Gurman: Neither Apple Nor OpenAI Are Paying for Partnership
Mark Gurman, writing at Bloomberg*:
Left unanswered on Monday: which company is paying the other as
part of a tight collaboration that has potentially lasting
monetary benefits for both. But, according to people briefed on
the matter, the partnership isn’t expected to generate meaningful
revenue for either party — at least at the outset.
The arrangement includes weaving ChatGPT, a digital assistant that
responds in plain terms to information requests, into Apple’s Siri
and new writing tools. Apple isn’t paying OpenAI as part of the
partnership, said the people, who asked not to be identified
because the deal terms are private. Instead, Apple believes
pushing OpenAI’s brand and technology to hundreds of millions of
its devices is of equal or greater value than monetary payments,
these people said.
Meanwhile, Apple, thanks to OpenAI, gets the benefit of offering
an advanced chatbot to consumers — potentially enticing users to
spend more time on devices or even splash out on upgrades.
Apple getting this free of charge, in exchange only for the prestige of showing the ChatGPT logo and credit to users of Apple devices who engage the integration, is Apple-iest negotiation in recent memory. My money says Eddy Cue, Steve Jobs’s favorite co-negotiator, made the deal. (I’d love to take Eddy Cue with me to the dealer when next I buy a car.)
During my show Tuesday night, I asked Federighi, Giannandrea, and Joswiak point blank, “So, who’s paying who in this deal?” (or something to that effect — transcript isn’t done yet), and got nothing more than smiles and shrugs in response. My read on the smiles is that they were smug happy smiles.
Ben Thompson and I recording today’s episode of Dithering — the world’s favorite 15-minute podcast — yesterday before Gurman’s report dropped, but speculating, we came to the same conclusion, that it seemed likely neither company was paying the other. It makes obvious sense from Apple’s perspective. Not so obvious from OpenAI’s. But if OpenAI’s overriding goal is to cement itself as the leader in world-knowledge LLMs — to become to chatbots what Kleenex is to facial tissues — it makes sense to agree to this just to gain users — some of whom will upgrade to paid accounts. Google, on the other hand, probably wants to be paid by Apple to integrate Gemini. But now Apple can turn to Google — and Anthropic and Mistral and whoever else wants in on this iOS and MacOS integration, like the other default search engines in Safari — and Eddy Cue can tell them “My offer is this: nothing. Not even the $20,000 for the gaming license, which I would appreciate if you would put up personally.”
Back to Gurman:
ChatGPT will be offered for free on Apple’s products, but OpenAI
and Apple could still make money by converting free users to paid
accounts. OpenAI’s subscription plans start at $20 a month — a
fee that covers extra features like the ability to analyze data
and generate more types of images.
Today, if a user subscribes to OpenAI on an Apple device via the
ChatGPT app, the process uses Apple’s payment platform, which
traditionally gives the iPhone maker a cut.
Not traditionally. Always. Apple always makes a cut. My single biggest regret from my interview Tuesday night is not thinking to ask, on stage, whether iOS and Mac users will be able to upgrade from free to paid ChatGPT accounts right in Settings, where, I presume, the ChatGPT account sign in will be. If so, Apple will surely be getting their 30/15 percent slice of that. And what’s the alternative? Sending users to OpenAI’s website where Apple would get zilch? That doesn’t sound like Apple.
* Bloomberg, of course, is the publication that published “The Big Hack” in October 2018 — a sensational story alleging that data centers of Apple, Amazon, and dozens of other companies were compromised by China’s intelligence services. The story presented no confirmable evidence at all, was vehemently denied by all companies involved, has not been confirmed by a single other publication (despite much effort to do so), and has been largely discredited by one of Bloomberg’s own sources. By all appearances “The Big Hack” was complete bullshit. Yet Bloomberg has issued no correction or retraction, and their only ostensibly substantial follow-up contained not one shred of evidence to back up their allegations. Bloomberg seemingly hopes we’ll all just forget about it. I say we do not just forget about it. Everything they publish should be treated with skepticism until they retract “The Big Hack” or provide evidence that any of it was true.
