Apple Sues OpenAI, Experts Sign Another AI Warning Letter, Paramount Threatens CA Exit | Diet TBPN

0:00John Coogan:Huge news over the weekend. Mark Gurman dropped a massive scoop right after we got off on Friday night. Friday afternoon, Mark Gurman broke the news that Apple is suing OpenAI. Apple and OpenAI are going to war. The Wall Street Journal called it thermonuclear, echoed past attacks, calling back to the jobs era. We'll get to that. But first, the accusations. Apple is suing OpenAI, accusing it of stealing Apple's trade secrets. Apple Inc. sued OpenAI for trade secret theft, accusing the artificial intelligence startup and its hardware chief of engaging in a coordinated campaign to steal information about upcoming products.

0:37John Coogan:The iPhone maker said in a suit Friday that OpenAI encouraged Apple employees to share information, components, drawings, and other materials related to upcoming products. So like the robot? What are the upcoming products from Apple right now? Part of efforts by the AI company. The lamp. The lamp. The smart lamp. The cobra lamp. by the AI company to develop its own suite of devices. I feel like rumors around the devices have gone back and forth. Is it a phone? Is it headphones? Is it something else? A pin? We're having Mark Gurman on the show today to break it down for us. He's coming on at 1245.

1:09The funny thing is I bet Gurman knows more about OpenAI's devices than we do because we specifically didn't want to be read in on anything device-related because we knew there was going to be so much speculation Then we just said, yeah, we're going to be in the dark. We'll find out. From the timeline. From the timeline.

1:27John Coogan:So at the center of the lawsuit is a former Apple employee named Chang Liu, who left for OpenAI and allegedly kept his Apple laptop for weeks after he left the company, downloaded proprietary Apple files, and encouraged other Apple employees to do the same. Yeah, if that happened, that's a big no-no. When you leave a company, you've got to leave your device on the day you leave, usually. I mean, I was remembering back to – I mean, we had a very graceful transition to this business from Founders Fund. But I had emails in Founders Fund from people that went to Hereticon, people that would be a good guess.

2:00John Coogan:And I was like, I'm not even going to export that. I'm just going to leave that, and I'll reestablish those connections to people, cold email them, find their information independently. Just don't take any files. Leave them with the other system. Standard practice. Yeah, it is standard practice. some people can make mistakes. Also, these are just allegations. None of this is confirmed. And this lawsuit will be going on for months, if not years. We can go through some of the other historical examples that are sort of interesting to sort of set the table on what might play out here. So Apple's filings also spends quite a few words on the fact that OpenAI has poached more than 400 employees from the company in recent years.

2:38John Coogan:That's not going to make anyone in Cupertino happy. They hate coaching. There's the famous Steve Jobs Adobe back and forth. Tang Tan left Apple in 2024 to co-found the AI hardware startup I.O. with Johnny Ive, which OpenAI acquired in 2025 as part of its consumer AI device effort. Tan is now OpenAI's chief hardware officer, and he's leading the consumer device effort there. In his lawsuit, Apple says Tan systemically solicited sensitive information from Apple employees who were interviewing for roles at OpenAI. A lot of perspective on this flying around the timeline, but Ben Thompson and Rolf Winkler in the Wall Street Journal both had interesting angles here.

3:16John Coogan:Wait, they have a Ben Thompson at the Wall Street Journal? No, no, no. Ben Thompson at Strutekery and Wolf... I said that wrong. Brandon got it in the newsletter. We can read a little bit of what Rolf said in the journal. He says, Apple's OpenAI suit echoes past attacks. Steve Jobs declared thermonuclear war. If you're trying to fire up your staff and you're going to battle, even if it's mundane, even if it's just for like, will the next device have 12 gigs of RAM or 32? That's boring. Thermonuclear war is exciting. You got to fire up the, the, the, the staff. So he declared, Steve Jobs declared thermonuclear war on Google, on Google's Android operating system in 2010, calling it a stolen product.

