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The partnership between Microsoft and OpenAI, which began in 2019 with Microsoft's $1 billion investment in the company, and was significantly expanded in January 2023 with an additional $13 billion investment, underscores the strong bond between the two companies.
The year that followed saw a flurry of activity from Microsoft as it released its first copilot in November 2023, followed by copilots for just about everything else as it folded generative AI into its portfolio of workplace tools. Microsoft talked up its generative AI strategy at every and any occasion — and forced vendors who didn’t want to disappear into oblivion to ride the generative AI wave.
What OpenAI Plus Apple Signals
However, while OpenAI and Microsoft cozied up, OpenAI clearly had its sights on other vendors. It followed the multi-billion dollar Microsoft windfall with a string of partnerships, with the most recent being its new partnership with Apple.
The partnership will see ChatGPT integrated into iOS, iPadOS and macOS later this year. OpenAI is also exploring other third-party partnerships.
Clearly, this is how business works. Meta and Apple are also reportedly in discussions about a new partnership. However, Apple with ChatGPT could be one of the partnerships of the year.
“OpenAI just announced something big," Bloomfilter founder and CEO Erik Severinghaus told Reworked. Putting ChatGPT into Apple’s system means people with Apple devices will have easier and more intelligent conversations on all their gadgets, he said. For OpenAI, however, the potential is huge. The Apple partnership will provide it with the chance to connect with many more users, collect more information and improve its AI models more quickly, he continued.
“The true success here is the recognition of AI's maturity. This collaboration declares, ‘AI is now ready for main stage,’" he said.
The fact that OpenAI is allowing third-party integrations shows it has a big plan for what’s next. Severinghaus points to a number of advantages:
- Rapid Innovation: Businesses will now be able use OpenAI’s tech to build fresh, groundbreaking apps. It's similar to giving developers new superpowers.
- Market Expansion: OpenAI can enter many different industries, such as healthcare and finance. This way, it can discover new opportunities and expand its presence in new fields.
- Improved Functions: When more platforms start using ChatGPT, the result is better and more specific AI tools designed for particular tasks.
“Entering partnerships with other companies is not just clever; it’s a brilliant idea,” he said. “This plan lets OpenAI grow its influence and create an environment where people work together, making new ideas flourish. Everyone wins.”
Related Article: It Could Be 5 Years Before We See Productivity Gains From Generative AI
Why Are OpenAI Partnerships Good for Microsoft?
Chamomile.ai founder and CEO Tirath Ramdas believes the Apple partnership shows that foundation models have become mere commodities. “Working with retrieval augmented generation (RAG) use cases, what I've noticed over time is an increasing perception that the foundation model is a commodity,” he said.
“We almost never get a client who has an opinion on whether we should use OpenAI or Anthropic or cloud Mixtral or anything else — and as a rule of thumb we default to OpenAI's models only due to familiarity," he continued.
If we accept the premise that the foundation model is a commodity, Ramdas said, then cost is key. Generally speaking, unit economics benefit from wider distribution. As such, Microsoft only stands to benefit if OpenAI establishes more partnerships as their enormous non-recurring expenses will amortize more efficiently, he said.
Beyond standard commodity unit economics, there is another dimension to consider with foundation models: knowledge cutoff.
Here too, he said, scale matters, as the cost of retraining on new information can be amortized over more users, updates can happen more frequently, leading to more useful foundation models with more recent knowledge cutoff dates. The result is that Microsoft only stands to benefit from OpenAI establishing more third-party partnerships, he concluded.
Technology Rivers founder and CEO Ghazenfer Mansoor said OpenAI's opening up to third-party partnerships will also have a beneficial effect for digital workplaces in small or medium enterprises. To date, access to OpenAI and LLMs has been largely for companies with considerable financial resources.
The Apple–OpenAI partnership underlines this dynamic. Generally speaking, it means small businesses and new startups will be able access previously out of reach advanced AI technologies, effectively leveling the playing field and allowing more innovation across industries, Mansoor told Reworked.
OpenAI simplifies the use of these technologies, aligning seamlessly with the objectives of many companies working across industries. Here he cites AI-powered healthcare solutions, improved educational tools and better financial services.
With ChatGPT on Apple devices, the potential partnership with Meta, and more partnerships likely in the works, AI will clearly be a big part of our daily life, he said.
"These partnerships demonstrate the significance of working together to enhance technology,” he said. “By teaming up with top companies and offering its platform, OpenAI is expanding what AI can do. This is crucial for driving innovation and making sure everyone benefits from AI advancements."
Related Article: Where Does a Microsoft-Databricks AI Alliance Leave OpenAI?
A Path for OpenAI to Become Embedded in Our Lives
Citibank VP and Global Tech Lead Architect Koushik Sundar noted a number of positive implications in the Apple partnership and beyond, including OpenAI's move into various business sectors, including health and education.
However this raises problems, particularly around privacy and ethics, he said. The current recommendation algorithms already create the illusion that devices are listening to us. This development could exacerbate those fears, potentially causing anxiety or other psychological fears or issues, Sundar told Reworked.
He also raised problems with data usage, pointing specifically to the disparity between organizations claiming their data sharing is based on user consent, when it often resembles the 'I agree' feature in terms and conditions, where users may feel indirectly forced to sign on to gain access to services.
The implications of OpenAI’s third-party partnerships come down to its survival, said Thomas Randall, director of AI Market Research at Info-Tech Research Group. OpenAI’s third-party partnerships (most recently with Apple and Meta) aren't a new part of the company’s growth strategy, he continued, rather they're fundamental to its continued expansion and ultimately being profitable.
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Thanks to ChatGPT’s explosive popularity, OpenAI’s revenues will increase — but not nearly enough to pay for all its expenditure and development, he said. Vast amounts of capital, time and data are required to launch a foundational model with an AI-application on top.
It is in this context where OpenAI’s partnerships become critical to its survival, Randall said. Large companies like Apple view partnerships with OpenAI as the least expensive and quickest route-to-market for a generative AI product, given OpenAI has already built the technology and foundational models required to perform sufficiently.
For OpenAI, their solutions become embedded in the most widely used platforms and devices across the world. “In the process, OpenAI gathers even more non-copyrighted data, trains its models on that exclusive data to improve performance, and becomes so fundamental to its partners that the company continues attracting investment,” he said.