Apple Sues OpenAI Over ‘Stealing Trade Secrets’ & Netflix Plans Live TV Channels?

0:01Are you sucking wind from trying to keep up with AI and its impact? Take a breather and tune in to The Intelligence Shift, Morning Brew's new podcast with PwC. It bridges the gap between big picture AI concepts and what it actually means in practice. Host Dan Priest is joined by expert guests to discuss AI's role in sports, music, HR, and more. Listen to The Intelligence Shift wherever you get your podcasts. Good Morning Brew Daily Show. I'm Raymond Liu. And I'm Kyle Heggie. Today, Apple just slapped OpenAI in the face with a lawsuit that says, stop stealing my stuff. And while you might see your favorite YouTube streamers popping up on Netflix, it's Monday, July 13th.

0:42Let's ride.

0:49Good morning. Neil and Toby are out, which means we have crowd favorite Kyle filling in. Kyle, welcome back to the pod. Let's do it. Excited to be here. Kyle, how fitted do you like your suit? I mean, obviously you can tell, pretty fit. I like them loose. I like the ability to grow into them a little bit. Well, the Wall Street Journal writes, in the era of protein maxing, men want tighter suits. Writer Jamie Water points out that when UFC fighter Conor McGregor met with President Trump at the White House last year, many noticed how tightly fitted his suit was and how it accentuated his physique.

1:24David August, the designer behind McGregor's suit, said that after that appearance, you've received dozens and dozens of requests for the same tailoring. So as men are trying to bulk out with all the protein and powerlifting they're doing, they're trying to show off their muscles along with their style. Kyle, but Kyle, how slim is too slim? I just got to say, if you're taking fashion advice from Conor McGregor, I have some serious questions for you. Already a red flag. And look, I need him loose as a new dad. I'm putting on a few extra pounds. So again, I like to grow into the suit. So I'm not going slim suits.

1:59But if it works for you, it works for you. Yeah, I agree. And now a word from our sponsor, Ultra Running. Hey, Ray, do you feel balanced and strong? Emotionally? Because if so, come back to me about that one in probably a month. No, of course not. We only care about the physical here. It's why we turn the cameras on. Ultra Running shoes are designed to give you room for your toes for comfort, balance, and strength. Most other shoes are narrow at the toe, but Ultra has more room for your toes so they can spread out and your feet can stay in a natural position. They actually make shoes shaped like feet.

2:33What a concept. Use promo code MORNINGBREW10 for 10 % off your first pair of Ultra Running shoes at ultrarunning.com slash morningbrew. That's A-L-T-R-A running.com slash morningbrew. The relationship between OpenAI and Apple has gone completely sour. Last Friday, Apple accused OpenAI of stealing trade secrets in its quest to build out a physical product line for ChatGPT. The lawsuit specifically calls out two former Apple employees, Tang Tan, a former hardware designer who worked on the iPhone, Apple Watch, and iPod, and is now OpenAI's chief hardware officer. And Chang Liu, a former electrical engineer who was privy to some of its most sensitive product developments, Apple says.

3:20The claims say Tan told OpenAI candidates to bring in actual parts from Apple during its interviews, and Lou downloaded several confidential hardware-related files as he was transitioning over to OpenAI. In the lawsuit, Lou wrote to a former colleague, LOL, I found out I can access the network storage, so funny, end quote. Quote, OpenAI responded saying, look, it has no interest in other companies' trade secrets. We remain focused on building innovative technology that empowers people everywhere. Now, back in February, Apple actually raised the issue of leaks to OpenAI, but they never responded.

3:58It's a partnership that's gone south. Apple asked OpenAI to help revamp Siri using its tech, but OpenAI grew disappointed with how Apple integrated ChatGPT. Kyle, this is a friendship that has kind of fallen apart, but technically they're still partners. So maybe they're more like frenemies. I guess so. And one, I mean, clearly you are interested in other companies' trade secrets. I get that there's a lawsuit. You got to be careful with your quotes, but that just seems to be wrong, point blank. And for me, like, how did the people doing this think it was going to work? Like, I'm sure Apple knows every one of my keystrokes and I don't even work for the company.

