Apple’s OpenAI lawsuit is about who gets to define the post-smartphone era
AI News Desk
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The Verge
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33 min read
Today on Decoder , I’m talking with Hayden Field, The Verge ’s senior AI reporter, about the major trade secrets lawsuit between Apple and OpenAI and what this tells us about OpenAI’s future.
Today on Decoder , I’m talking with Hayden Field, The Verge ’s senior AI reporter, about the major trade secrets lawsuit between Apple and OpenAI and what this tells us about OpenAI’s future.
By now I’m sure most Decoder listeners are familiar with Apple’s allegations in this case . The company says a number of ex-Apple employees at OpenAI targeted Apple’s trade secrets in job interviews and even downloaded files from Apple’s servers related to hardware manufacturing. The claims are shocking, although OpenAI denies them, and we have yet to see the company’s legal response.
Hayden has been covering OpenAI for years now, and she also j ust talked to a bunch of lawyers who specialize in intellectual property and trade secret law to get a sense of how serious this case is. The answer is not entirely positive for OpenAI, which spent $6.5 billion to acquire legendary Apple designer Jony Ive’s AI hardware startup, io Products , back in 2025.
As you’ll hear Hayden explain, Apple is a notoriously tenacious litigant, and we have lots of tech industry history to back up that reputation. But those cases were against companies at the scale of Microsoft and Samsung, giant corporations that could afford the cost and distraction of this kind of litigation.
OpenAI isn’t yet that kind of company. It’s still burning cash and a little strategically adrift as it tries to compete in both enterprise and consumer markets, and it’s turning over executives on a regular basis. So Hayden and I spent a lot of time talking about what this case might mean for a company that defined the early part of the AI boom, but which lately always seems to be in a crisis of one sort or another.
Okay: Verge senior AI reporter Hayden Field on the Apple-OpenAI lawsuit, and how the AI industry might change because of it. Here we go.
This interview has been lightly edited for length and clarity.
Hayden Field, you’re the senior AI reporter for The Verge . Welcome back to Decoder .
Once again, we’re going to talk about OpenAI, Hayden.
We’re going to talk about whether OpenAI can maintain focus at a time of great distraction, which seems to be a theme with that company. Although this time, it’s not their own distraction. It’s a distraction from out in the world, maybe caused by some of their own behavior.
Of course, we’re talking about the Apple trade secret lawsuit. It feels like a big deal. Apple is accusing OpenAI of stealing all kinds of information from that company, even in job interviews — asking people in job interviews to tell them what they know about Apple products. Tell us briefly about this lawsuit and what’s going on here.
Definitely. So, it is crazy. I wrote a piece last week titled “Sam Altman didn’t need another lawsuit,” and that’s really the situation here. It seems pretty egregious from some of the claims that Apple is making. A former Apple employee was allegedly soliciting trade secrets over interviews, asking people to maybe bring pieces of hardware outside the Apple office to OpenAI to do a “show and tell” in interviews, things like that.
There’s a lot of allegations being made that are pretty crazy. But then when I actually interviewed a bunch of experts last week, they said they’ve seen all of this before, a lot. It’s just they haven’t seen all of it in one case with two key players.
Some of this stuff is pretty egregious, if it turns out to be true. But also, to the experts in the space, they’re saying, “Oh, we see this all the time with trade secrets cases. It’s not crazy. What’s really crazy is that it’s all in one case and that it’s two really large companies.”
It’s really interesting. It’s just a pattern, maybe not worth diving into at great length, but in the ’90s, Apple pushed copyright law to the limit. They sued Microsoft for allegedly infringing on how the Mac looked and felt with Windows. I will point out that Windows still exists, Microsoft is fine.
And then in the 2000s and early 2010s, Apple pushed patent law to the limit, suing Samsung for allegedly violating a bunch of patents with Android and Galaxy phones because Apple felt that they had protected the iPhone. Samsung eventually paid about $1 billion in damages and those cases just went around in circles forever.
