Apple is paying OpenAI with exposure, not cash

It is well known that Google pays Apple billions for the premium seat as iPhone's default search engine. It seems that arrangement isn't necessary in either direction for the Apple and OpenAI partnership.

According to a report from Bloomberg, Apple isn't paying OpenAI nor is OpenAI paying Apple. The current arrangement relies on Apple providing exposure to OpenAI's ChatGPT to millions of users who want access to the tool — a mutually beneficial arrangement.

While it appears that this is the arrangement for now, it could change into a kind of revenue share deal in the future. Apple is talking with other LLM providers like Google to give customers more options. Eventually, Apple will likely make a cut of any monetization options offered by third-party LLMs.

Apple introduced AI features during WWDC 2024, calling its in-house options "Apple Intelligence." The on-device models are made by Apple, and calls out to servers are done using an ultra-private and secure system called Apple Cloud Compute.

However, Apple is offering an alternative to Apple's server-side LLMs. The launch partner for this is OpenAI, so users can call ChatGPT on a per-request basis via Siri and other tools.

Every call to ChatGPT has to be authorized by the user, and OpenAI has said it isn't collecting any data about requests from Apple users. While an account isn't required and the feature is free, premium ChatGPT users can connect their accounts for more advanced options.

Apple Intelligence and the option ChatGPT integrations are launching in beta in the fall. Apple is expected to roll out access slowly during the initial launch.