Apple’s Lawsuit Will Disrupt OpenAI’s Bid to Rival the iPhone

0:00As a top-performing advisor, you demand top-performing funds. That's why Fidelity's 1 ,000 experienced research professionals combine deep insights and advanced analytics to deliver consistent outcomes for clients across market cycles. Explore 300-plus Morningstar-rated 4 - and 5-star funds at i.fidelity.com slash top funds. Across all fund share classes of Fidelity, Fidelity Advisor Shares, and Fidelity ETFs as of 6-15-2026, past performance is no guarantee of future results. The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand.

0:38But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. When you're running a business, the best days are the ones where priorities stay on track. For midsize and large companies, risk can affect multiple parts of the organization at once, from property and liability to cyber and regulatory challenges. At that level, managing risk becomes an ongoing discipline.

1:16At the Hartford, the focus is on helping businesses manage risk before it turns into something more disruptive. And when losses do happen, that work is paired with insurance coverage shaped by years of underwriting, risk engineering, and claims experience. Learn more at thehartford.com slash risk mitigation. Policies provided by Hartford Fire Insurance Company and its property and casualty affiliates, Hartford, Connecticut. Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevec on Bloomberg Radio. Do you know who might be having a stiff drink right now?

1:57No, he's working. Maybe people at Apple. He's working. He walks in. No, no, no. I was going to say either people at Apple or people at OpenAO. Oh, okay. Yeah, that's a good point. Mark Gurman walks in here, and you've got to say he walks the walk because he's got his AirPods with him. He's got – which version of the iPhone is that, Mark? This? 17 Pro Max. 17 Pro Max. And what is this whatever tablet computer situation you have over here? It's a Samsung tablet. No, I'm just joking. Oh, oh. iPad. Okay, it's an iPad. Okay. Just making sure the cover's on it, so I'm not completely sure. I love that.

2:27I know. Mark, we want to talk to you about this OpenAI lawsuit. Yeah, it's a drink. Probably Sam Altman right now, right? Yeah, yeah, yeah. Maybe. I mean, I was out last week, as Carol keeps reminding me, so I kind of missed the breaking news a little bit. Because I missed you. Okay. You had a nice follow-up about how this could delay whatever hardware product OpenAI is working on. For people who missed what happened on Friday, bring us up to speed. Okay, so Apple sued OpenAI over trade secret theft, claiming that OpenAI has systematically taken their trade secrets, their IP, information about upcoming products, components, development processes, even security procedures about how to leave a company in order to evade Apple security when you depart, in order to build their new family of devices.

3:17Okay, I want to pause it here. Go. When you are a company like OpenAI that has, and has historically, I might say historically, I use that term loosely, but over the past few years, had lots of money and equity to throw at people to attract them to Apple, or from Apple to your company, or wherever they're coming from. What are the policies in place to stop somebody's brain from sharing that information? Maybe you're not actually on purpose taking... That's what my husband said over the weekend. It's like, it's just, if you get hired, you're just going to work for this new company and do. the company he was working on.

3:50People move between companies in Silicon Valley all the time. And so Apple has to have a high bar here and explain what is the difference between taking your years of experience and knowledge from one company to another and what they're claiming is going on here. What they're claiming is that even in the interview process, the people at OpenAI are asking the Apple employees to hold show and tell sessions where they're bringing components, schematics drawings and whatnot but what they're working on at apple so they can get more knowledge of it so they're trying to paint a picture that this is not normal moving between companies hold on hold on these apple employees these are like the most secret apple is such a secret and i'm talking to mark german about this i mean you know this better than anyone else mark i mean you can't people on their linkedins barely show what they do when they work at apple like why are they walking in somewhere talking about what they really want a job well yeah first of all open AI is paying a ton more than Apple's paying.

