Apple and OpenAI partnership was forged in mutual benefit, not monetary exchange

WWDC 2024 is behind us, and the deal that undoubtedly surprised everyone was Apple and OpenAI shaking hands to bring artificial intelligence to iPhone and other Apple-branded devices. So what were the details of the agreement? Did Apple empty its coffers for this deal? It seems like an unusual deal has been made!

According to recent reports, Apple paid OpenAI nothing in monetary terms for their recent partnership, opting instead for a currency far more valuable by today’s standards: Distribution.

According to Bloomberg’s Mark Gurman, neither company exchanged cash in this deal, focusing instead on what each brings to the table in terms of reach and technology.

NEW: Apple and OpenAI have been silent on the financial terms of their ChatGPT deal. But here are the details: Apple and OpenAI aren’t paying each other and instead there’s money to be made later on revenue sharing deals. More here: https://t.co/MGTdWeJsyG

— Mark Gurman (@markgurman) June 13, 2024

Consumer connection is the most valuable currency

This partnership isn’t about dollars and cents; it’s about connecting with consumers. Apple, with its vast user base spanning iPhones, iPads, and Macs, offers OpenAI an unparalleled platform for expanding the reach of ChatGPT. In return, OpenAI provides Apple with cutting-edge generative AI capabilities, boosting its appeal to consumers and investors alike.

This exchange of value is evident in the stock market’s reaction. When Apple mentioned ChatGPT at its Worldwide Developers Conference (WWDC) together with the introduction of Apple Intelligence, Apple’s stock prices saw a notable increase. This suggests that investors see the potential of this partnership, recognizing the value of combining Apple’s hardware with OpenAI’s AI prowess.

The move benefits both parties

While Apple isn’t paying OpenAI directly, it’s not a one-sided deal. Apple benefits by gaining access to OpenAI’s advanced AI technology, which it can leverage to enhance its products and services. This strategic move could help Apple maintain its competitive edge in the market and attract new customers.

Furthermore, by partnering with OpenAI, Apple is positioning itself at the forefront of the AI revolution. This could help the company attract top AI talent and solidify its reputation as a leader in innovation.

The price of progress

The partnership between Apple and OpenAI is complex, with both companies standing to gain from the collaboration. While Apple may not be paying OpenAI directly, it’s important to consider the indirect costs involved.

The partnership could help Apple maintain its competitive edge and attract new customers (Image credit)

For OpenAI, the partnership comes with increased expenses. As more people use ChatGPT through Apple devices, OpenAI’s computing costs will rise. This is because OpenAI relies on Microsoft’s Azure cloud servers to host ChatGPT, and usage fees apply.

On the other hand, Apple benefits from OpenAI’s technology without incurring these direct costs. This gives Apple a potential advantage in the long run, as it can leverage OpenAI’s AI capabilities without the financial burden of developing and maintaining the technology itself.

This partnership also underscores the importance of data in the AI domain. Apple’s vast user base provides OpenAI with a treasure trove of data, which is essential for training and refining AI models. This highlights the growing significance of data as a valuable asset in the tech industry.

Featured image credit: Solen Feyissa/Unsplash