Regardless of my points with Apple’s AI efforts, I’ll often hit up Siri with an obscure query.
After I do, I often get the identical response:
“Would you like me to make use of ChatGPT to reply that?”
That’s as a result of Apple and OpenAI struck a cut price final yr to boost the “Apple Intelligence” AI system.
Apple Intelligence makes use of Apple’s personal fashions for on-device duties. However due to this deal, when Siri wants assist it asks your permission to ship a question to ChatGPT.
In return, OpenAI will get one thing most firms would commerce a truckload of GPUs for…
Entry to the iPhone crowd.
This deal appears to work out nice for the common iPhone client, though it actually simply provides a layer between me and my ChatGPT app.
However I hadn’t given it an excessive amount of thought till this week, when — out of the blue — the deal between these two tech giants turned an enormous situation.
Not surprisingly, Elon Musk was concerned.
Right here’s what occurred, and what it actually means…
What’s This Beef Actually About?
In June of final yr, Bloomberg reported that there was an uncommon construction to Apple’s take care of OpenAI.
Apple wasn’t paying OpenAI in money. It was “paying” with distribution.
In different phrases, entry to lots of of tens of millions of Apple customers.
It’s a easy funnel. Apple sends customers to ChatGPT to deal with sure questions, and OpenAI banks on a portion of these customers changing to paid accounts inside Apple’s ecosystem.
And the deal is smart when you think about the going charge for distribution on the iPhone.
Google pays billions of {dollars} yearly to stay Safari’s default search. In 2022 alone, courtroom filings present the corporate paid $20 billion for this privilege.
If that’s the value Apple can command to promote consideration, then you’ll be able to see why OpenAI agreed to take a slice of that focus as an alternative of money.
However this deal was cemented final yr. So what’s all of the fuss about immediately?
It began on Monday when Elon Musk accused Apple of favoring OpenAI within the App Retailer.
He additionally wrote: “xAI will take instant authorized motion.”
However OpenAI CEO Sam Altman was having none of it. He fired again with this submit:
And the web did what it does finest when billionaires bicker.
It turned the feud into content material.
However I don’t actually care if these two are combating once more. They’ve an extended historical past of sniping at one another.
Musk co-founded OpenAI in 2015, however he left in 2018 after a failed takeover bid. Altman received that energy play, and Musk has been firing photographs on the firm ever since.
He’s accused OpenAI of abandoning its non-profit mission, of being too near Microsoft and of placing income over security.
He even sued the corporate over its mission earlier than dropping the case in June 2024.
That’s why I’m extra involved with why Musk introduced up this deal within the first place.
As a result of I consider there’s far more to this dust-up than the unhealthy blood between Musk and Altman.
For one, there’s the timing of Musk’s submit.
His AI firm, xAI, is rising quick. In March, simply after Grok 3 launched, the service pulled in almost 203 million visits.
But it surely’s nonetheless trapped inside X’s partitions…
And that’s not the identical as being on lots of of tens of millions of iPhones.
In the meantime, OpenAI is reportedly nearing 800 million weekly lively customers as of early August.
So you’ll be able to see why Musk would take into account it a strategic menace if the App Retailer’s entrance web page appears tilted towards ChatGPT.
In any case, he threatened to ban Apple gadgets at his firms when Apple first introduced the ChatGPT tie-in final yr.
However public fights like these additionally seem to play to Musk’s strengths.
He is aware of that turning a enterprise dispute right into a viral second places stress on his rivals and rallies his base. It’s the identical playbook he’s used with regulators, short-sellers and opponents in different industries.
Then there’s the optics conflict.
Musk has framed himself as an AI security advocate whereas working a for-profit AI store. By accusing Apple of “favoring” OpenAI, he paints himself as an underdog taking up Massive Tech gatekeepers.
That’s why I don’t consider this spat is nearly App Retailer rankings.
It’s about who owns probably the most useful entry level to client AI. As a result of the iPhone continues to be the richest on-ramp in client tech.
Musk needs a lane onto that on-ramp, however Apple gave OpenAI the go-ahead first.
Right here’s My Take
If the App Retailer is the brand new scoreboard for AI, then we are able to’t ignore Musk’s claims that Apple rigs discovery in ChatGPT’s favor.
However Apple insists its featured spots and rankings are primarily based on “goal standards” and skilled curation.
What’s extra, Group Notes and third-party trackers identified that different AI apps have hit No. 1 this yr, together with DeepSeek and Perplexity.
In different phrases, ChatGPT isn’t the one one which has made it to the highest this yr.
Now, I can agree that Apple’s App Retailer picks aren’t above scrutiny. However the public knowledge doesn’t present a ChatGPT monopoly on the charts.
This implies Elon is making an even bigger deal of this example than the information help.
In truth, I consider there’s an enormous “inform” that this race continues to be broad open.
Sure, it appears most individuals solely use Grok to reality test on X. So Chat GPT undoubtedly has the lead.
But it surely’s attention-grabbing to me that the motion of utilizing AI hasn’t gotten a verb but. Like how most individuals name tissues “Kleenexes.”
Or how, once you search on-line, you most likely say: “I Googled it.”
And once you use a rideshare service, you seemingly say: “I Uber-ed there.”
That type of shorthand doesn’t exist for LLMs but.
Finally, it comes all the way down to this…
Apple’s “cost” to OpenAI was in attain, not in money. Which implies this week’s battle was much less about favoritism and extra about who controls the on-ramp for AI on the iPhone.
Musk is combating an optics conflict as a result of he would very very similar to xAI to have iPhone-grade distribution, and one solution to probably get it’s to attempt to stress Apple in public.
However except he can show systematic bias by Apple, his lawsuit discuss is all theater.
That stated, if Apple needs fewer fights like this, it ought to make its App Retailer rating course of extra clear.
That might be a win for everybody concerned on this dust-up.
Regards,
Ian KingChief Strategist, Banyan Hill Publishing
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