4:34So like the fact that you thought you might get away with this also blows my mind. I think for OpenAI to have their chief hardware officer being accused of a crime is just not a good look. And I think you brought up a really good point, which is the fall from grace. ChatGBT was going to be a partner with Apple on Siri in 2024. And I think so many people were excited about that because Lord knows Siri just doesn't really work. We were like, oh my gosh, this could be huge. And that partnership just fell apart so fast. Now Apple has switched to Gemini in 2026 to power their AI. And so, yeah, this looks like a really tough relationship.

5:12The other part that I think is souring between Apple and OpenAI was Joni Ivey joining OpenAI. Joni Ive. Joni Ive, excuse me, joining OpenAI, who is the famed Apple industrial designer, chief design officer. He spent 27 years at the company. He has every right to join OpenAI. But I think what Apple takes very serious is its domination in the hardware space. They've been open about allowing OpenAI, Anthropic, Amazon to invest billions of dollars into AI products. Knowing that those AI products are going to have to run on their hardware, what I think Apple feels some pressure now is what does the future of hardware look like and what does the interface people go to?

5:53Is it going to be MetaRaybans? Is it going to be SnapSpecs? Is it going to be an Amazon Alexa? Is it going to be this new hardware that OpenAI develops? Once Apple feels threatened like that, I mean, they got$140 billion in cash and the best lawyers in the world, they're going to go after you. And so I think this makes sense from Apple's perspective to defend what they do best, which is hardware. Yeah, a lot of these tech companies are trying to crack the code of consumer AI products. No one has really, really done so yet. I mean, it's still very much in its nascent period. So we will see. But Sam Altman, who's the top guy over at OpenAI, has been very public about his hardware hopes and dreams.

6:30But he isn't actually necessarily interested in building the next revolutionary computer or even the next revolutionary phone for that matter. He's actually said that today's laptops and phones were designed for pre-AI worlds. He even thinks our current technology or slate of technology isn't quite ready for the AI future that he's looking for. But the problem is that no one knows what kind of products that OpenAI is building. So he's publicly said that they're working on prototypes, and he's also touted, like, oh, these early prototypes are so good, I can't wait. But it's largely been kept a secret.

7:09Nonetheless, they've poured billions into its hardware effort, and at the same time, it's also racing towards an IPO. That's right. I mean, they spent$6.5 billion to acquire IO Products, which was the product and engineering company that Joni Ive founded, to bring him in to lead this hardware effort. we haven't seen much from that effort and you know personally i think open ai this is a bit of a distraction the lawsuit but also chasing after hardware the problem of ai is tough enough to figure out how to consistently deliver the best models to also build something in hardware which requires intense supply chain coordination and everything apple is known to be best at that seems like another whole different company hard to run them both uh so we'll see how this lawsuit shakes out and what OpenAI's future in hardware is.

7:58Yeah. And as I mentioned, Apple took notice back in February of this. So it's not like they're going from sideways. They're saying like, hey, stop it. They gave OpenAI an opportunity to kind of have this resolution back in February, and then they just didn't respond. So I feel like at this point when they actually filed the lawsuit, to me, they've built out a pretty strong case to actually sue. And they were pretty specific about it too. So it's not like they just said, generally catch all trade secrets. Hey, whatever, we feel like you're taking our ideas. They have the guy saying, lol, I stole stuff.

8:30Exactly. Again, according to the lawsuit, but it's down to like details, like the metal finishing techniques that Apple wants to protect. And that's like a key thing, especially when it comes to like their supply chain, as you mentioned. But many are saying, like you said, it does not look great for open AI, especially when you hire these former high level workers from Apple. In fact, more than 400 former Apple employees, according to Bloomberg, have joined OpenAI. And that's also because they are enticed by this opportunity to build this next generational device. And also because they have just massive, dazzling pay packages.

9:05I mean, some of the pay that I've seen on LinkedIn is just crazy. But I want to also make sure that we say, what does Apple ultimately want to achieve in this lawsuit? Well, it wants OpenAI, first and foremost, to stop stealing its trade secrets, for one. But it also wants OpenAI to scrap any hardware plans that may have a tinge of Apple in it. So it basically says anything that you're working on that may be construed as our trade secrets, re-engineer it, start over, start from square one. But it's not only just the product itself, it's also including the supply chain data, which could have a really massive impact on OpenAI.