★
Mark Gurman, writing at Bloomberg*:
Left unanswered on Monday: which company is paying the other as
part of a tight collaboration that has potentially lasting
monetary benefits for both. But, according to people briefed on
the matter, the partnership isn’t expected to generate meaningful
revenue for either party — at least at the outset.
The arrangement includes weaving ChatGPT, a digital assistant that
responds in plain terms to information requests, into Apple’s Siri
and new writing tools. Apple isn’t paying OpenAI as part of the
partnership, said the people, who asked not to be identified
because the deal terms are private. Instead, Apple believes
pushing OpenAI’s brand and technology to hundreds of millions of
its devices is of equal or greater value than monetary payments,
these people said.
Meanwhile, Apple, thanks to OpenAI, gets the benefit of offering
an advanced chatbot to consumers — potentially enticing users to
spend more time on devices or even splash out on upgrades.
Apple getting this free of charge, in exchange only for the prestige of showing the ChatGPT logo and credit to users of Apple devices who engage the integration, is Apple-iest negotiation in recent memory. My money says Eddy Cue, Steve Jobs’s favorite co-negotiator, made the deal. (I’d love to take Eddy Cue with me to the dealer when next I buy a car.)
During my show Tuesday night, I asked Federighi, Giannandrea, and Joswiak point blank, “So, who’s paying who in this deal?” (or something to that effect — transcript isn’t done yet), and got nothing more than smiles and shrugs in response. My read on the smiles is that they were smug happy smiles.
Ben Thompson and I recording today’s episode of Dithering — the world’s favorite 15-minute podcast — yesterday before Gurman’s report dropped, but speculating, we came to the same conclusion, that it seemed likely neither company was paying the other. It makes obvious sense from Apple’s perspective. Not so obvious from OpenAI’s. But if OpenAI’s overriding goal is to cement itself as the leader in world-knowledge LLMs — to become to chatbots what Kleenex is to facial tissues — it makes sense to agree to this just to gain users — some of whom will upgrade to paid accounts. Google, on the other hand, probably wants to be paid by Apple to integrate Gemini. But now Apple can turn to Google — and Anthropic and Mistral and whoever else wants in on this iOS and MacOS integration, like the other default search engines in Safari — and Eddy Cue can tell them “My offer is this: nothing. Not even the $20,000 for the gaming license, which I would appreciate if you would put up personally.”
Back to Gurman:
ChatGPT will be offered for free on Apple’s products, but OpenAI
and Apple could still make money by converting free users to paid
accounts. OpenAI’s subscription plans start at $20 a month — a
fee that covers extra features like the ability to analyze data
and generate more types of images.
Today, if a user subscribes to OpenAI on an Apple device via the
ChatGPT app, the process uses Apple’s payment platform, which
traditionally gives the iPhone maker a cut.
Not traditionally. Always. Apple always makes a cut. My single biggest regret from my interview Tuesday night is not thinking to ask, on stage, whether iOS and Mac users will be able to upgrade from free to paid ChatGPT accounts right in Settings, where, I presume, the ChatGPT account sign in will be. If so, Apple will surely be getting their 30/15 percent slice of that. And what’s the alternative? Sending users to OpenAI’s website where Apple would get zilch? That doesn’t sound like Apple.
* Bloomberg, of course, is the publication that published “The Big Hack” in October 2018 — a sensational story alleging that data centers of Apple, Amazon, and dozens of other companies were compromised by China’s intelligence services. The story presented no confirmable evidence at all, was vehemently denied by all companies involved, has not been confirmed by a single other publication (despite much effort to do so), and has been largely discredited by one of Bloomberg’s own sources. By all appearances “The Big Hack” was complete bullshit. Yet Bloomberg has issued no correction or retraction, and their only ostensibly substantial follow-up contained not one shred of evidence to back up their allegations. Bloomberg seemingly hopes we’ll all just forget about it. I say we do not just forget about it. Everything they publish should be treated with skepticism until they retract “The Big Hack” or provide evidence that any of it was true.