But I’ll point out that Android still exists, Samsung is doing just fine. Apple may have redefined patent law around 3G and 4G licensing, but fundamentally, it did not actually succeed in stopping its competitors with intellectual property lawsuits.
So, you go from copyright to patent and now trade secrets, which is the third big intellectual property, and Apple’s doing it again with OpenAI. My big question is whether OpenAI can just pay the money the way that Microsoft and Samsung were able to just pay the money. If you look at Samsung, spending $1 billion in penalty fees to get Galaxy phones off the ground and be a major competitor in mobile is maybe the easiest and best investment that company ever made.
But I don’t know if OpenAI is the same company at the same moment. It certainly seems like all of the Apple employees that went over to OpenAI maybe pushed the limit too much, at least from the story that Apple’s telling us right now.
It’s pretty crazy reading the wildest claims from the lawsuit and also the messages that were being exchanged. One of them allegedly accessed Apple confidential information on a device and then said, “LOL! So funny that I can access this.” There’s a lot there.
I’ve been wondering the same thing. It really depends on Apple’s willingness to be petty or be super logical here. When I interviewed a bunch of lawyers about this, they said Apple is a notoriously tenacious litigant, as we’ve seen in those past cases. But also, they really will take things far. They have a lot of money and they’re willing to use it. It really just depends on how mad they are.
I think that they would potentially settle if OpenAI paid them enough, but will OpenAI be able to do that? They’re already having a really tough year. They’re about to IPO, all the investors are looking at their bottom line, wondering when they’re going to turn a profit. It’s a tough time to be shelling out a ton of money to Apple. We’ll have to see what they do.
I think it’s going to go to trial and be a very drawn-out years-long thing. That’s what a lot of the lawyers I interviewed said as well. But I could see a world in which they just figure out a way to get all this money together and pay and maybe Apple accepts it.
In the Samsung patent cases, they lasted forever. In the middle of it, Tim Cook was at a Code Conference and I asked him, “What are you doing? Is this accomplishing anything?” And he looked at me very seriously and he said, “Well, we think the fees for licensing standard essential patents are out of whack.” And I was like, “That is not the reason you’re doing any of this. That’s not the point, the point is that you were mad and you wanted to run this lawsuit to ground and you’re going to run this lawsuit to ground no matter what the nominal reason is.”
That feels like a big piece of the puzzle here. OpenAI has taken a bunch of Apple employees. Famously Jony Ive, Apple’s most famous designer, is working with OpenAI on hardware devices. Tang Tan, who is OpenAI’s chief hardware officer. He had a reputation at Apple for “playing fast and loose,” that’s from Mark Gurman at Bloomberg .
He seems like the central character in the story, not so much Jony Ive, but Tang Tan. And that piece where it’s a bunch of ex-Apple people maybe playing too fast and loose almost feels like it’s personal, almost feels like there’s a lot of emotions involved. Talk about Tang Tan and talk about what all these folks are alleged to have done that feels like it’s a little more personal than your standard big corporate dispute.
On what you said about talking to Tim Cook, I truly believe people underestimate companies’ pettiness. We’ve seen it in recent years, like with the OpenAI-Elon Musk lawsuit. There are so many things that could have been avoided if companies weren’t trying to just be petty, which is fine. They can do that, they have enough money to do that. But people underestimate how much that plays a part sometimes in these things.
As for Tang Tan, yeah, he worked at Apple for 24 years. He was the VP of the Apple Watch. He left in 2024 to work on Jony Ive’s hardware company, io Products, which obviously OpenAI ended up purchasing .
OpenAI then appointed him as chief hardware officer. So he had a C-suite role at OpenAI, but this is after 24 years at Apple. According to Apple’s lawsuit claims, he was the mastermind of a lot of this trade secrets gathering, regarding interviews that he would conduct and ask about secret code-named projects. And then the person being interviewed would feel like maybe they were able to tell him stuff because, oh, well, why would he know the name of this project or these details about it if he wasn’t involved also? So, they felt they could speak more freely, allegedly.