3:58John Coogan:Now his successor is going to battle against Apple's most new, most dangerous rival. in one of his last acts as Apple's chief executive before successor John Ternus takes over. Tim Cook fired a missile at OpenAI. In a lawsuit filed Friday, Apple alleged that senior OpenAI executive, who once sat atop Apple's own product design team, was involved in a months-long campaign to steal Apple trade secrets. OpenAI replied at this point and said, we have no interest in Apple's trade secrets. But Ralph continues, he says, Although it isn't clear yet what evidence the company has to back up all of its claims, the suit lands before OpenAI has released a product.

4:37John Coogan:And as the technology industry races to build artificial intelligence-powered devices that can move society beyond the smartphone era. And there's a whole debate to be had for where that goes and the value of devices in a world where the agents are just kind of off-working and you can maybe just text them or send them a message on Telegram. There's a whole debate over what the, is the future of devices more devices and different devices, or is it just no devices? But OpenAI has clearly been working on devices, as we know from the IO acquisition. The winner could dominate the future, just as Apple's iPhone ruled the consumer market for the last 20 years.

5:13John Coogan:Quote, I am not afraid of Apple, but I have tremendous, got to flip to A6. Let's see. Tremendous respect for them. OpenAI CEO Sam Altman posted on X Saturday. And he said S tier company. Yeah, he said, oh, that didn't make it into the paper. Maybe the Wall Street Journal readers aren't familiar with the proper tier list. They think S is down at the bottom, when in fact, it is above A. Big tech rivals have long tried to supplant Apple, but so far, Google, Samsung, Meta Platforms, Microsoft, and Amazon.com have all failed. It is crazy. People think, you know, okay, Android was successful but captured like one-tenth of the actual value because the margins on Android devices are so much lower.

5:53John Coogan:But you forget that Jeff Bezos stood on stage and said, we're launching the Amazon Fire phone and we're going to win. And then Microsoft had the whole Microsoft phone and they were really pushing that. And Facebook, Chamath was at Facebook working on the Facebook phone. Sort of a rite of passage. It is a rite of passage. it's an ultimate long shot as an up-and-coming hyperscaler. It's a rite of passage to go and challenge Apple. Now OpenAI is emerging as a new threat. It has built powerful AI models and is working toward an unspecified family of devices, interesting to hear that, to run them, devices that could supplant Apple's.

6:32John Coogan:Company observers say to slow poaching of Apple staffers, for instance, so this could just slow the poaching that's happening. Friday's lawsuit has echoes of the ones Apple's filed against various Android ecosystem players beginning in 2010, a legal battle royale with hardware makers producing rival phones that played out over eight years. The central allegation then, as now, was a rival stole Apple's innovations. Apple said Samsung slavishly copied the iPhone with smartphones it was already selling by the millions, which Samsung denied. The company settled in 2018 after a long, costly battle.

7:09John Coogan:Eight years. In AI years, that's like a million decades. At the center of each case Apple has pursued was a perceived breach of trust. So Google's then chief executive, Eric Schmidt, sat on Apple's board as his company developed Android. So there was like you're on the board of Apple saying, yeah, we should definitely launch it. Kind of similar to the Krieger-Figma dynamic. Yeah, very, very tricky. I'm going to destroy Android because it's a stolen product, Jobs told biographer Walter Isaacson. Apple alleges in its new suit that, quote, at every level, OpenAI has been stealing Apple's trade secrets.

7:48John Coogan:A more junior employee appeared to cross the line by using an Apple employee's login to access Apple servers. But Apple has also accused OpenAI's hardware chief, Tang Tan, of soliciting trade secrets from its employees in interviews for Jobs and encouraging them to bring, quote, actual parts from Apple for show and tell sessions at OpenAI. Tan worked at Apple for 24 years, rising to vice president of product design. But bringing parts to an engineering interview isn't unusual, say people familiar with the tech hiring process. That was shocking to me. It does feel unusual to me. Interviewers want candidates to talk through their work.

8:25John Coogan:The question is whether the parts were sensitive, something Apple doesn't offer evidence of and is seeking discovery to determine. A spokesperson for OpenAI said, We have no interest in other companies' trade secrets. We remain focused on building innovative technology that empowers everyday people everywhere. Tan and a more senior employee, Chang Liu, didn't respond to a quest for comment. At Apple, Tan worked very closely with Johnny Ive, its famous industrial design chief. Ive left Apple to build his own design firm, later poaching Tan. OpenAI bought that company, IO Products, in 2025 to spearhead its own device development efforts.

