When Apple Inc. CEO Tim Cook and his top deputies this week announced a landmark deal with OpenAI to integrate ChatGPT into iPhones, iPads and Macs, they were silent on the terms. financial account.
There was still no answer on Monday: which company will pay the other as part of a close collaboration that brings long-term monetary benefits to both. However, according to people briefed on the matter, the partnership is not expected to generate meaningful revenue for either side – at least not initially.
The deal includes incorporating ChatGPT, a digital assistant that responds to simple requests for information, into Apple’s Siri and new writing tools. Apple will not pay OpenAI as part of the partnership, said the people, who requested anonymity. Instead, Apple believes that pushing OpenAI’s brand and technology to its hundreds of millions of devices will be worth as much or more than the monetary payments, these people said.
Meanwhile, Apple, thanks to OpenAI, gets the benefit of providing an advanced chatbot to consumers – potentially enticing users to spend more time on the device or even spend money on upgrades.
Representatives for Apple and OpenAI declined to comment.
The deal with OpenAI is part of Apple’s broader push into AI. The iPhone maker laid out the plan during a keynote at its annual Worldwide Developers Conference, introducing AI features for iPhone, iPad, and Mac. Non-ChatGPT functions – branded Apple Intelligence – are designed internally by the company.
But even if money isn’t the main factor in the Apple-OpenAI deal, compensation could come into play later.
Under its current structure, the partnership could become costly for OpenAI, which would need to pay Microsoft Corp. to host ChatGPT on that company’s Azure cloud computing system. The more people use ChatGPT, the more OpenAI costs increase. And integration into Apple devices — while optional for users and limited to the company’s recent products — risks adding significantly to computing budgets.
ChatGPT will be available for free on Apple products, but OpenAI and Apple can still make money by converting free users to paid accounts. OpenAI subscriptions start at $20 a month – a fee that includes additional features like the ability to analyze data and generate a wider range of images.
Today, if a user signs up for OpenAI on an Apple device through the ChatGPT app, the process uses Apple’s payments platform, which traditionally benefits the iPhone maker.
Apple’s deal with OpenAI is not exclusive, and the iPhone maker is discussing offering Google’s Gemini chatbot as an additional option. That deal will be done later this year.
Apple has also held talks with Anthropic as a potential chatbot partner, people familiar with the matter told Bloomberg earlier this year. The ultimate idea is to provide a series of AI services to users – similar to how Apple has different search engine options in the Safari browser.
Ultimately, according to these people, Apple aims to monetize AI by reaching revenue-sharing agreements under which it will receive a cut from AI partners that monetize results from chatbots. on Apple platforms. The company believes that AI can cash in on the billions of dollars it receives from the Google search contract because users will favor chatbots and other tools over search engines. Apple will need to come up with new deals to make up for the shortfall.
Apple’s AI services will be inexpensive to provide because most of them are processed on the device itself rather than through cloud computing. However, the company is ramping up its data center operations to support new online AI services that handle more advanced tasks.
For Apple Intelligence to succeed, the company will need to expand it to other languages and countries. That could be a challenge in China, one of Apple’s biggest overseas markets, where services like ChatGPT and Gemini are banned.
According to the people, the company has yet to reach an agreement with a local Chinese supplier to handle chatbot features, but is considering agreements with companies such as Baidu Inc. and Alibaba Group Holding Ltd. Currently, Apple Intelligence is only available in US English, but the company is aiming to support more languages next year.
–With assistance from Rachel Metz and Shirin Ghaffary.
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