There were other times that he asked, “Hey, why don’t you bring some batteries or other pieces of hardware outside the Apple office that you’ve worked on in the past so that we can do a show and tell?” It’s very interesting to go through these claims. It just seemed like he really was not worried about what was going to come of this, if these claims are true.
The other major character here is Jony Ive, Apple’s very famous ex-designer who worked with Steve Jobs and all of those famous projects. I would say Ive reportedly has a very testy relationship with Apple.
Now that he’s left, he’s certainly made that clear in various interviews and statements. And he’s working with Sam Altman on new devices. He made a video with Sam Altman, which I can only describe as a romantic coffee date .
In which they described the phone and the laptop as legacy devices.
It was instantly memed. I have to say the memes were amazing.
It’s very good. And they shut down half of San Francisco to make it. I thought Ive calling the phone and the laptop legacy devices in that video was just a straight shot at Apple. These are the things that he made, that he revolutionized in many, many ways. And he’s like, “These are over now.”
You can say a lot about whether that’s true, whether that can come true, and I want to talk about that in a little bit. But it’s notable to me that Jony Ive is not mentioned in this lawsuit. There’s a line Apple wouldn’t cross, and it’s mentioning the fact that it’s Jony Ive who went to OpenAI and started hiring all of his old designers, who sold a big portion of his company to OpenAI. And now, they’re trying to make hardware and allegedly stealing trade secrets. But Jony Ive, he’s not part of it. We’re just going to leave his name out of it.
Is that because he’s too famous? Is that because it’s too nuclear? Is it because he’s still friends with Laurene Powell Jobs? What do you make of that?
I think it may be more that he knew how to cover his tracks. It could be that he’s too powerful or any of the things you said, but I really feel like it’s just that he has other people doing his dirty work for him. The other stuff in this lawsuit is pretty egregious, and they’ve found it all. So if they found some really intense stuff on Jony Ive, would they really not put it in the lawsuit? There’s some bad blood between them. I just feel like they would put it in there.
This is just speculation, but when you’re in a powerful enough role, you don’t have to do all this stuff yourself. You have other people doing it for you and you also know how to cover your tracks. So, to me, maybe they just didn’t have anything on him.
Yeah, or he’s distracted designing Ferraris no one likes or whatever it is he’s doing, but he’s not in this. I do think that’s notable because the reason Sam Altman would hire Jony Ive is to make a credible claim to the next device. Whatever that category of AI-powered device is going to be, you hire the most famous designer to say, “I made the iPhone and I’m going to make this thing.”
And then it seems like OpenAI also wanted a bunch of Apple’s know-how in order to make that thing. What do you make of that, that OpenAI needed hardware know-how from Apple? Or at least Apple alleges that OpenAI needed hardware know-how from Apple to make whatever the next thing is?
To some extent, whether you’re talking about trade secrets or just regular legal aboveboard know-how from hiring their employees, of course they needed it. They’ve seen a ton of hardware in AI crash and burn and they’re trying to not become the next Humane AI Pin . It can be incredibly embarrassing to make an AI hardware device in this day and age. Chances are you’re probably going to fail miserably and become a laughingstock. And so, if you want to avoid that, of course you need to get the best people on your side.
Hardware is hard, as everyone says, so of course they want to get experts in there that have experience actually being incredibly successful at hardware. That’s not surprising to me and I think it’s a smart decision. OpenAI has demonstrated in the past — and this is typical of every tech company, it’s not just OpenAI— that sometimes they’re a little bit disconnected from what the consumer actually wants.
You roll something out, no one really wants it. Okay. With software that’s a little easier to pivot from, as we’ve seen from OpenAI deleting its side quests and stuff. They’re like, “Oh, we’re not doing this anymore . We’re not doing this anymore. We’re rolling this into that .” With hardware, you can’t do that. You’d better have it right from the get-go.
I’m glad you said consumer, because that brings me to what I think is the heart of the matter for OpenAI, which is that it was going to be the consumer AI company, Anthropic famously focuses on enterprise and it’s been lucrative for them; maybe that’s where all of the money is. But OpenAI was going to take down Google, maybe through Bing, maybe through its own app. It was going to be a consumer company.