9:02John Coogan:Bedfellows can quickly become enemies in tech. OpenAI made the IO acquisition, revealing its intention to wean customers off smartphone screens a year after announcing a partnership with Apple to integrate ChatGPT into some parts of the iPhone. The Wall Street Journal has a content licensing partnership with OpenAI, of course. Bigger companies have so far failed to dent Apple's dominance. They talk about Amazon's Fire Phone, Microsoft Windows Phone. Mark Zuckerberg also tried to do an end run around the iPhone with the metaverse that never fully disrupted the iPhone, of course. Elon Musk has also chafed at Apple's control of the digital economy.

9:36John Coogan:A unit of SpaceX is suing Apple for disadvantaging its AI app, and the company is now prototyping its own smartphone-like AI device. Apple has said that its app store relies on algorithms and expert curation and doesn't suppress rivals. The irony of Apple's case against OpenAI is that Apple itself has so frequently been accused of stealing other companies' ideas that it has spawned a new verb, Sherlocking, which is a reference to an app for the Mac that allowed you to hit, I think, command space and get a finder window to search everything across your entire desktop. That eventually became the spotlight feature baked into Apple, but it was not very good for the company that was running Sherlock.

10:18John Coogan:And so Apple, this is the same, like the labs will steamroll this or these many companies just got put out of business by this company. And sometimes it works, sometimes it doesn't. It just sort of depends. Apple recently tried to Sherlock Partiful, but it seems like Partiful is doing fine. And so it sort of depends on the actual product. Yeah, I've not gotten a single invite from Apple's invite system. At the same time, when was the last time you paid for a flashlight app? Probably never, right? Because all of that stuff's baked in. Apple's trying to catch up. I saw someone actually go pretty viral on Instagram with the world's most expensive flashlight app.

10:57Really? It was like$5 to turn the light on and then$129 to turn it off. That's great. Genius.

11:08John Coogan:I like those. Ben Thompson read through the filing as he would. He says, you can read Apple's filing here and almost everything you need to know is actually on the first page in the first four paragraphs. Paragraph one is a succinct introduction to the case. This case is about Apple's former employees stealing trade secrets for the benefit of OpenAI. Apple brings this suit to put a stop to it. Paragraph two recounts how Apple has spent a lot of time and money building products that delight customers. Paragraph three basically says that everything they do is a trade secret. And paragraph four introduces Chang Liu and spends the next page and a half recounting his crimes.

11:44Ben Thompson says Liu is almost certainly guilty and an idiot to boot. Not mincing words there. Apple has a lot of details about Lou's behavior, including downloading dozens of proprietary Apple hardware related files and encouraging other Apple employees to do the same because he did it on his Apple issued laptop and furthermore logged on to Apple servers for weeks after he had already left the company. Ben says Apple security says, as depicted in this case, is shockingly poor. First, the company lost track of the fact that Lou didn't return one of his laptops or disable it remotely. Second, due to what Apple claimed was a bug, Lou continued to have access to the company's internal servers for weeks.

12:24He talks about how, you know, Tan is the point person for the 400 people that Apple says that OpenAI has hired away from the smartphone maker. That is no crime, of course, although one does get the sense Apple sure thinks it is.

12:37John Coogan:The funniest moment in here is where he says a couple quick points. A few weeks ago, there was a bit of hubbub about meta capturing keystrokes from employees in order to train AI. What confused me was people surprised that a company had this level of access to company-issued hardware in the first place. Moreover, while that access may very well be theoretical for a lot of companies at Apple, it has always been a well-known fact, going at least as far back as when I was an intern there, Ben Thompson was an intern there, 16 years ago, that the company could and would go through everything if you ever crossed them.

13:06John Coogan:And so it's, yeah, everyone should know this, but somehow it, at least Apple alleges that it was not known or just a terrible mistake or brazen, you know, brazen mistake. He does talk about a little bit of the motivations for why you're going to thermonuclear war. He says the AI era has sucked for Apple. Yeah, so he says, Tan is the face of Apple betrayal. Open AI is the face of AI generally. and it's hard to escape the sense that Apple just really hates AI, and why shouldn't they? Go back to 2022, Apple had it all figured out. They had a lock on the premium end of the smartphone market, which they continued to slowly expand, even as they had figured out how to earn services revenue from every iPhone user basically forever.