4:47There are a lot of Apple employees who are like, so I really want to work on the same iPhone year after year, year after year, year after year, right? It's the same stuff every year. Come to OpenAI, work on something revolutionary, work on the next iPhone, right? Work on the next iPad. And so people who are in Silicon Valley, they want the money and they want to work on this revolutionary new thing. And so there's a lot of interest. They've hired over 400 people from Apple. I would venture to guess between 5 % and 10 % of OpenAI, their last company they worked at was Apple. And so that's a lot of people.

5:18So clearly they're getting them to come for something. Help me understand, the show and tell is before they've left Apple? Or no, this is after they've left Apple. They explain it as before they left Apple in the interview process. That feels a little... Again, allegations. We don't know if this is true. And the other thing is, is that I feel like Apple's suit is pretty thin. I think that a lot of these are allegations and they're explosive allegations. And I think that was the whole point. Even if this doesn't go to a courtroom, even if a jury doesn't rule on it, the damage is done. If you're an Apple employee and you know the scrutiny that anyone at Apple is under right now for even considering to go to OpenAI, let alone leaving to OpenAI, you'd have to be out of your mind to not think twice about doing this, right?

5:57Yeah. Like, I don't know. I mean... But didn't the 400 who left know that? I mean, this is a company that is... No, not necessarily. Okay. Not necessarily. You, I will never forget interviewing you a year ago and you said and this is in the context of meta platforms getting employees from Apple and you said these folks have the opportunity to amass life-changing generational wealth yes by jumping from Apple to meta platform yeah opening is not paying what Meadow is paying I mean they're paying I mean they put out a pay package for one dude for I think it was like 50 million a year for one of their ai guys we're talking a couple million a year here at open ai which is probably through your forex what they were making at apple so it's a different ball game it's a different ball game does apple have the same challenge with meta platforms that it has with open ai in terms of i mean look we're talking a lawsuit here so we've seen absolutely no evidence that the poaching from meta uh has included anything of the like what you're seeing with this open AI situation.

7:03But I think the warning is out to any company hiring from Apple is that if you want our people, we're not going to make it so easy. So do you think Apple knew that this was kind of a thin lawsuit, but they just wanted to kind of like... Of course they did, because throughout the lawsuit, you have a lot of papers. Do you have the complaint in front of you? Yeah, I don't. No, I wish you did. I am not Mark German. Mark, that's just a day that ends in Y for Kittle Master. That's funny. I'm going to do a search later for how many times they say in the case, It's a 40-page thing. How many times in those 40 pages do they say, we need to do discovery to figure out what's going on?

7:37So I think for a couple years ago. Apple says this in the lawsuit. Yeah, I'm not using their words. Yeah, yeah, yeah. We need to, their exact wording is basically like, we need to do discovery to understand the full extent of the theft. Okay? They got this, I call it a smoking gun. They're not calling this. It was this young iPhone engineer who broke into Apple systems by finding a bug well after he worked at Apple. while he was already at OpenAI, right? They found a smoking gun that they could tie the lawsuit to. If it wasn't for finding this guy, I don't think they would have been able to file a suit.

8:07So they found this, and now they're hoping there's going to be a stream of people that they find. Why don't they just call up Johnny Ive and say, Johnny, come on, we parted on good terms. But he was gone. You sure about that? I don't think he did. Well, he was gone. He was gone before OpenAI poached him, right? He was gone. He was serving as an advisor. It was like a slow transition out of Apple. Yeah, he officially left in 19. Okay. Okay, so seven years ago. Yeah. But if you think Apple and Johnny Iveron's good answer. I know, I know. But I mean, is that, what's his role in all of this? He's the one who's left unmentioned.

8:39Do a command F on that lawsuit. He's not in there? You're not going to find Ive in there one time. So what does that mean? Good question. They have nothing on him. But, or, you know, he's untouchable. I mean, his brain, like the stuff that he knows, right? It's been seven years. okay but you know there's processes and whatnot that's there uh him and apple likely had a separation agreement that uh made him not be able to work in the consumer electronics industry for a certain number of years i would venture to guess that he was not allowed to do this for three years but it's been seven yeah and legally because the contract said three years again i'm just guessing it was three years but um i think i would consider johnny ive someone who would not breach that contract.

