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Apple has filed a bombshell lawsuit against OpenAI, accusing its tech rival of gaining access to confidential information through the hiring process of its employees.
So what? AI talent wars have taken on a new dimension. Apple’s legal action pits the world’s second most valuable company against a startup with ambitions to revolutionise consumer tech and consign the iPhone to the dustbin of history. The lawsuit
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puts Jony Ive, Apple’s legendary former designer, under the spotlight;
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threatens to kibosh OpenAI’s plans to go public and enter the hardware space; and
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may introduce wider risks that help burst what some fear to be an AI market bubble.
You’re hired. Tech firms are engaged in intense competition for the top AI talent, offering $100m signing bonuses and $250m pay packages to poach each other’s employees. Alphabet shares fell by 5% in a single day last month after the exit of two high-profile researchers.
You’re mired. Apple’s lawsuit, filed on Friday, accused OpenAI of taking advantage of its hiring process to steal hardware secrets and approach the company’s trusted partners. OpenAI allegedly asked Apple employees to bring components or unreleased product samples to interviews for “show and tell”. Those named in the suit include
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Tang Yew Tan, a former VP of design at Apple, accused of taking supplier information to OpenAI and encouraging Apple employees to divulge trade secrets in interviews; and
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Chang Lui, a former senior electrical engineer at Apple, accused of taking an Apple laptop when he left and using an authentication bug to download confidential files.
Tell us what you really think. Apple said: “OpenAI’s nascent hardware business now rests on the shakiest of foundations, rotten to its core by its illegal reliance on misappropriated trade secrets.” Apple alleged that trade secret theft was known and approved at “every level”.
Right to reply. OpenAI said: “We have no interest in other companies’ trade secrets. We remain focused on building innovative technology that empowers people everywhere.”
Does Apple need to win? Not necessarily. OpenAI, predominantly known for ChatGPT, is expected to release its first hardware product this month and has an IPO in the works. It is believed to be developing a device that could challenge the all-powerful iPhone. Apple’s lawsuit may derail all of these plans even before there is any resolution in the court.
Bigger picture. Apple and OpenAI used to have a fairly cordial relationship, with ChatGPT being integrated into iPhones in 2024. But things began to fall apart last year when OpenAI spent $6.4bn to acquire a hardware startup founded by iPhone designer Jony Ive.
No love lost. Ive’s startup, io Products, is also named in the lawsuit. Apple is seeking unspecified damages from OpenAI and a court order blocking its rival from using its trade secrets. OpenAI is no stranger to blockbuster lawsuits. It recently won a case against Elon Musk, the world’s richest man, who was deemed to have waited too long to file his claims.
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Different gravy. This legal action may be even messier. ChatGPT remains integrated into iPhones, meaning any major stock hit to OpenAI could also damage Apple.
What’s more… The lawsuit may introduce wider risk to the sector, especially if it leads to further claims. This matters not just to tech CEOs and the stock market, but to the millions of Americans whose investment portfolios and pension pots are tied to the fortunes of AI.
Photograph by Thomas Trutschel/Photothek via Getty Images