Apple announced on Monday that it would integrate OpenAI’s ChatGPT into its devices. However, people familiar with the deal told Bloomberg that the iPhone maker won’t pay OpenAI to use its product.
Instead, Apple thinks the new deal will bring OpenAI’s technology closer to hundreds of millions of users and will be of equal or greater value than a cash payment, Bloomberg’s sources told the outlet.
However, the sources said this alliance between Apple and OpenAI isn’t expected to generate meaningful revenue for either company yet.
The deal could still be a win for both parties. Apple, for one, would benefit from offering users access to an advanced AI chatbot.
And OpenAI stands to reap the benefits of access to Apple’s vast platform. Being integrated into devices means it will reach millions of Apple users, some of whom may upgrade to paid ChatGPT versions, access to which starts at $20 a month.
OpenAI and Apple did not immediately respond to requests for comment from Business Insider sent outside regular business hours.
Still, OpenAI may be getting a pretty good deal. That’s considering that partnering with Apple doesn’t often come free — Google in 2022 paid the company $20 billion to have its search engine be the default on iPhones and other Apple devices.
The extent of OpenAi’s access to Apple users is also fairly extensive. At its Worldwide Developer’s Conference on Monday, Apple announced that it would add ChatGPT to its iPhone, iPad, and Mac products. Users will have access to writing tools, document reading, and image generation without switching between apps.
The tech giant also plans to integrate ChatGPT with Siri, the digital assistant built into Apple devices. Users can opt out of the integration and decide if they want Siri to send their queries to ChatGPT.
Apple’s WWDC keynote, which also discussed its in-house Apple Intelligence offerings, provided relief to investors who worried that the company was falling behind in the AI race.
Analysts reacting to the OpenAI deal also predicted that the tie-up may dilute Apple’s revenue, at least in the near term.
For one, analysts at Bernstein wrote after the WWDC keynote that while revenue sharing could benefit both firms, “some possible migration from traditional search queries” may still affect Apple’s returns on the investment.
That said, Apple may also introduce similar partnerships with other chatbots.
Top Apple executive Craig Federighi also said at the WWDC keynote that Apple’s looking to cut a deal with Google to use its Gemini AI model.
Apple has also held talks with Anthropic for a potential chatbot deal, people familiar with the matter told Bloomberg in March.
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