The only reason you would make hardware is to go attack the consumer, to go attack the iPhone. So, OpenAI’s ambitions, at least as I could see them, were first to take market share from Google, which is one of the most lucrative businesses in the history of the world, and then to go attack the iPhone, which is the most famous and culturally dominant tech product that has ever existed.
I don’t know how it can do either of those things. It doesn’t seem like consumers even want these products or want AI at this scale. I don’t know where that revenue comes from in consumer, and the college students are all booing AI at graduation . Does OpenAI just need to pivot to enterprise? Does it need to spend its time spinning its wheels at consumer hardware devices before it figures out its business?
OpenAI has pivoted so many times internally. Its most recent pivot was that it was going to focus on its key revenue drivers, which are enterprise and coding. They’ve said that a million times. OpenAI folded Sora, Atlas, the sexting feature. It feels like years ago, but it’s crazy that that was in the past year .
They’ve done a lot of this, and so, everyone thought, “Okay, they’re going for it, they’re doing enterprise,” because that’s the tried-and-true money maker here, especially in a year that they’re going to IPO. To be fair, yes, they had already planned to do the hardware device before this whole pivot and cutting out the side quests. I guess they can’t afford to cut out this potential side quest because they’ve already spent a lot on it, it’s happening no matter what. So now they’re just trying to make it as successful as it can.
I’ve only been on the AI beat for six years. That is a long time in AI, and maybe I’m missing something, but I just do not see a market when everyone is buying an OpenAI hardware device. If I’m wrong, we can come back on here and laugh at my clip from July 2026. A smart speaker, okay, maybe people buy it just to be a smart speaker like Google Home, that’s what I use mine for.
I think it’s going to be one of those things that a few people really, really, really love and that the general public probably does not adopt because it’s difficult to get them to adopt anything unless all their friends have it. There’s a social aspect. You’re going to be a laughingstock with green text if you don’t have an iPhone. No hate to Android people, I’m just saying sometimes you don’t get added to the group text or something. It’s sad and it’s not right, but there’s got to be some public buy-in if you’re going to be adopting a new piece of hardware a lot of the time.
We founded The Verge at the start of the smartphone boom. Just thinking back on it, it was never a question of whether people would adopt smartphones. That was obvious. It was obvious to us, maybe it wasn’t obvious to everyone, but we were in it and the only thing that wasn’t obvious was who would win.
After a while it became obvious that Apple would win. How many iPhone killers did we cover 15 years ago? And they all came and went, and they looked like new operating systems. Windows Phone existed. The Palm Pre ran an operating system called webOS. Android was ascendant. Nokia tried to do its own thing and then they pivoted to Windows Phone.
At the end of the day, we ended up with iOS and Android and everything else fell into line. Maybe the whole tech industry hates this and they hate paying the App Store fees, but this feels like that same kind of moment where OpenAI is going to put out a hardware device, it’s going to run its own operating system. Elon Musk is fulminating about Starlink and xAI putting out their own phone , maybe running their own operating system, apparently the run-up to IPO, they were showing it to people.
I just have really dumb questions that, to me, mirror the same questions we asked about new smartphone operating systems 15 years ago. Are you going to make a Gmail client? Is it going to have Instagram? Because if you don’t have those things, you don’t actually get to replace the phone. And if you don’t replace the phone, well, I’ve got the beta of iOS 27 on my iPhone right here and Siri AI is definitely good enough to just get through the day.
That’s what really gets me here, because the smartphone replaced the dumb phone. So okay, you’ve got to have something way better than the smartphone. Are you going to? Doubtful, but we’ll see.
But the other thing that gets me here is how many devices OpenAI is reportedly working on. Reportedly it’s five hardware devices, and the screenless smart speaker is the first one. How can they come up with five? That’s what I want to know. What are the five? And shouldn’t you be putting all your resources toward one? It’s already hard to make one. I’m a little dubious of five successful AI hardware devices. Even one is a long shot, but five is a little bit crazy.
