Apple is paying OpenAI in ‘exposure’ & not dollars, but Sam Altman doesn’t mind this at all

Apple, in its deal with OpenAI, has been able to pull off something that would make every brand manager dealing with influencers, or recruiters dealing with freelancers can only dream of — paying them in ‘exposure’.

According to insiders, neither Apple nor OpenAI are focusing on revenue generation from the partnership. Instead, Apple aims to provide OpenAI with significant exposure by embedding ChatGPT into Siri and new AI writing tools on the iPhone, iPad, and Mac.

Rather than monetary payments, Apple believes the exposure provided by featuring OpenAI’s technology across millions of devices is equally, if not more, valuable. This arrangement allows Apple to enhance its devices with advanced AI capabilities, potentially boosting user engagement and driving hardware upgrades.

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This collaboration is part of a broader push by Apple into the AI realm, as showcased at its recent Worldwide Developers Conference. Alongside ChatGPT integration, Apple introduced its proprietary AI features under the “Apple Intelligence” brand.

To put it succinctly, OpenAI and Apple have a symbiotic relationship of sorts. OpenAI has adequate services but no platform like Google or Microsoft has for their AI services, whereas Apple has a platform but no impactful AI chat service to offer.

While the current deal is not financially driven, there is room for prospects that would drive revenue in the future.

OpenAI’s integration into Apple devices could significantly increase operational costs for OpenAI due to the need to host ChatGPT on Microsoft’s Azure cloud. As user engagement with ChatGPT grows, so will OpenAI’s expenses.

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If users opt to subscribe to OpenAI services via Apple devices, Apple will benefit through its payment platform, which takes a cut of the subscription fee. This aligns with Apple’s strategy to monetise AI by sharing revenues with AI partners who generate income on its platforms.

The deal with OpenAI is non-exclusive, allowing Apple to integrate other AI chatbots like Google’s Gemini, expected sometime later. Apple is also exploring partnerships with other companies, such as Anthropic, to diversify its AI offerings, similar to its approach with multiple search engines in Safari.

Apple aims to profit from AI by establishing revenue-sharing agreements with AI partners. This strategy anticipates that AI tools will eventually reduce the revenue Apple currently earns from its Google search deal, as users may prefer AI chatbots over traditional search engines. Apple’s in-house AI services, which operate primarily on-device, are less costly than cloud-based solutions, though the company is expanding its data centre capabilities to support more advanced online AI services.

Expanding Apple Intelligence to other languages and countries is crucial for its success. This presents a challenge in markets like China, where services such as ChatGPT and Gemini are restricted. Apple is considering collaborations with local providers like Baidu and Alibaba to navigate these restrictions. Currently, Apple Intelligence supports only American English, but the company plans to extend support to more languages next year.

Apple’s innovative approach to compensating OpenAI with exposure rather than immediate financial payments exemplifies a strategic move in the tech industry. By integrating OpenAI’s ChatGPT into its ecosystem, Apple not only enhances its devices but also positions itself to benefit from future AI advancements and revenue opportunities.