Who needs cash? Apple is paying OpenAI in exposure for ChatGPT integration

Apple announced new ChatGPT integrations for the iPhone, Mac, and Siri at WWDC 2024 earlier this week. However, the company didn’t divulge any specifics about its deal with OpenAI. Instead, most of the time on stage was spent assuring users they would have complete control over what information is shared with the chatbot. Unlike the ChatGPT smartphone app, for example, the Apple integration won’t store conversations or even users’ IP addresses.

Now, it turns out that ChatGPT creator OpenAI isn’t getting paid to process queries on Apple’s devices either. According to Bloomberg, sources familiar with the deal say the partnership isn’t expected to make either company much money.

Instead, Apple believes that the exposure generated by the ChatGPT integration is worth more than a one-time or recurring payment to OpenAI. On the other hand, the iPhone maker indirectly benefits by offering a better Siri experience to users. However, that doesn’t mean neither company stands to benefit in monetary terms.

Apple will use its own “foundation” models to power the majority of upcoming AI features across its platforms. And according to recently published benchmarks, the server AI model is about as good or even slightly better than GPT-3.5 — the base option available to all OpenAI users. However, Apple’s best model pales in comparison to GPT-4o, which is the current best option available to ChatGPT Plus users.

When the overhauled Siri is released later this year, it will offer to forward certain user questions to ChatGPT. The hope is likely that enough users will see the utility of ChatGPT’s higher response quality and end up paying for unlimited access to GPT-4o and other paid features. The subscription costs $20 per user per month.

Additionally, if a user decides to upgrade to ChatGPT Plus via Apple’s payment processing system, the company will get a cut of the purchase.

ChatGPT runs on Microsoft’s Azure cloud platform, where OpenAI likely enjoys discounted compute rates. With over $13 billion in cumulative investment to date, Microsoft is the startup’s largest stakeholder.

Still, even the most conservative estimates say that every single ChatGPT query costs OpenAI a few cents’ worth of computational power. The exact number depends on the number of tokens generated by the chatbot, which loosely corresponds to output length. We know that ChatGPT’s smartphone apps are designed to deliver shorter responses, so the company could use the same strategy to keep costs under control when the iPhone integration goes live. And luckily, only a subset of Siri queries get passed on to ChatGPT, which should further alleviate the load.