The ChatGPT deal is an impressive negotiation by Apple — and an interesting gamble by OpenAI

Yesterday there was a surprising report that Apple is not paying OpenAI for the ChatGPT deal, which will bring the chatbot to Apple devices later in the year.

It’s an impressive piece of negotiation by Apple, which was expected to pay a hefty fee for all the server access provided, and an interesting gamble by OpenAI…

Apple’s ChatGPT deal

The core of the iPhone maker’s move to artificial intelligence is Apple’s own intelligence. This runs on-device for many tasks, and uses Apple’s own cloud service, Private Cloud Compute, for more complex requests.

But if the device or PCC cannot handle the request, users will be asked for permission to use ChatGPT. These ChatGPT calls are processed by OpenAI’s servers, so tens of millions of iPhone users will be using the AI ​​company’s resources.

You’d expect Apple to pay for the privilege, however Bloomberg He says that’s not the case.

Apple is not paying OpenAI as part of the partnership, said the people, who asked to remain anonymous because the terms of the deal are private. Instead, Apple believes pushing the brand and OpenAI technology into hundreds of millions of its devices has equal or greater value than cash payments, these people said.

This is an impressive negotiation by Apple

There is a common complaint by creative professionals that they can sometimes be rudely asked to do an unpaid project “for the show.”

In other words, the company is arguing that the world will see its work, its association with the brand, and that this has value. The classic response to this from creators is that they will agree once mortgage companies and grocery stores start accepting “exposure” as payment.

However, that’s exactly the deal Apple has struck here: it’s convinced OpenAI to work for exposure.

It’s an interesting gamble from OpenAI

So what does OpenAI stand to gain from it? Two things are possible.

First, well, exposure. While you and I may think that ChatGPT is already a household name, most of us live in a technology bubble. There are a lot of ordinary people who have either never heard of it, or only know that it is a type of artificial intelligence that they have never used.

Because Apple very carefully controls which AI tasks its own hardware and PCC will handle, a a lot A number of Siri requests will be delivered to ChatGPT.

And because Apple is equally eager to get permission to pass requests to ChatGPT (to protect its reputation against AI hallucinations), every Apple user with a compatible device will start seeing that name on a daily basis.

Second, although we don’t know the exact details yet, it appears that Apple users will be subject to restrictions on using ChatGPT in a similar way to free live users. This will certainly include the version used, and may also include a limit on the number of requests they can submit.

So OpenAI is hoping to sell some of us on its premium plans.

Will the gamble pay off? Maybe – but I know I’ll be happier when I’m on the receiving end of this deal with Apple!

Image from photography Solen Vysa on Unsplash