I’m sure there’s a lot and some will come and go. The thing that I think about, particularly when it comes to Jony Ive and his approach to hardware — which is familiar at this point, we’ve watched him launch a lot of hardware at Apple — is Ive tends to focus on new input methods for new devices.
The iPod had the click wheel and that really defined the form and function of the iPod. The iPhone has a multitouch screen that really defined the form and function of the iPhone and then the iPad. If you’ll remember the Apple Watch, they launched it with great fanfare about the scroll wheel on the side. I don’t know if that came to pass, but they really thought that was a big deal when they launched the Apple Watch.
This is Ive’s go-to path: “We find a new input mechanism, we’re going to define the product around it.” I know exactly what that should be for AI — it’s a natural language input. You can just tell the computer whatever you want and it’ll figure it out and it’ll go off and do it for you.
But we’re however many years into the AI revolution?Three or four years into this version of it? And it doesn’t quite work yet. I think this is why the AI devices keep failing, as you keep mentioning. Because you can talk to a Humane Pin all day and all night and it will pretend to understand you and then not actually be able to do the things on the other side of it.
That feels like the problem in AI right now. There’s these flashes of brilliance and then there’s these limits of capability. Where do you think we are in that process of figuring out exactly what it can and can’t do? And how do you think that limits a hardware device?
We’re still in the midst of it. I personally use AI all the time, obviously in my personal life to test things out, see what it can do. Month to month, I see how it’s improved, at least from my own personal experience, which is all anecdotal.
But just the other day I was trying to look up a lot of addresses of companies because I wanted to map something out. I would say maybe 60 percent of the ones I looked up were completely wrong, just wrong. It made me a whole table. And it was like, “Yeah, don’t worry, all these are definitely correct.” And then 60 percent wrong. I’m like, “A lot of these are wrong.” They’re like, “Oh, sorry, my mistake.”
It’s like, “Oh yeah, you’re right. You caught me.”
It’s right about a lot of stuff a lot of the time. But as we all know from when we were an intern back in the day, or if we’ve ever had an intern, there are certain things that are just easier to do yourself if you’re not 100 percent sure the person is going to get it right.
So what I wonder is, for a hardware device like this, there are a lot of low-stakes questions you can ask it and it’ll be fine. But for higher-stakes things, it’s simpler to just look it up yourself or do it yourself even than put it out there when it’s going to be a potentially wrong answer.
Is this going to end up like a Google Home situation, where you’re just using it as a speaker and you’re asking it what the weather is because it doesn’t really matter that much if it’s wrong? But as we know, it can only really be super useful if you can trust it with those higher-stakes types of questions. And so, saying, “Hey, what time does Emily’s flight get in tonight because she’s staying with me? What flight is she on?” Or, “Is it delayed?” If it gets that wrong, okay, I’m not going to be ready for her to come in from the airport.
This does seem like the core problem. Will there be enough progress? Certainly the industry will claim that it’s made great progress on hallucinations. Whether that’s the lived experience of people who use these products, I think that’s up for debate. But the industry claims they’ve made great progress here.
The other piece is, will OpenAI have access to all of your data and personal context to make this useful in an environment with a smart speaker, where you can just say whatever you want to it? That, again, brings you back to whether it’s going to have a Gmail client. Where’s the Gmail client going to run? Are you going to let OpenAI log into your Gmail, so when you ask for flight information, it can go look at it? Or are you just going to default to opening Gmail on your phone and asking it because Google already has it? This seems like a version of competition that really depends on how comfortable you are handing over all of your data to various AI providers. And I’m just not sure OpenAI is that one.
The other part of this is that — and obviously this is a vocal minority here, it’s not like the majority of OpenAI users — a lot of people are extremely worried about ads. Anthropic capitalized on that with its Super Bowl ads that were anti-AI ads. OpenAI has been dealing with that fallout and just trying to say, “Hey, don’t worry, we’re not going to influence answers, we’re just going to raise a similar ad underneath the answer.”
