OpenAI Eyes Legal Action After Apple's ChatGPT Integration Flopped

OpenAI is reportedly consulting external lawyers over its troubled integration deal with Apple, after the partnership failed to deliver anything close to what the AI firm was promised.

When the deal was struck, Apple compared it to the famously lucrative arrangement that put Google search inside Safari. That analogy got OpenAI very excited. One OpenAI executive told Bloomberg the company believed the arrangement could generate billions in annual subscriptions. It has not done that.

Instead, OpenAI now suspects Apple deliberately sandbagged the rollout. The design choices alone tell a story. Apple required users to specifically say the word 'ChatGPT' when invoking the feature through Siri, which is about as hostile a UX decision as you can make without technically removing the feature altogether. Responses appeared in small windows that were easy to miss and easier to dismiss. OpenAI feels Apple built a trapdoor into the integration rather than a front door.

The OpenAI executive told Bloomberg the company took a 'leap of faith' because the prospect of reaching hundreds of millions of iPhone users was genuinely compelling. Apple apparently kept the operational details vague until after the deal was done. Efforts to renegotiate have since stalled, and OpenAI has reportedly refused to cooperate on Apple's internal AI model work precisely because it feels so badly misled.

'We have done everything from a product perspective,' the executive said. 'They have not, and worse, they haven't even made an honest effort.'

OpenAI would prefer to settle this without litigation, but breach of contract is apparently on the table. The AI firm is working with outside counsel and could move formally 'in the near future,' according to Bloomberg's sources. A lawsuit isn't the only option, but it's no longer off the table.

The Musk complication

There is a subplot here that makes everything messier. Elon Musk filed a lawsuit last August claiming the Apple-OpenAI deal violated antitrust and unfair competition laws. His theory, stated plainly, was that Apple and OpenAI conspired to lock out rival chatbot developers, with Apple propping up ChatGPT to dominate the market while simultaneously protecting its smartphone turf from disruption.

That theory is looking increasingly strained. The emerging picture is not one of a cosy anti-competitive alliance, but of two companies that struck a deal that neither is happy with. Bloomberg's sources suggest Apple was glad enough to work with OpenAI when its own AI projects were struggling, but cooled considerably once it learned OpenAI was developing a physical device that could compete with the iPhone. Reuters reported Apple was also rattled by OpenAI's collaboration with former Apple design chief Jony Ive on that hardware project.

Musk's claims about ChatGPT exclusivity are also falling apart in practice, since Apple is now testing Siri integrations with both Anthropic's Claude and Google Gemini.

OpenAI has been clear the original deal was never exclusive, and that its potential legal action is unrelated to Apple broadening its AI partnerships.

Musk's lawsuit has survived dismissal motions, and a decision could come as early as next week. This week, magistrate judge Hal Ray Jr. rejected Musk's request to see Tim Cook's internal messages about the deal, but did order Apple to hand over documents from Craig Federighi, the Senior Vice President of Software Engineering. The judge noted Federighi 'made high-level, strategic decisions about the Apple-OpenAI Agreement' and may hold evidence not yet produced. Apple must also disclose any documents referencing potential exclusivity clauses.

So Musk's legal team is getting something, but probably not enough to rescue a conspiracy theory that is being undercut by the facts of the deal itself.

There is still a path to reconciliation. Apple is expected to announce a rebuilt Siri at its June developer conference, potentially one that promotes ChatGPT more prominently. If that happens, OpenAI's most immediate grievances might be addressed before anyone files anything.

But right now, both sides are heading into a court battle in October defending a partnership that neither appears to want anymore. That is going to make for an awkward trial.