13:50Business was good. AI has ruined all of that. Suddenly, Apple has to make existential decisions about whether or not to compete in the model game. They totally embarrassed themselves with the 2024 new Siri introduction. had their most prominent blogger declare that something is rotten in the state of Cupertino, had to completely overhaul their software and services teams, lost their position as kings of the supply chain and most favored customer of TSMC to the point where they had to enact an emergency mid-cycle price rise and then worst of all have to actually wrestle with the possibility that AI is such a paradigm shift that it might actually threaten the iPhone.

14:23And then on top of all that, they lose 400 of their best employees, recruited by the lead hardware engineer for the iPhone in partnership with their most famous executive outside of Steve Jobs and have to know that all 400 of those employees are getting hit up by their former colleagues looking for a job as well. The AI era has sucked for Apple, even if they aren't necessarily doomed, and even if they relaunched new Siri ends up working out, their position is still more fragile than it was, and everything about life is worse. Given that, how sweet it must feel to suddenly have a smoking gun in the form of a seriously dumb employee blatantly lifting documents and to use it as a cudgel to exact revenge on the company that represents everything that is making your life miserable.

15:03The perspective does make one wonder if that phrase rotten to its core was projection in the end. AI is changing the world, and Apple's contribution is to deliver two-year-old technology differentiated by exclusive access to data it won't share. It certainly has no interest in delivering on a new AI-driven paradigm that endangers its iPhone franchise in any way, any of its employees who wish to do exactly that. Meanwhile, are being told loud and clear that Apple doesn't just think it owns your laptop, but also your mind and knowledge. I think it mostly stinks. But then again, rotten things usually do.

15:36It's thermonuclear. But it's not the first. Go sign up for a straight techery. Read the whole article. There's a bunch of context. And we're going to come back to the story with the Germinator. Rohan in Semaphore says Paramount weighs leaving California over Warner Brothers Rift. What's going on here, John?

15:58John Coogan:So this is on the basis that California is trying to block the Paramount acquisition of Warner Brothers Discovery. Rohan says, I'm told that if the states do choose to sue, they would have to assume the damages stemming from that action chiefly. $600 million to$1.2 billion in ticking fees would potentially be paid out to state taxpayers. So if they leave, those fees would not be paid to the state. Paramount just issued this response to the state AG lawsuit. Brian Stelter is breaking it down. Saying the complaint distorts settled antitrust law and is based on misrepresentation of competition in the entertainment industry today.

16:40John Coogan:So Paramount is weighing whether to shift major operations out of California after Attorney General Rob Bonta and 11 other state attorneys general, I always get that wrong, filed today to block its$110 billion acquisition of Warner Brothers Discovery. This story was back and forth. Well, Netflix get it. Paramount wound up with the highest bid, the most cash to offer. It got approved. Huge windfall for David Zaslav over at Warner Brothers Discovery, but a very controversial acquisition. And all the shareholders? Yeah, everyone did very well. But people were very worried because they owned two historic studio lots in Los Angeles.

17:19John Coogan:Would they need both of those? Would they convert one to apartment buildings? This was sort of the nightmare case for fans of Hollywood filmmaking, that it would become a more agile, lean, globally distributed studio. Would they be making less films? Would they change their pattern? Because as they are two separate buyers of intellectual property and scripts that come to Hollywood, they can pay higher prices. There's less competition. potentially the price that the industry becomes more monopolistic and there's less buying activity. So the proposed deal is the largest merger in Hollywood history.

17:59John Coogan:It would combine two of the five major film distributors and give the resulting company control of roughly 27 % of U.S. film distribution and basic cable channels. Of course, anyone who's in favor of this was arguing that, well, people are watching Instagram and YouTube all day long and listening to podcasts and live streams. You can't look at Hollywood in isolation. It's OK if there's a little bit of consolidation in an industry that's facing incredible pressure from a new disruptive industry. We saw this play out with the Shutterstock Getty Images question where you have immense pressure in the stock image market from an entirely new outsider technology.

