A year ago, OpenAI seemed like it had an untouchable lead in the AI race.
It was by far the dominant AI platform for consumers. Competitors like Meta were scrambling — and spending a gazillion dollars on new hires — to catch up. Sam Altman had enough cash, and clout, to hire famed Apple designer Jony Ive to build him a mystery device meant to take on the iPhone Ive helped build.
Now the narrative has turned: OpenAI is now scrambling to catch up to rival Anthropic, which had focused on enterprise accounts instead of selling to individuals. Altman seems to constantly be reorganizing his leadership structure, and then reorganizing again. And Apple is suing OpenAI, claiming that Altman’s company poached its employees and stole its secrets.
It’s an open question whether OpenAI erred by focusing early on consumers instead of companies. Or whether it has the right executives in the right roles. You need time to see how all of that shakes out. (I’ve asked OpenAI if they want to weigh in on any of this.)
But we can focus on the Apple lawsuit right now. Because what’s interesting to me isn’t just the spectacle of one of the world’s most powerful companies suing one of the world’s most valuable startups (and, possibly dragging its legendary former employee into court as well, though Ive hasn’t been named in the suit).
It’s that this is the second time OpenAI has aligned itself with a leading tech giant, and ended up in a messy breakup.
That first rift was with Microsoft, which at one point appeared to be OpenAI’s most crucial Big Tech ally. Microsoft first invested $1 billion in OpenAI way back in 2019, and then made a much bigger commitment in 2023, months after OpenAI ushered in a new era of AI with ChatGPT. When Altman was temporarily fired by his board later that year, Microsoft CEO Satya Nadella provided crucial backing for Altman in his negotiations to take back his job.
But by April of this year, Microsoft and OpenAI had more or less broken up. They still have a deal, but the exclusive relationship they’d forged a few years earlier is now formally non-exclusive. Of note: That deal came weeks after a report that Microsoft was considering suing OpenAI for allegedly breaching their existing contract.
The Apple/OpenAI story isn’t a carbon copy of the Microsoft/OpenAI story, but it rhymes.
In 2024, Apple blessed OpenAI’s status as the dominant AI company by giving it pole position on the iPhone: Apple wasn’t forcing its users to use ChatGPT, but it was going to integrate the chatbot into its phone software. It seemed like a win for both companies.
Then OpenAI bought Ive’s company for $6.5 billion, and announced plans to build a mystery device that isn’t supposed to be an iPhone but is also clearly meant to compete with the iPhone in some way. And by May of this year, OpenAI executives were so disappointed with their Apple tie-up that they were reportedly considering suing Tim Cook’s company for breach of contract.
Instead, Apple is suing OpenAI.
I don’t have an opinion about the merits of Apple’s case. So far, we only have Apple’s (preliminary) side of the story. And there are plenty of observers, including my colleague Alistair Barr, who aren’t particularly sympathetic to Apple.
It’s also not the first time Apple has used the court system to fight a would-be iPhone challenger: While it didn’t sue Google directly, in 2011 it did sue Samsung, which was using Google’s Android software to build an iPhone rival.
But I think it’s remarkable that OpenAI has struck two very important alliances with Big Tech giants, and both of them have ended in acrimony.
A seen-it-all perspective would be to argue that fighting with Big Tech companies is a sign that you may be a Big Tech company yourself. And that all of these guys have enormous resources, and lawsuits take forever to play out, and by the time they do, the world may have changed so radically that the initial fight becomes pointless. We’re all adults here, let’s move on.
But if you’re a Big Tech executive who’s working with OpenAI, or considering it, you may have already had concerns about the company’s leadership. This week’s news may give you even more reasons to fret.
