OpenAI Is Threatening to Sue Apple Over a Deal That Was Supposed to Make Them Both Rich

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Two years ago, OpenAI and Apple shook hands on a deal that was supposed to be a win for everyone. ChatGPT would get in front of a billion iPhone users. Apple would finally have a credible AI story. Sam Altman flew to Cupertino and sat in the audience. It felt like the future.

It did not go as planned. Let's get into it.

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In June 2024, at Apple's Worldwide Developers Conference, Apple made a big announcement. It was partnering with OpenAI to bring ChatGPT into iOS 18, iPadOS 18, and macOS Sequoia.

Siri would be able to tap into ChatGPT when a question needed more than it could handle. ChatGPT would also power Apple's Writing Tools, letting users generate content without leaving the apps they were already in. Apple's software chief Craig Federighi called OpenAI a pioneer and market leader. Sam Altman sat front row.

The financial terms were straightforward. iPhone users could subscribe to ChatGPT directly through iOS settings, with Apple taking a cut of the revenue.

OpenAI expected that level of reach to funnel billions of dollars in new subscriptions its way. At the time, it looked like one of the biggest distribution deals in tech history.

What actually happened

OpenAI has enlisted an outside legal firm to explore its options, including formally notifying Apple of a possible breach of contract. A full lawsuit is not off the table, though the preference is to settle this without going to court. Any formal action is likely to wait until OpenAI's ongoing trial with Elon Musk wraps up.

The core complaint is that Apple made ChatGPT almost impossible to find. To use ChatGPT through Siri, users must say the word "ChatGPT" explicitly. There is no suggestion, no proactive routing, no real placement. ChatGPT responses served through the Siri interface are also more limited than what you get in the standalone ChatGPT app. The integration was buried so deep that most iPhone users never interacted with it at all.

OpenAI executives have internally described the deal as a failure. One executive said the company had done everything it could from a product perspective, and that Apple had not made an honest effort. Another described the original negotiation as Apple asking OpenAI to simply trust them and take a leap of faith.

The subscription revenue that was supposed to flow from the deal never arrived anywhere near projections. OpenAI had expected billions of dollars annually. That number, sources say, has not come close to materialising.

Apple's side of the story

Apple has its own grievances. The company has reportedly grown uncomfortable with OpenAI's push into hardware, specifically the AI device project involving former Apple design chief Jony Ive.

That project, now part of OpenAI after a reported $6.4 billion acquisition of Ive's startup in 2025, is seen inside Apple as a potential competitor to the iPhone. Apple also raised concerns about OpenAI's approach to user privacy, a particularly sensitive issue for a company that has built its brand around data protection.

Apple's position may also have evolved beyond the original deal in ways that diminish OpenAI's role significantly. Rather than deepening the ChatGPT partnership, Apple is reportedly moving toward an open platform model with iOS 27.

Under this system, users will be able to choose between multiple AI chatbots directly inside Siri through an Extensions framework. ChatGPT will still be an option, but so will Google's Gemini and Anthropic's Claude.

Reports suggest Gemini could play a central role in a revamped Siri later this year, with more details expected at WWDC in June.

OpenAI's contract was never exclusive, so Apple bringing in other providers is not technically a breach. But it does signal that the strategic partnership OpenAI thought it had signed is no longer what Apple is building toward.

This is not a new dynamic

OpenAI is not the first company to discover that being inside Apple's platform is not the same as being protected by it. The iPhone is one of the most attractive distribution channels in the world, but Apple controls every layer of it. Companies that build there are tenants, not co-owners. The terms can shift, the prominence can disappear, and there is very little a partner can do about it once they are inside the ecosystem.

What this means for iPhone users

If you are an iPhone user who has never once used ChatGPT through Siri, you are not alone. The integration was never surfaced prominently. But the situation is changing. iOS 27 is expected to give users a real choice between AI assistants inside Siri for the first time. That could actually make ChatGPT more visible than it has ever been on Apple devices, even as the exclusive partnership frays.

The irony is that the lawsuit threat, if it ever materialises, may come at the exact moment when OpenAI's product is finally about to get better placement on the iPhone.

The Bottom Line

OpenAI signed a deal with Apple expecting a billion-dollar pipeline of new subscribers. It got a buried menu option and limited Siri responses. Now it is exploring legal action. Apple, for its part, is building an open AI platform that could include Claude, Gemini, and ChatGPT equally, which may ultimately give OpenAI more reach than the exclusive deal ever did.

The partnership that looked like the biggest AI distribution story of 2024 has turned into one of the messiest breakups in recent tech history.

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OpenAI built its name on being the scrappy AI lab that moved faster than anyone else. But a legal dispute with Apple is a reminder that distribution is power, and in Silicon Valley, the platform almost always wins.

The question worth sitting with is not whether OpenAI has a legitimate grievance. It probably does. The real question is what it says about any startup's long-term strategy when its biggest growth bet turns out to be a tenant agreement dressed up as a partnership.

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— Vivek

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