Apple accuses OpenAI of a hardware heist

TL;DR: In a lawsuit filed last Friday, Apple accused OpenAI of stealing trade secrets for hardware products it spent “hundreds of billions of dollars and decades of effort” developing—and it could (probably much to Apple’s delight) pose a major roadblock to OpenAI’s hardware ambitions.

What happened: Apple’s suit names OpenAI’s current Chief Hardware Officer Tang Tan—formerly Apple’s VP of product design for iPhone and Apple Watch, who was at the company for 24 years—as a key figure in the alleged theft.

Per Apple, Tan directed its employees to bring actual hardware parts to their OpenAI interviews, using these meetings as a “show and tell” to glean what Apple had cooking. The company says over 400 former employees have left for OpenAI, with the lab recently poaching Apple’s smart glasses and VR chief. OpenAI, Tan, technical staffer Chang Liu, and io Products (the hardware company Jony Ive and Tan co-founded, which OpenAI bought last year for around $6.4 billion) are all named defendants, with Apple demanding a jury trial.

Other allegations include:

• The LOL moment. After realizing he could still access Apple’s file repository, Liu wrote to a former colleague still at Apple, “LOL, I found out I can access the [network storage], so funny.” He then downloaded documents on hardware designs, manufacturing processes, and more.
• How not to get caught. OpenAI circulated an internal Apple document laying out its offboarding security procedures to new hires, which helped them evade those measures when leaving Apple.
• Pedal to the metal. OpenAI got a trusted Apple supplier to perform Apple’s proprietary metal-finishing technique by “misleading the partner to believe they had Apple’s permission to do so.”
• Read the many accusations Apple is making here.

Apple says it reached out to OpenAI in February to discuss this trade theft, but that the company never replied. After the lawsuit was filed, OpenAI said in a statement that it has “no interest in other companies’ trade secrets.”

The two previously partnered to integrate ChatGPT into iPhones, though OpenAI reportedly weighed suing Apple over how it panned out. (Meanwhile, Musk vs. Altman part deux is unfolding on X, with the two trading barbs yet again after Apple’s lawsuit went public.)

Stopping the iPhone killer: An emerging class of AI consumer devices is vying to replace the smartphone—including the ones OpenAI has been working on—and this lawsuit appears to be Apple’s counter. It didn’t mince words in its filing, saying that “OpenAI’s nascent hardware business now rests on the shakiest of foundations, rotten to its core by its illegal reliance on misappropriated trade secrets.”

OpenAI’s messiest “side quest” yet?: Despite vowing this year to focus on its AI models, OpenAI continues to develop hardware products. The suit could throw a wrench in that if the court rules that OpenAI used Apple’s proprietary information to create them. It could also have financial implications and put a strain on recruitment, per Bloomberg.

Bottom line: If even half of Apple’s allegations bear out, we might not see that rumored OpenAI screenless device for a long time—if ever. —WK

Also at Apple…

• AI is shaking up Apple’s release schedule of Mac chips, and it could result in some shockingly expensive computers in about a year and a half.