Apple Inc.’s lawsuit accusing OpenAI of systematically stealing its intellectual property threatens to disrupt the artificial intelligence company’s device ambitions.
In the suit filed last week, the iPhone maker alleges that OpenAI asked former Apple employees — and even prospective recruits — to bring information about unreleased products. Apple also claims that OpenAI instructed hires on how to evade its security procedures, using a checklist developed by the tech giant’s former iPhone design chief.
Apple seeks monetary damages and an order requiring OpenAI to halt the alleged conduct and destroy any proprietary materials. Legal remedies could take months or years to materialize, but the consequences of the lawsuit itself are likely to be felt more immediately — with the legal fight potentially straining recruitment and product development plans.
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OpenAI declined to comment on its device plans. In response to the suit, OpenAI said it has “no interest in other companies’ trade secrets” and would “remain focused on building innovative technology.”
The San Francisco-based AI company aggressively recruited from Apple’s hardware organization, draining talent from teams responsible for the iPhone, Apple Watch, AirPods and other major products.
OpenAI poached so heavily from engineering groups, particularly within the iPhone product design organization, Apple was forced to rebuild parts of those teams.
OpenAI now employs more than 400 former Apple workers, after luring many of them with compensation packages so lucrative, the iPhone maker recently responded with unusually large retention bonuses. Apple even sent some of its top executives to help persuade individual senior engineers to stay at the Cupertino, California-based company.
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By combining hundreds of former Apple engineers with legendary designers such as Jony Ive — and pairing that expertise with the industry’s leading AI technology — OpenAI positioned itself to potentially become Apple’s most formidable hardware competitor in years. That prospect comes as Apple struggles in AI and overhauls its own hardware organization.
Apple’s own executives acknowledged the disruptive potential of AI. During testimony in Google’s search antitrust trial last year, Apple services head Eddy Cue warned that the technology could reshape the devices marketplace. “You may not need an iPhone 10 years from now, as crazy as it sounds,” he said.
Apple, in its legal paperwork, said the lawsuit is about trade secrets and characterized OpenAI’s hardware work as nascent. “This lawsuit and the discovery process are needed to expose and begin to remedy the pervasive theft of Apple’s trade secrets,” the company said.
Still, by filing the suit, Apple already hurt OpenAI’s potential to build a true iPhone competitor. The claims, along with potential investigations and concerns about OpenAI’s methods, may cause many Apple employees to reconsider leaving for OpenAI.
Even interviewing with OpenAI could expose Apple employees to scrutiny from the company’s security team and leadership. That may slow OpenAI’s recruiting pipeline, keep more engineers at Apple and reduce the flow of institutional knowledge into OpenAI’s ranks even without a court ruling.
The lawsuit likely will reshape OpenAI’s engineering culture. Former Apple employees may become reluctant to discuss their previous work, while managers might avoid asking certain technical questions out of concern they could touch on Apple’s confidential information. The result could be a more cautious organization.
The lawsuit is also likely to create more red tape at OpenAI, including new legal reviews, tighter internal controls and compliance training that take engineers away from development work. Senior OpenAI executives are likely to spend time meeting with lawyers, handling the discovery phase of the case and being deposed. All that threatens to slow development.
The new Apple iPhone 17 Pro is displayed Sept. 9 during a special event unveiling a new generation of iPhones, updated Apple Watches and AirPods at Apple headquarters in Cupertino, California.
If Apple is able to prove OpenAI incorporated its trade secrets into upcoming devices, the AI startup could be forced to redesign its products. It would echo Apple’s settlement with chip startup Rivos, which ultimately agreed to redesign portions of its processor technology.
OpenAI still believes it is on track to announce its first product this year and release it in 2027, according to a person with knowledge of the matter. That could change, however, as OpenAI digests Apple’s claims, the person said, asking not to be identified while discussing an internal matter.
Even so, while development of the first product is at an advanced stage, it likely will be more challenging to quickly build out what OpenAI described as a family of devices.
OpenAI explored several device categories — including smart speakers and wearables — but its ultimate goal is to launch an iPhone competitor, Bloomberg News reported. A non-smartphone, simpler to engineer than an iPhone rival, is likely to debut first.
Apple is working on AI-driven wearables, including new AirPods, a pendant and smart glasses. It’s also developing a range of home devices, including a tabletop robot, a smart home command center with facial recognition and a security system.
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“Apple is likely to secure targeted preliminary relief tied to OpenAI’s device effort,” Bloomberg Intelligence wrote Monday. “Any order would likely require disputed materials to be isolated, evidence preserved and compliance certified, potentially slowing OpenAI’s hardware plans.”
The supply chain is another factor. As vast as Asia’s electronics manufacturing network is, the community of suppliers building consumer devices is small. Given Apple’s market power, suppliers could think twice before deepening their relationships with OpenAI out of concern that doing so could jeopardize far larger, more established partnerships or entangle them in litigation.
To be sure, OpenAI has what it considers some of Silicon Valley’s best engineering talent, the legal resources to fight Apple’s claims and former Apple executives such as Ive and Tang Tan, whose longstanding relationships with suppliers, investors and other key partners could help the company mitigate the fallout and keep its hardware ambitions on track.
Whether or not Apple ultimately proves its allegations, the lawsuit has already created a perception that may be difficult for OpenAI to shake. In a post on X on Saturday, OpenAI Chief Executive Officer Sam Altman said he’s “not afraid of Apple” and has “tremendous respect” for the company.
Apple, in its lawsuit, said it sees the situation differently. OpenAI’s “hardware business now rests on the shakiest of foundations, rotten to its core by its illegal reliance on misappropriated trade secrets,” the company wrote.
Long before the case reaches a judge or jury, Apple may already have accomplished something as valuable as a courtroom victory: slowing the company working hardest to usher in the post-iPhone era.
