Apple Intelligence — and its crazy deal for ChatGPT on iPhones

During WWDC 2024, Apple introduced Apple Intelligence, a set of generative AI features for iPhone 15 and above. 

It was a significant event.

While Apple didn’t introduce any ground-breaking innovation and was playing catch-up with Open AI & friends, their move puts general intelligence (AGI) into the hands of the mainstream masses.

Since Apple is all about privacy and won’t join the data-gathering game, they’ll rely on 3rd party integrations for specific user queries. 

For this, they struck a deal with Open AI to use ChatGPT on iPhone while making it explicit to users what service they're using behind the scenes.

It was out of character for Apple to advertise a 3rd party this way as part of the operating system. It made me curious about the deal and how much Open AI is paid for this service.

Interestingly, they get paid zero dollars.

Nada. Apple isn't paying OpenAI to use ChatGPT, despite how expensive compute power is for AI queries.

The deal is about brand recognition, putting ChatGPT in front of hundreds of millions of users. Open AI is simply offering this for free to gain more recognition in the hope of customers.

Microsoft is likely paying a part of the cost as they own a 49% stake in Open AI and provide infrastructure on the Azure Cloud service.

This deal is a testament to Apple's leverage in the market, having built such a strong bond with end users.