employees about unreleased products. Apple says that Tan even used Apple's secret internal product code names in interviews and asked candidates about the status of those products. And this is the part that's crazy. He even told candidates to bring actual parts from Apple to their interviews for a show and tell session. So some of these employees were bringing batteries, logic boards and product casings. So you can kind of see why Apple filed this lawsuit. But here's the thing, most of Apple's most detailed evidence is coming from Cheng Lu. And that's because he was dumb enough to do all of his shady stuff on Apple's company hardware. But going after Cheng Lu might just be how Apple gets a look inside what OpenAI is working on when it comes to their hardware. Tech analyst Ben Thompson wrote a great piece this week describing Lu as basically a fishing license for Apple. Apple has this potential smoking gun against one of their former employees. And now the discovery process for this lawsuit could give them access to OpenAI's emails, documents and communications. And this could achieve Apple's ultimate goal of slowing down OpenAI's hardware ambitions. So let's talk more about that.