But it can be unnerving, whenever I use ChatGPT and an ad surfaces. It just makes me feel like it’s less private. It’s just a little bit strange and I feel like everyone gets that unnerved feeling. Even if it’s not affecting the actual answer, it’s still reminding you that it’s not a space where they’re not trying to sell you something. Someone is always trying to sell you something.
There’s already a lot of loss of trust right now in AI labs, if anyone trusted them to begin with. Right now, it’s at an all-time low. We’re seeing the rise of AI populism. We’re seeing lots of death threats against AI CEOs, as The Wall Street Journal covered the other day. There’s a lot of backlash, like you were saying about college kids booing AI at graduations. We’re seeing a huge backlash right now, and I just think it’s a strange time to be releasing a public-facing, “every consumer should buy this” AI hardware device.
That connects to a bigger issue for OpenAI in this Apple lawsuit, which is that the AI industry right now is basically built on unauthorized taking. I’m saying that instead of theft because there are a lot of lawsuits. I know our audience wants me to just call it theft and maybe it is just theft. And maybe we can just say that when we get to the end of the road of 10,000 different lawsuits. But that part of the AI industry feels like we have to studiously ignore it.
There’s a trillion-dollar question over whether training data is fair use that is as of yet unresolved. We can just go down the list of lawsuits where all of these companies have to defend themselves about training data. And if they lose any one of them, maybe this whole industry cost structure falls apart.
The inputs to AI right now are free. They just took the internet and they took all the books. We just saw, as a result of a hack, that Suno had to basically admit that it had scraped all of the music off of YouTube illegally. It just didn’t have permission, and I think YouTube feels a certain way about that and certainly the artists on YouTube feel a certain way about that.
Here’s Apple saying OpenAI also took its hardware designs and its manufacturing know-how. It didn’t have permission for that either, those are Apple’s secrets. OpenAI hired people and they concocted this scheme to take all of that stuff without permission.
Again, culturally, this just feels like part of the AI industry to me, that they think they can just take everything to build super intelligence as fast as they can. And once they get there, all will be forgiven. But the public doesn’t seem to like it. Certainly, artists and writers and musicians don’t seem to like it, and now Apple doesn’t like it.
It feels like this lawsuit is going to be a proxy for that as much as anything else. Can you take all this stuff without permission? I’m not sure OpenAI has the cultural capital to fight back. What are they going to say?
It’s really ironic that this whole industry is only possible because of the amount of data it’s consumed, whether aboveboard or not. And AI labs, as well as just tech companies in general, get so litigious when others take that information elsewhere. So this whole thing is pretty ironic.
The AI industry is really famously cliquish. It’s almost incestuous, it’s like you work with the same people here, then you depart and go elsewhere. Then that same company buys your start-up that you created and then you leave that start-up to go somewhere else and you get acqui-hired by your old friend that worked at this other place. A lot of industries are like that, but this industry specifically is so much like that. And so yeah, I think it’s a bit ironic on both counts.
People are going to leave Apple, and okay, they’re going to take some trade secrets. Was this incredibly egregious? Yes, some of these claims are crazy. But also, like you were mentioning, a lot of the reason that any of these companies are even successful in the first place is because of all the unauthorized taking they’ve done. It’s an interesting time to be watching all this play out.
All the AI companies get really mad when, I don’t know, Chinese AI companies distill their models . I’m just thinking about a jury and how Apple will play this case to a jury and be like, “You stole all the music, didn’t you? And then you also stole our manufacturing designs. And don’t you get mad when the Chinese companies distill ChatGPT?”
In the course of your reporting, does it ever occur to the people in the AI industry that being mad about distillation is the exact same feeling that artists and musicians have about all of their work being put into the model in the first place?
I haven’t seen any of them even acknowledge that or at least even hint toward it one time, which is crazy. It just feels like there’s a disconnect there. They get so, so angry about distillation, they’re saying, “It’s against our terms of service!” They can’t even say it’s illegal, just against the terms of service. They write open letters to the government. They even come together with their mortal enemies and other AI labs to unite against distillation. So, it’s just interesting to me thatI’ve never seen that occur to them.