9:44That's right. Ray, if a competing podcast ever tries to poach you, Don't give them our trade secrets, okay? Don't give them our trade secrets. I just learned about a new term, and it is cookie stuffing. No, this isn't when you buy a pack of double dark chocolate Milanos and eat the entire bag on a Friday night, speaking for a friend. Rather, it's when a company or app attaches its affiliate code using computer cookies into your browser, which allows the app to claim sales it didn't actually drive. While the former definition of cookie stuffing sounds a little more fun personally, it's the latter definition that has Fia, the AI-powered shopping plug-in company founded by Phoebe Gates, the daughter of Bill Gates, in the news and in a bit of trouble.

10:24That's right, the co-founder of Microsoft's daughter, Phoebe, has the entrepreneurial spirit that her father has as well. She launched Fia officially in 2025 with her co-founder, Sophia Chiani, and subsequently went on to raise$35 million for the app. Fia allows users to compare prices for new and used clothing, shoes and accessories with one click, and it also provides insight into how certain brands hold value in secondary markets to help shoppers discern when to buy secondhand. However, according to Ben Edelman, an independent researcher in the affiliate marketing space, Fia was using cookie stuffing to claim sales it didn't actually drive, a violation of many digital platforms policies as well as users' trust.

11:06Essentially, if you had the app installed on your computer and you were shopping online, FIA would secretly load onto another tab, inject its affiliate code into your shopping experience, and then close. When you went to make a purchase, it would appear that FIA helped drive the sale, when in reality it was unknown and unintended by the user. Now, FIA has acknowledged the issue, saying, quote, Within the last 24 hours, we were made aware that in a recent release of our code base was causing misattributions from a subset of users. as soon as we were notified our team worked overnight to identify mitigate and has since resolved the issue but there will still be more damage to be undone by fia for example impact.com a leading partnership and affiliate management platform said it suspended fia's account due to this behavior that was quote inconsistent with our platform policy ray very tough news for something that sounds as fun as cookie stuffing to turn out to be actually a bad thing and has nothing to do with dessert.

12:02I'm so disappointed. Let's talk about how affiliate marketing should work in an ideal setting. So let's say you're on Instagram and there's an influencer you follow is they often are promoting like a brand or a product, some kind of item that they use, whether they actually use or not, but regardless, they're promoting it. They often have an affiliate link that includes a discount code in it. So as long as you click on that link, and when you do a small file called a cookie saves to your device. And this cookie remembers the affiliate's ID. So now if I'm the shopper and I actually go to the website, a store, an online store, and actually wants to buy the product that the influencer is promoting, the system verifies that cookie and then credits the sale to the affiliate and records the commission.

12:49The problem is that that's not happening in this case with Fia. I went online to look at some of the chatter and it's obvious, Of course, it's been pretty lively. And some aren't buying the fact that Fia said that, oh, it's kind of a technical bug. We weren't aware of this. We're going to go ahead and fix it. But they're also quite skeptical of Gates's innocence in this manner, that she was probably more, she knows more than she's kind of giving off. And there's a lot of scrutiny on her because she's Bill Gates's daughter, of course, and that she's an influencer and she has this flashy podcast called The Burnouts Podcast and has a lot of big names on it.

13:24But then you have those who are actually coming to her defense saying, hey, people should give her a lot more grace because she's a first-time founder. Mistakes are going to be made. And that maybe because she is a female founder, there's a lot more of a bias to really amplify and pounce on the mistakes that she's made. Yeah, and we're not sure if this was intentionally malicious, as you noted. And I think we need to see where these allegations go a little further and how FIA continues to respond to them. In addition, this is not new. Capital One also had a claim very similar with its shopping app about affiliate code injection and cookie stuffing.

14:02So this is something that has happened in this space. I'm not excusing behavior, but it is something that has happened. Although this can come with criminal prosecutions if it is super, super intense. In the late 2010s, two affiliate marketers were actually criminally prosecuted for defrauding eBay, which a scheme that netted them about$35 million. Not saying fee is at that scale, but this is something that can get serious if you don't respond properly. However, I think your point is very well taken. The reason we're talking about this is because the last name of the founder, Phoebe Gates, her father obviously is Bill Gates.

