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Apple to 'Pay' OpenAI for ChatGPT through Distribution, Not Cash

Apple has partnered with OpenAI to bring ChatGPT into its devices. There are no direct monetary payments involved in this partnership. Apple recognises the importance in promoting OpenAI's brand and technology to its user base.

While the financial parameters of the transaction have not been public, people familiar with the subject confirm that the arrangement does not include direct monetary payments between the two companies.

The agreement entails incorporating ChatGPT, a digital assistant that provides straightforward responses to information requests, into Apple's Siri and new writing tools. Contrary to expectations, Apple will not be paying OpenAI for this partnership. Instead, Apple sees the value in promoting OpenAI's brand and technology to millions of its devices as an equivalent or even greater benefit than financial compensation.

On the other hand, Apple stands to benefit from OpenAI's advanced chatbot technology, which might entice consumers to spend more time on their devices and even upgrade. However, neither Apple nor OpenAI will comment on the specifics of their relationship.

This collaboration with OpenAI is part of Apple's larger push into the realm of artificial intelligence. During Apple's annual Worldwide Developers Conference, the company unveiled plans to include AI technologies into its devices, which include the iPhone, iPad, and Mac. The corporation created these AI capabilities, known collectively as Apple Intelligence, internally.

While financial reasons may not have been the major emphasis of the Apple-OpenAI agreement, compensation may become an issue in the future. As it is, OpenAI is incurring costs by hosting ChatGPT on Microsoft's Azure cloud computing platforms. The more people utilise ChatGPT, the higher OpenAI's costs increase. Additionally, adding ChatGPT into Apple devices, albeit optional and limited to recent items, might have a substantial influence on OpenAI's computational budget.

Although ChatGPT will be available for free on Apple devices, both OpenAI and Apple have the ability to make money by converting free users into paid accounts. OpenAI offers membership plans starting at $20 per month that include extra services including data analysis and image synthesis.

Currently, if a user subscribes to OpenAI via the ChatGPT app on an Apple device, the payment process is handled by Apple's payment mechanism, which usually pays Apple a portion of the revenue.

It is crucial to note that Apple's collaboration with OpenAI is not exclusive; the business is already in talks to provide Google's Gemini chatbot as an additional option. The arrangement is scheduled to be completed later this year. Apple has also been in negotiations with Anthropic about partnering on chatbots, with the goal of giving customers with a variety of AI services, akin to the many search engine alternatives offered in Apple's Safari browser.

Looking ahead, Apple intends to monetize AI by engaging into revenue-sharing arrangements with AI partners who earn money from chatbot results on Apple platforms. This plan is viewed as a means for Apple to diversify its revenue streams and potentially minimise its reliance on the billions of dollars generated by its Google search partnership.

  • Apple partners with OpenAI to integrate ChatGPT into its devices

  • No direct monetary payments involved in the partnership

  • Apple sees the value of promoting OpenAI's brand and technology to its user base

Source: SCMP

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