I know a lot of people are probably listening to this and that they’re mad at me, and mad at us, for not making the claim that Apple is just filing this lawsuit because it was behind in AI. It missed with Apple Intelligence, it took a long time to catch back up, it’s only shipping it now. It had to go to Google and distill Google’s Gemini models and put them in its new Private Cloud Compute system , and all the stuff that it needed to do. But that is shipping now.
Do you feel like the broader AI industry is just looking at Apple lashing out at being late? Because I have heard a lot of glimmers of that, that this is just Apple trying to slow down the biggest threat in consumer as it launches Apple Intelligence and tries to catch back up.
That could be definitely part of it. Everyone knows Apple has been famously incredibly behind in AI and it’s been a big topic of conversation and an embarrassment for the company for years. So, that could definitely be part of it.
But this lawsuit is not about someone “stealing trade secrets” for Siri. It’s about hardware, specifically “show and tell” of hardware, things like that. Hardware is something that Apple does amazingly and they are pretty much by all accounts the best at.
So, I think some people are thinking that. It’s a benefit for Apple if they’re able to kneecap a competitor from pulling ahead in any way. But the fact that this is a trade secrets lawsuit about hardware specifically I think has rolled back a few of those claims; it’s not like they’re trying to claim that OpenAI is stealing Siri AI’s secrets that it may not have many of.
[Laughs] They’re like, “Please take everything we know about Siri AI. That will truly kneecap you.” Apple can afford the distraction, you’ve mentioned this already in this conversation. Apple can just hire a bunch of lawyers and set them off to be as tenacious as they want. Maybe the rest of Apple won’t even notice that that’s happening, because they’re busy making the next iPhone.
Apple spent however many years and like $10 billion trying to make a car and it just didn’t work. It didn’t even occur to the rest of Apple that was happening. They just kept shipping phones and laptops and everything was just fine.
OpenAI is not that company. OpenAI might not even have enough executives to absorb the cost of another distraction. They keep leaving. Greg Brockman, who’s the president of OpenAI, seems to be running the entire company himself.
As you’ve been reporting on the story, has it occurred to OpenAI that they’re going to need more people to do more things? Because I look at that company and they just keep shedding all of their talent and pivoting, as you said, from one thing to the other and they’ve landed on “we need to compete with Anthropic.” But it doesn’t seem like they can afford distraction at this scale in any way, shape, or form.
They can’t. This is like the final battle. Actually, there are going to be a lot more battles, but this is a key battle in the longstanding AI arms race. This is the IPO year. Things are coming to a head. Investors are looking very closely at these companies in a way they haven’t before. They’re looking for them to turn a profit, or at least have a way to turn a profit in a way that they have not really paid too much attention to before, and it’s all coming down to the line. They cannot afford a distraction right now.
They are reshuffling, restructuring, changing executives around. When I’ve asked them about this, they will say, “Well, it’s all been one large plan that we’ve just been doing in little pieces. It’s not like we’ve pivoted a million times, we’ve always been going towards one thing and these are just different steps along that journey.” But it doesn’t always read that way to the general public.
In some ways, yes, Greg Brockman is taking control of product. That’s because Fidji Simo, the AGI chief, took leave because of her health and then she left permanently because of her health . So, it’s not all things that the company could control, but I do think there have been a lot of defections even from the rank-and-file staff. They’ve got to get more people. They’ve got to hire more, which will require even more money, and it’s not the time to get distracted by anything.
It’s worth noting that there’s some reporting saying OpenAI will delay its IPO. And as you and I are sitting here speaking, SpaceX’s stock price has dipped below its IPO number. These mega IPOs, they’re in some kind of danger. It might not be a good idea to do this, especially if you don’t have the revenue or, more importantly, the profits to back it up. Do you think there’s some risk that this lawsuit is the straw that pushes OpenAI to delay its IPO?
