Apple to pay OpenAI via distribution for ChatGPT integration: Report

Apple’s recent agreement with OpenAI marks a significant step in its AI strategy, reported by Bloomberg’s Mark Gurman.

Unlike traditional deals involving cash payments, Apple plans to integrate OpenAI’s ChatGPT into Siri and other tools through distribution across its devices.

This move aims to enhance user experiences by offering a digital assistant capable of responding to queries plainly and effectively. While no monetary exchange is involved at present, Apple views the partnership as mutually beneficial.

By leveraging its vast user base, Apple intends to amplify OpenAI’s technology and brand presence. This approach, according to sources familiar with the matter, aligns with Apple’s strategy to drive adoption of AI-driven functionalities without direct financial transactions.

Financial Implications and Strategic Considerations

Mark Gurman highlights that despite no upfront payments, future financial factors may arise for OpenAI due to escalating Azure hosting costs for ChatGPT with increased usage.

Integrating into Apple’s ecosystem, while optional and limited to newer products, could potentially increase OpenAI’s expenses. Gurman notes initial free access for ChatGPT on Apple devices with revenue potential from converting users to paid subscriptions.

He also anticipates revenue-sharing through Apple’s payment platform for OpenAI’s subscription plans starting at $20 per month, offering advanced features like data analysis and image generation.

Expansion and Market Dynamics

Apple’s collaboration with OpenAI is non-exclusive, with future plans to integrate Google’s Gemini chatbot, aiming to offer users multiple AI options similar to its Safari browser approach with search engines.

Apple foresees generating revenue from AI services through revenue-sharing agreements to offset potential declines from existing arrangements, as users increasingly favor AI tools over traditional search engines.

Challenges and Global Strategy

Expanding Apple’s AI services globally faces challenges, especially in markets like China, where regulatory constraints affect offerings such as ChatGPT and Gemini.

Discussions with local providers like Baidu and Alibaba are ongoing. Currently, ChatGPT supports only American English, with upcoming plans to include more languages, according to Gurman.