14:36The investors they had was like a who's who of big name investors. Khloe Kardashian, Sydney Sweeney, the chain smokers, Karlie Kloss. I mean, it looked like a festival lineup, not necessarily investors. They got everyone on board, and so there's a lot of heat around this. I think my hot take is this actually helps FIA over the long term. If you didn't know about FIA before, you certainly know about them now. This is everywhere. It's going to continue to be everywhere, I think, this week in the press. I believe they'll make changes, and unless the company is forced to shut down, which I don't see happening.

15:09More people know about it. More people will try it. Did they erode enough users' trust to never come back? We'll see. But the real downside is not really to the user. It's to the advertisers and the publishers. So I think this maybe ends up helping them. However, it is another knock on the Forbes 30 to 30 fraud pipeline. Both Phoebe Gates and her co-founder were named to Forbes 30 to 30, which is a funny coincidence. You do not want to be on that list for some reason. That's why I turned it down, Ray. That's why I turned it down. Yeah, of course. So, of course, you've got a heart of gold. That's why.

15:40Okay, let's move on. It's time for winners of the weekend, the segment where we pick two stories from the weekend that folded the perfect origami crane. Kyle, you won the pre-show game of who can stay within the lines of our adult coloring book. So you get to go first. My winner of the weekend, Ray, is Netflix. And there's a famous business phrase that essentially says there's only two strategies in business, bundling and unbundling. Netflix first pioneered the unbundling, right? stripping down the ability to watch content from complex cable subscriptions that you could never cancel, packed with things you didn't want, or even removing the friction of having to drive to the store to pick up movies or TV shows you wanted to watch.

16:19But now Netflix is entering its bundling era with plans to continue going deeper into live TV, adding podcasts and short form video, a new gaming app for kids, and quite literally bundling its service or potentially bundling its service with other digital content providers like Peacock. Now, why is Netflix seemingly bundle maxing? Well, subscriber engagement is showing signs of decline with many season twos of series showing a sophomore slump like the hit show Beef, which reportedly had a 70 % drop in engagement season over season. And Netflix share of TV viewership has fallen to 7.8 % in April, according to Nielsen, the lowest level since May 2025.

17:00Simply put, Netflix needs more reason for you to tune in consistently. And it's not just traditional live TV Netflix is after. The streaming giant said on Monday that it had ordered a spinoff of Hot Ones, the hit YouTube show with Sean Evans where celebrities eat hot wings and talk about things. The new show, Hot Ones Extra Heat, very creative name there, will stream after the occasional major live sporting event or big series or film premiere on Netflix. Ray, if there's two things I know about Netflix, it's that that dun-dun, when you load the app will always be too loud and they will continuously disrupt themselves to stay on top.

17:37I like this move in Netflix. It's something they have to do. I'm glad to see them doing it. Well, you know what this reminds me of? You either die a hero or live long enough to see yourself become the villain because this is kind of far away from its roots when it first started out to disrupt the cable television landscape. But yeah, Netflix wants to basically own your eyeballs, but it has an engagement problem, as you mentioned. And some have pointed out that it kind of stems from something that it essentially pioneered, and that's binge watching. So if you remember, binging was great because when you compare it to traditional TV and you really enjoyed a show, and all you had to do was pick a free weekend, and you're like, I can just watch this entire season, and I didn't have to wait another week to watch an episode and sit and watch at a certain time.

18:23But today you have TikTok. Today you have YouTube and Reels, which are platforms that are actually stealing away attention and eyeballs and time from its users. According to eMarketer, TikTok was near Netflix in terms of time spent back in 2024. U.S. adults spent an average of 62.1 minutes per day streaming on Netflix and 58.4 minutes per day on TikTok. So the gap is kind of closing there. And of course, you have YouTube, who generally pulls in more monthly viewership than any other streaming platform. It's constantly generally number one, according to Nielsen's report. And there, we have access to both short-form and long-form videos.

