Apple has initiated a lawsuit against OpenAI, alleging improper actions designed to entice both current and former Apple staff to divulge proprietary information. OpenAI, however, contests the claims, stating it has no belief that the lawsuit holds any validity.
During a recent episode of TechCrunch’s Equity podcast, hosts Kirsten Korosec, Sean O’Kane, and I discussed the potential implications of this lawsuit on OpenAI’s well-publicized ambitions to enter the hardware sector, starting with a smart mobile speaker, and the prospect of going public.
Sean pointed out, “Regardless of whether the court issues any form of injunctive relief or a restraining order regarding OpenAI, this situation naturally risks delays in their current projects. Apple’s motives in initiating this suit are likely strategic.”
With so much at stake, will OpenAI seek a swift settlement, or has the company, having recently triumphed in court against Elon Musk, developed a willingness to endure the financial and reputational costs of litigation? At least Kirsten believes the latter to be true.
Here’s a summary of our discussion, refined for brevity and clarity.
Kirsten Korosec: Sean, how do you feel about the idea of Sam Altman potentially listening to you through a small device, possibly in your pocket?
Sean O’Kane: I’m okay with that. Admittedly predictable, but I’d prefer not to.
We’ll delve into that later, but this is rumored to be OpenAI’s first hardware project, developed in collaboration with Jony Ive and his team. They’ve been quite secretive since releasing an ambiguous video last year featuring discussions about hardware and legacy devices like laptops and smartphones. If this is their intended direction, more power to those who are open to a device that constantly listens. However, it’s not something I’m interested in.
Anthony Ha: It’s important to recognize that such devices don’t just record you; they capture conversations happening around you. I might be indifferent about it — though I’m really not — but if we were to meet in person at Disrupt, it could be picking up everything we say.
There will need to be shifts in social norms if these devices become widespread. Those who record others without their consent should rightly be criticized.
Kirsten: I mentioned the device under speculation, and we’ll see its actual form once it’s officially unveiled. But it’s crucial to relate this to the lawsuit Apple lodged last Friday, which certainly stole the headlines. It’s a trade secret case with some dramatic allegations, which we must recognize are merely claims stated by Apple. The allegation suggests a systematic effort by OpenAI to attract Apple employees, specifically targeting their former chief hardware officer, Tang Tan.
Apple’s assertion is that OpenAI has essentially misappropriated their trade secrets, possibly for a rival hardware product. Without diving into the validity of the lawsuit — given that full discovery hasn’t yet occurred — what are your first thoughts on this case, aside from the fact that it promises to be quite the spectacle?
Sean: There are two important considerations. First, this could pose a significant risk to whatever OpenAI is currently developing. Setting aside potential judicial constraints on OpenAI’s activities, this situation can lead to delays in their ongoing projects, which I suspect played a role in Apple’s decision to pursue this lawsuit. They’re strategic in their legal actions.
Second, OpenAI has reportedly filed confidentially for an IPO, likely aiming for the end of this year or early next year, according to Sam Altman’s careful comments. This lawsuit complicates that situation because, at present, OpenAI’s focus seems to be on software rather than hardware. As they prepare to enter the investment market, they’ll need to convince stakeholders regarding their growth potential, which may depend on a hardware division — representing a considerable risk that could affect how the IPO is valued.
Anthony: Apple has likely gathered solid evidence supporting its claim that over 400 former Apple employees now work at OpenAI. While both companies are large with thousands of employees, that figure indicates a significant talent exodus.
Additionally, considering Sean’s point about the impending IPO, how much reputational damage did OpenAI actually incur from the previous trial? They came out on top, but not without airing some awkward moments. To what extent do they wish to avoid a repeat of that? Or did they emerge from it learning, “Hey, we survived that; we can handle another lawsuit with Apple”?
Kirsten: Personally, I believe it will be the latter.
