Key Takeaways
Apple is reportedly taking an observer position on the new artificial intelligence partner (AI) OpenAI’s board. This new role came as part of last month’s deal between the two tech companies to integrate OpenAI’s ChatGPT into Apple products.
Phil Schiller, the head of Apple’s App Store and longtime member of its executive team, is set to represent the company in the observer role later this year, the report said, citing a source with knowledge of the matter.
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PYMNTS has contacted Apple for comment but has not yet received a reply. An OpenAI spokesperson declined to comment.
Role and Dynamics of the Observer Position
According to the report, this role lets Schiller attend board meetings but not vote on company decisions, a similar position to that of rival Microsoft, also named a non-voting board member last year.
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Microsoft has invested roughly $13 billion in OpenAI. The company’s board has shaken in recent months following the whirlwind firing and rehiring of OpenAI founder/CEO Sam Altman in November 2023.
Apple and OpenAI had been discussing a possible partnership for months before the iPhone maker made it official last month when it rolled out plans for its “Apple Intelligence” AI project.
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Integration of ChatGPT into Apple Ecosystem
As part of that effort, the company plans to integrate OpenAI’s ChatGPT 4o into its iOS, macOS, and iPadOS operating systems.
Days after the announcement, a report by Bloomberg News revealed that the terms of the partnership mean that rather than Apple paying OpenAI, the larger company believes that exposing OpenAI’s brand and product to its hundreds of millions of users is of equal if not greater value than a monetary deal.
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The report notes that this partnership could cost OpenAI, as it needs to pay Microsoft to host ChatGPT on that company’s cloud network. The more users ChatGPT gets, the more OpenAI’s expenses grow, with the integration into iPhones having the potential to balloon the company’s computing budget.
Strategic Implications and Industry Impact
Additionally, reports highlighted that while Microsoft had been focused on Google’s AI dominance, it should have also considered Apple’s potential impact in the AI sector.
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Despite being quiet on AI advancements, Apple’s late entry does not signify weakness. The observer seat on OpenAI’s board, expected to be filled by Phil Schiller, is part of Apple’s broader strategy to integrate ChatGPT into its devices, giving it a competitive edge in the AI market.
Historic rivals Apple and Microsoft now both hold non-voting positions on OpenAI’s board, allowing them to glean insights from OpenAI’s decision-making processes without direct control.
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Future Prospects and Potential Conflicts
Further, Bloomberg’s report indicates that the partnership reflects OpenAI’s strategy to diversify its alliances and not rely solely on Microsoft. This strategic positioning might mitigate potential conflicts of interest, given the competitive relationship between Apple and Microsoft.
Moreover, Apple’s integration of ChatGPT into its devices, starting with the crème de la crème of chatbots, aims to enhance Siri’s capabilities, providing users with advanced AI-driven features and improved user experiences.
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The collaboration signifies a strategic maneuver by Apple to deepen its involvement in the AI sector and leverage OpenAI’s expertise to stay competitive.
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