19:04So for Netflix, the real competition isn't TV anymore. It's apps like TikTok and YouTube. Yeah, there's a famous quote from Reed Hastings, the co-founder of Netflix, that said, sleep is our biggest competitor, right? And I think if you take that quote to its logical conclusion, anything that can take your attention away from Netflix is a Netflix competitor. Unfortunately for them, the attention and the focus on getting your eyeballs away is more larger than ever. I mean, there's competition from YouTube. All of the streaming services have effectively copied Netflix and caught up a bit. There's TikTok.

19:37There's still sleep. And so everything is coming for your attention. Netflix is now in a field of many. and so they have to develop IP that keeps you coming back. They have to find a way into live appointment watching TV because that's something that people still want to do. They're trying to find their way into podcasts. It feels like they're trying to find this perfect mix where you can go to Netflix the same way you would go to YouTube and know you're going to find something you like. That is going to be their biggest challenge. Again, I wouldn't bet against Netflix though because if they've shown one thing during the history of this company, it's that they will continue to disrupt themselves.

20:10I think they still have the strongest brand in streaming, and it's how can they leverage that brand to move into everything else now. Yeah, another way that they're trying to capture and expand audiences is reportedly they're using shorter video content by adding content from publishers like BuzzFeed, Condé Nast, Variety. And you're already seeing some of this with what you said, video podcasts. It is a way for them to test out whether subscribers would be open to watching that shorter type of content that is typically for the web, such as news, lifestyle, how-tos, because these are videos that are faster and more importantly, cheaper to produce than let's say a scripted series.

20:48So here's the thing, if it works though, and if people are turning to Netflix to watch these types of videos, you could potentially see them starting to develop more in-house content of this style. All right, well, before we get into my winner of the weekend, let's go ahead and take a quick break. Neil, have you ever been late to a trend? Yes, jelly shoes. My feet are still recovering. Well, every day you're late to AI, you fall two days behind. NetSuite Next from Oracle helps you catch up. Trusted by 43 ,000 customers, it can connect your financials, inventory, HR, and CRM into a single source of truth with AI built into everything you do.

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22:47My winner of the weekend is marijuana. Yep, I said it. That's because more employers are caring less about you popping a gummy at night after a stressful day or when you want to just vibe out on a bench at Fort Greene Park. According to new data from Quest Diagnostics, the share of urine tests that are positive for marijuana use rose 4.4 % last year, up from 3.9 % in 2021. Hair tests, which can detect drug use as far back as 90 days, revealed far more widespread use over the extended period of time. About 15 % of workers tested positive, a 60 % jump from 2021. one. It's all from a combination of factors.

23:27One, more states are legalizing it. 20 states legalized it between 2016 and 2023, a rapid change by historical standards. And today, 24 states have fully legalized it. And two, more people are using it. Weed among boomers hit its highest ever in 2025. And Gen Z, we covered before in the show, are drinking less but are using marijuana more. And three, then you have the Trump administration wanting to reclassify the drug from Schedule 1 to Schedule 3, a less harsher classification, which could also affect employers' drug testing policies. According to the Wall Street Journal, more employers don't see it as a red flag anymore and is no longer a deal breaker when it comes to keeping or getting a job that it once was.

24:12And some employers are not even screening for the drug at all. Kyle, this is a total shift from how it used to be, especially when it comes to the workplace. I remember a time when movies and TV shows had entire plot lines where a character would try wild ways to circumvent their employer's drug screening to keep their job. But today, not so much. Yeah, this has changed so much just over the course of my lifetime. Ray, that Fort Greene park bench was oddly specific. So I'm going to be looking for you at the park now. Vibing out. Yeah, I think like you said, the society has really changed its perception of marijuana, even in the past two decades to something that is generally more accepted.

24:52I also think this is just capitalism being capitalism. When companies were screening for marijuana, they were finding it hard to find actually qualified employees based on the heuristic that if you had weed in your system, you wouldn't be a good employee. They said, well, we actually just need employees. We have to loosen these restrictions. And if, yeah, if you're not doing something right on the job, there will still be consequences. But I think the perception has been more like alcohol where what you do off the clock is your business as long as you're locked in at work. I think some industries, they might want to screen for marijuana positive and hire those people who are most creative.