Absolutely. Reporting showed that Sam Altman was originally worried about filing its Form S-1 before Anthropic. Then it didn’t do that. Anthropic did it first and then — and this is me just speculating — it seems like after Anthropic won that part of the race, OpenAI backed off and said, “Okay, well, should we actually do this right now? We were trying really hard to win, but let’s look at the facts here.” That’s why it said, “Okay, it might be early next year, it might not be this year.”
That was before Apple’s lawsuit dropped. So now of course I’m sure OpenAI is thinking, “Okay, should we delay it even more? Especially because there’s no way we’re going to beat Anthropic to an IPO.” It seems like that might be a smart idea.
If you can put out a great hardware device and make some big splashy profitable entry into the consumer market, that’s a good story to tell in an IPO. But if you can’t do that because everything you do is going to end up in litigation or in messy discovery on the way to litigation, maybe that all just has to be set to the side.
That’s pretty much my last question here. I feel like my thesis on this show and on The Verge generally has been, “Okay, I understand how this is going to work for software development and I understand how this is going to work in enterprise, although even that’s pretty shaky still. But consumers don’t love this stuff.” That there are 900 million free ChatGPT users is not a reflection of anything other than, well, Google Search got really bad and this thing will tell you it loves you.
But it hasn’t turned into, “We should build more data centers.” It hasn’t turned into, “We culturally love the products of AI.” It’s turned into, “Get this slop out of my face and we’re going to boo you at graduation and we’re going to come to the town board meetings and say we don’t want data centers.”
T here’s some huge gap there. Do you think OpenAI can close that gap? Because it has always been the company chasing the big consumer product vision, the big consumer market. If it can’t close the gap, it should just shut it down and compete with Anthropic for enterprise uses. I don’t know which one it’s going to be. Do you have a sense through all this reporting if OpenAI has realized how existential the consumer side of the debate is?
I think they know to some extent, but not the full extent. tThey will get at it in speeches, in research papers, in tweets. They have some PR lines where they will acknowledge that this is a thing, but I just don’t think they realize how deeply this crevice goes. The gap is so wide. I don’t see them being the only company to close it — if it’s ever going to be closed. People are extremely worried about so many things when it comes to AI and they’re very emotional about it.
It’s not just logic. I think if it was just a logical gap — some people logically think it’s not good, some people logically think it is good — I think they could probably close that. But when emotions come into play, no, I don’t think that they will be able to fully bridge that gap.
For me, when I became an AI reporter six years ago, none of my friends really knew or cared what I wrote about. That was fine. It was really niche, whatever. Starting four years ago, it would come up at the bar, at the club. I’ll be walking down the street, someone’s asking me about it, and they don’t know I’m an AI reporter. So, when they learn I’m an AI reporter, it happens even more. But just randomly, this is coming up for people and making them extremely emotional. So yeah, I just don’t think OpenAI is going to be the company to bridge that gap.
We’ll see what happens with the hardware of it all. A lot of people I’ve been seeing — TikTok creators, creators on other platforms — are trying to change the narrative here, saying, “Hey, don’t get left behind. Learn how to use this stuff.” And it’s something that can be valid, but the way that they’re framing it a lot of the time is more, “Oh, it’s such a high learning curve. You must learn how to use it before it leaves you behind.”
It’s not that high of a learning curve, it depends on how you’re using it, but you know what I mean. Sometimes it is, yeah, if you’re using Codex and doing all sorts of intense vibe coding, yes, of course it is. But if you’re just chatting with a chatbot, it’s really not a high learning curve.
I personally believe all that algorithmic social video content is an astroturfing campaign. That’s just me. That’s a conspiracy theory, we’re going to leave that aside. I do want to pitch you a video series called “Hayden in the Club,” where you just go to the club and talk to people about AI.
[Laughs] I would love to do that officially instead of just having it happen to me unofficially all the time.
It’s been a long time since I was in the club. That was not what the club was like when I was younger. Things have changed.
Hayden, this has been great. I have a strong suspicion you’re going to be back on this show talking about this lawsuit and OpenAI for the rest of this year. We’re going to have to have you back very soon.
Questions or comments? Hit us up at decoder@theverge.com. We really do read every email!