18:41John Coogan:Consolidation makes a lot of sense usually in those scenarios. But if you're just looking at it, if you're just defining the industry as only Hollywood studios, then yes, this does represent more consolidation. Friends and advisors to Paramount CEO David Ellison had reportedly been urging him to reconsider the company's California footprint in the event that California sued over the deal. Previously, Paramount had offered to keep both of its historic studio lots in California open and release 30 films annually, which was basically just adding the 15 and 15 that were made from both studios, I believe, something like that.

19:16John Coogan:But executives have privately complained that Bonta refused to negotiate. Worth noting that the Justice Department has already cleared the merger, while China and other international regulators have raised no comparable objections thus far. So from an antitrust perspective, it looks like the merger can go through, but the state of California is potentially trying to block it now. So Paramount says California's complaint distorts settled antitrust law and is based on misrepresentation of competition in the entertainment industry today. It would be very interesting to see where they actually go if they do leave California.

19:52John Coogan:There's been so much movement to Texas and Florida. But in terms of filmmaking, Toronto, London, Atlanta, exactly. So maybe Georgia. I don't know. I'm sure every other state is gunning for this because bringing an industry to town is almost always a good move. more jobs for your local economy, more tax dollars going around. There will probably be a competition, but we'll see where this develops. And we might have someone from the media analysis industry come on the show later this week to discuss. There is a new letter. New letter just dropped. We were hoping for a new billion-dollar PDF, but we got another letter.

20:38More than 200 researchers and economists, including Jack Clark, Jeff Dean, Don Brown, Tyler Cohen, Schulte, John Shulman, Eric Schmidt, Dean Ball,

20:48John Coogan:Yoshua Bengio, have signed a statement urging governments and institutions to act now to prepare for AI's economic impact. they start the uh pretty simple letter by saying ai may become radically more powerful over the next 10 years they don't this isn't like the start it's just three statements the entire so they're signing that but they're signing they're saying we all agree with these three statements they agree that ai could possibly become radically more powerful over the next 10 years which feels very conservative that's like an incredible you're not committing to anything at all uh no i mean there are plenty of people that are saying that ai will go away in the next 10 years like it's it's useless you know no one's really saying that and zitrin's saying that and like a hundred thousand people are liking his post when he says that so like there are a hundred thousand people out there that are like it hallucinates it's dumb it's it's not useful it's going to go away people out of billions i'm just saying i'm gonna go away i'm just saying there there are people that don't believe this but yes this does feel like a like a like actually an easier statement to agree with than the short timelines of fast takeoff in two years, recursive self-improvement, anything that's coming out of basically any lab is much more aggressive than this.

22:04John Coogan:Elon's timelines have been solving new physics in two years, stuff like that. Point one, AI may become radically more powerful over the next 10 years. Point two, this could drive an unprecedented transformation of our economy larger than the industrial revolution, but unfolding over a vastly shorter timeframe. It could bring risks, including large-scale job displacement, as well as opportunities such as major gains in living standards. And three, economists, policymakers, and technology leaders must act now to understand the economics of transformative AI and to build the incentives, guardrails, and institutions needed to steer AI in a direction that complements humans and benefits society.

22:42John Coogan:So that last one's not a probability. Yeah. The first one, it feels like you can sign if you're at 1%. One percent chance that it gets more more radically more powerful over the next 10 years. One percent chance that it drives an unprecedented transformation of our economy. But as long as you agree that economists, policymakers and technology leaders must act now to understand the economics of transformative AI, you sign this. So three is really the strongest, the strongest, the most strongly worded bullet point. Well, and it's interesting because the people signing this are technology leaders.

23:16John Coogan:But not the actual top leaders, interestingly. So if you look at who signed this, you have a ton of people from OpenAI, Anthropic, Stanford, Meter, Harvard, like every lab. Bam Margera, I think you said. No, no, no. Google, Jeff Dean. Like you have people from top institutions, but not the CEOs, not the investors. Like there's been other – I mean I guess Reid Hoffman and Jan Tallinn and who else is – I mean Eric Schmidt is on here. But notably absent are Sam Altman, Dario Amadei. I don't believe Demis is on here. Is he on here? Yeah, but you have Jack Clark, Sarah Fryer. Yeah, but what's interesting is that it's sort of like the proxies.