In 2024, Apple and OpenAI announced a landmark partnership that integrated ChatGPT into Siri as part of iOS 18, marking one of the most significant collaborations between a consumer electronics giant and an artificial intelligence startup. However, according to a detailed report published today, the relationship has soured dramatically, with OpenAI now considering legal action against Apple over what it claims are unfulfilled promises and a lack of good faith efforts.

The report, citing sources familiar with the matter, indicates that OpenAI's legal team has been working with an outside law firm to explore a variety of options that could be executed in the near future. One possible move is sending Apple a formal notice alleging breach of contract, which would stop short of filing a full lawsuit but signal the seriousness of the dispute. The news comes just weeks before Apple's Worldwide Developers Conference (WWDC), where the company is expected to unveil a next-generation Siri powered by Google Gemini, further complicating the existing partnership.

A partnership born of high hopes

When Apple and OpenAI initially struck the deal, the arrangement was framed as a win-win. Apple would enhance Siri with powerful AI capabilities without having to build its own large language model from scratch, while OpenAI would gain access to Apple's massive user base—over a billion active devices—and a prime position within the iPhone's virtual assistant. The integration allowed ChatGPT to serve as a fallback for Siri when handling world-knowledge queries, and also powered image generation in Image Playgrounds and visual intelligence features.

Under the terms of the deal, no money changed hands directly between the two companies. Instead, Apple would take a cut of paid ChatGPT subscriptions that users signed up for through the Settings app on iPhone. OpenAI executives reportedly believed this channel could generate billions of dollars annually in subscription revenue. However, according to an unnamed OpenAI executive quoted in the report, those expectations have "not come close to happening."

"When we heard about this opportunity, it sounded amazing: being able to acquire a giant number of customers and have distribution in such a big mobile ecosystem," the executive said. At the time, Apple was unwilling to share detailed product plans, essentially asking OpenAI to take a "leap of faith." The executive added that the deal ended up being a failure for the startup, which has seen far lower conversion rates than anticipated.

Allegations of unmet commitments

The core of OpenAI's grievance appears to be that Apple did not deliver on the promised level of integration and promotional placement within iOS. The executive alleged that OpenAI has "done everything from a product perspective," while Apple "has not held up its end of the deal" and "hasn't even made an honest effort." This sentiment reflects a broader frustration that the partnership, which was supposed to be a strategic distribution channel, has failed to produce meaningful results for OpenAI's subscription business.

It is worth noting that the integration did bring ChatGPT to millions of iPhones, but the path from free usage to paid subscriptions proved much more difficult than anticipated. Users could access ChatGPT features without creating an OpenAI account, and many likely never encountered the subscription upsell. Apple also reportedly limited the visibility of the ChatGPT subscription option within the Settings app, further hampering conversion rates.

Apple's expanding AI ecosystem

Adding to OpenAI's discontent is Apple's upcoming announcement at WWDC, where the company is expected to introduce a next-generation Siri powered by Google Gemini. This move signals that Apple is not relying solely on OpenAI and is actively building relationships with multiple AI providers. Furthermore, the next major version of iOS — likely iOS 27 — will reportedly allow users to integrate with other AI models, including Anthropic's Claude.

Despite these developments, the OpenAI executive insisted that Apple's decision to open the iPhone to other AI models is not the primary driver of the legal action, since the partnership "wasn't meant to be exclusive from the start." However, the executive did express frustration that Apple's market power allowed it to dictate terms that ultimately worked against OpenAI's interests. "Apple has so much market power that they can dictate terms," the executive said. "We already took this leap of faith with you, and it didn't work out well."

Broader tensions between the companies

The legal dispute is only one facet of a deteriorating relationship between the two tech giants. OpenAI, while pursuing its hardware ambitions, has been actively recruiting Apple engineers, poaching talent for its own device development efforts. Those efforts are led by former Apple design chief Jony Ive, who joined OpenAI to create a new category of consumer hardware. Apple executives have reportedly been "fuming for more than a year" over OpenAI's recruiting tactics, which they view as aggressive and opportunistic.

This talent war adds a layer of personal and competitive animosity to the business dispute. Apple has long prided itself on retaining top engineering talent, especially those working on its most secretive projects. OpenAI's ability to lure away key staff, combined with Jony Ive's high-profile involvement, has created an environment where collaboration has become increasingly difficult.

What comes next?

The report emphasizes that no final decisions have been made regarding legal action, and OpenAI still hopes to resolve its issues with Apple outside of court. However, the fact that the company is actively preparing legal options suggests that the relationship may already be beyond repair. If OpenAI proceeds with a breach of contract notice, it could force Apple to renegotiate terms or risk a protracted legal battle that would expose the inner workings of their partnership.

For Apple, the timing is particularly awkward. The company is gearing up for WWDC, where it will showcase its evolving AI strategy. A high-profile dispute with a key AI partner could overshadow those announcements and raise questions about Apple's ability to manage its partner ecosystem. Apple has not yet publicly commented on the report.

Industry observers note that the situation highlights the challenges of partnerships between platform owners and AI companies, where distribution power is heavily concentrated. OpenAI, once the sole AI partner of Apple for Siri integration, now finds itself sharing the stage — and potentially the courtroom — with the company it helped modernize.

Source: 9to5Mac News