9:25And so if you're working on a consumer electronics after your contract has expired, it's fair game. What's open AI trying to build? So they're working on about five different devices, a family of devices. The ultimate goal is to build a smartphone. I do not believe that the first product that I still am told is being announced this year and launching next year, save for any lawsuit issues related to that is the phone. You know who else wanted to build a phone? Meta. Yep. You love calling it Meta Platforms. Meta. Who calls it that? Who calls it Meta? I just want to call it Facebook. I call it Facebook.

9:58And every time I'm about to call it Facebook. It was Facebook. You know, whenever I read a story from you, Mark, it says Meta Platforms Inc. That's because those are the rules here. I'm just following the rules. Just following the rules. Yeah. Meta. Amazon had its fire phone. Jeff Bezos wanted to build a phone. There are a lot of companies that have tried to do this. Well, you're basically taking the best of the best who worked on the iPhone and merging that with the best of the best AI. But they're not bringing iOS with them. No, but they're bringing the next computing platform, the next iOS potentially, which is, you know, chat GPT underlying models.

10:30So we'll see. I think it's a very high bar. I don't think anyone is ditching these things anytime soon. And I think that Apple has the ability now to fast follow. But it is fascinating to see Apple kind of do this flex. So what are they worried about? Well, you've got your 400 of your best engineers. You've got the guy who used to run your design and created the iPhone's design and everything. And by the way, it's been seven years, but does the iPhone really look different than when Johnny Ive created the iPhone, right? No, right? So you've got your best designer, you've got some of the best engineers, then you've got it combined with the best AI.

11:01That's a scary thing for Apple. And I think this lawsuit was a brilliant strategy on Apple's part. They are stopping the bleeding recruiting-wise. They're going to throw a bunch of the senior executives and leadership at OpenAI into depositions and discovery now for the next year. So they're like... You're a little busy, right? They're distracted. They're distracted. So, you know, they bought some time. You mentioned phone. What else? What other family devices? Something wearable? Not going to get into all of it. Yes, wearable. But they're looking at a lot of different things from earbuds to glasses to a pendant to a smart speaker.

11:35I don't think the phone is the first device, but that's ultimately what they want to get to. I love it when Mark Gurman is in New York. I know. Yeah, glad to have you here. I know. You should come hang out more with us. I'm here for the next several days. Okay. Talia, did you hear that? We have Mark on like every day. They're going to be reaching out to you. Mark Gurman, thank you so much. Mark also jumped on on Friday, and it was late Friday. I don't remember. Yeah, I don't remember either. All right, Mark is Bloomberg News Managing Editor for Global Consumer Tech. Mark Gurman, check it out. All on Bloomberg, all of his work.

12:11Healthcare doesn't always work great. If you've ever waited on a refill or couldn't schedule an appointment, you get it. That's the kind of stuff Optum is changing. They're using data and technology to integrate patient care, pharmacy, and everything else. So healthcare is connected, not complicated. What's that look like? Cheaper prescriptions that are easier to get and care that looks at the whole person. How you need it. Optum is helping make healthcare work as one for everyone. Learn more at business.optum.com. As industries evolve faster than ever, companies need an environment that accelerates strategic growth.

12:46And Michigan delivers on that promise. From emerging startups to global enterprises, Michigan offers what executives value most, a resilient, innovative ecosystem, diverse communities that attract top talent, and a quality of life that supports work-life balance. With our unified Team Michigan approach, businesses scale faster and compete at the highest level. Michigan, pure opportunity. Seize your opportunity at michiganbusiness.org. These days, it seems like AI agents are just about everywhere you turn. every field and every function. But without identity, you can't trust they'll serve your business instead of jeopardizing it.

13:22Fortunately, Okta helps you get identity right by securing your AI agent's identities, giving you a single layer of control, a single standard of trust. So whether an AI agent supports a single user or your entire enterprise, with Okta, you'll turn risk into opportunity. Secure every agent. Secure any agent. Okta secures AI.