What Apple’s OpenAI lawsuit is really about

Summary

Decoder with Nilay Patel

Episode: What Apple’s OpenAI Lawsuit is Really About

Date: July 23, 2026
Guest: Hayden Field, Verge Senior AI Reporter

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Episode Overview

This episode explores the high-stakes legal battle between Apple and OpenAI over alleged trade secret theft, why it matters for the future of AI hardware, and what it reveals about the current state of the tech industry. Nilay Patel and Hayden Field dissect the specifics of Apple’s lawsuit, OpenAI’s precarious position as it pivots towards consumer hardware and an IPO, and the broader pattern of “unauthorized taking” that characterizes the AI field. They also reflect on whether consumer AI hardware is even a viable business and what these tensions say about Silicon Valley’s culture of competition.

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Major Discussion Points & Insights

1. The Lawsuit: Context and Allegations

• Apple alleges that former employees now at OpenAI solicited and obtained Apple trade secrets, especially regarding hardware manufacturing, during job interviews and beyond.

  • Allegations include downloading confidential files and encouraging job candidates to bring physical components (“show and tell”).
  • OpenAI is yet to publicly respond in court.

• Legal Precedents:

  • Apple’s historical aggressiveness in IP litigation (e.g., lawsuits against Microsoft, Samsung).
  • Trade secret cases are common, but rarely so concentrated with such high-profile players.

Quote:
“It seems pretty egregious from some of the claims that Apple is making... but... experts in the space, they're like, oh, we see this all the time with trade secrets cases. It's not crazy. What's really crazy is that it's all in one case and that it's two really large companies.”
— Hayden Field [04:06]

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2. Apple’s Motivation and Legal Strategy

• Apple’s “pettiness” and tenacity as a litigant:

  • Apple often pursues lawsuits out of more than just logic—there’s a strong emotional or competitive component.
  • They settle when it’s in their interest, or fight for years if “angry enough.”

• Scale and Impact:

  • Previous targets like Microsoft and Samsung could absorb legal costs; OpenAI’s financial and organizational resilience is more questionable.

Quote:
“I truly believe people underestimate companies’ pettiness... I think people underestimate how much that plays a part in these things.”
— Hayden Field [08:48]

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3. The People: Ex-Apple Talent and OpenAI Hardware

• Tang Tan:
  • Former Apple VP (24 years), now OpenAI’s chief hardware officer, depicted as a “mastermind” of the alleged trade secrets plot—including coaching candidates to divulge codenamed projects.
• Jony Ive:
  • Not named in the lawsuit, possibly for strategic reasons (profile, lack of evidence, or savvy in “covering tracks”).
  • Relationship with Apple remains tense; OpenAI acquired his hardware company and star power for its consumer push.

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4. The Big Picture: OpenAI, Hardware, and Consumer Ambitions

• Why does OpenAI want hardware?

  • Originally gunning for dominance in consumer AI (to challenge Google and the iPhone).
  • Recent pivots emphasize enterprise/coding as main revenue—hardware persists, partly due to sunk costs and aspirations.

• Skepticism on consumer hardware success:

  • Market adoption likely to be low, outside early adopters/tech enthusiasts.
  • Social momentum and network effects (e.g., group text dynamics with iOS/Android) make breaking into mass market exceptionally hard.

Quote:
“I just do not see a market when everyone is buying an OpenAI hardware device. I really don’t.”
— Hayden Field [18:34]

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5. AI Hardware: Invention, Input Methods, and Limitations

• Jony Ive’s playbook:

  • Historically built hardware around novel input paradigms (iPod click wheel, iPhone multitouch, etc.).
  • For AI, the “new input” is natural language, but the technology still falters on reliability and utility.

• AI’s core limitation:

  • Hallucinations and inaccuracy make AI devices hard to trust for anything important or sensitive.

Memorable Exchange:
“It made me a whole table and it was like, yeah, don't worry, all these are definitely correct...60% wrong.”
— Hayden Field [23:28]

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6. Data, Trust, and Consumer Reluctance

• Privacy and user trust is at a low point:

  • OpenAI is seen as intrusive (ads in ChatGPT, data access concerns).
  • Generational and social backlash against AI is rising (e.g., “booing AI at graduation”).

• Entrenched skepticism:

  • Consumers are not demanding new AI hardware in the way they demanded smartphones.
  • “The gap is so wide, and I don’t see them being the only company to close it if it’s ever going to be closed.”
    — Hayden Field [40:58]

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7. AI Industry’s Reputation: “Unauthorized Taking”

• The lawsuit is a microcosm of a bigger pattern:
  • AI labs thrive on scraping data without permission—for training, music, art, and now allegedly hardware know-how.
  • Hypocrisy: When others “distill” their models, big AI companies get litigious.

Quote:
“This whole industry, it’s only possible because of the amount of data it’s consumed, whether above board or not. And AI labs... get so litigious when others take that information elsewhere.”
— Hayden Field [31:38]

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8. OpenAI’s Internal Turmoil & IPO Prospects

• OpenAI’s distracted, chaotic state:
  • Constant executive turnover, identity crises, and “side quests” (unsuccessful pivots).
  • Potential delay of IPO due to the lawsuit and market headwinds.

Quote:
“They cannot afford a distraction right now...They’ve got to get more people, they’ve got to hire more, which will require even more money. And it’s not the time to get distracted by anything.”
— Hayden Field [38:14]

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Notable Quotes & Moments

• Nilay Patel on corporate motives:
  “I think the fees for licensing standards essential patents are out of whack. And I was like, that is not the reason you’re doing any of this...The point is that you were mad and you wanted to run this lawsuit to ground...” [07:29]

• On OpenAI’s existential dilemma:
  “If they can’t close [the consumer gap], they should just shut it down and compete with Anthropic for enterprise uses.”
  — Nilay Patel [40:29]

• On changing public sentiment:
  “Now, not even just now...starting like four years ago, it would come up at the bar, at the club...this is coming up for people, making them extremely emotional.”
  — Hayden Field [41:59]

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Key Timestamps for Important Segments

• [03:26] — Overview of the lawsuit and Apple’s accusations
• [04:28] — Apple’s historical IP litigation strategy
• [06:08] — Tang Tan’s alleged actions and cultural context
• [12:00] — Why Jony Ive isn’t named; Apple’s selective aggression
• [16:23] — OpenAI’s consumer vs. enterprise conundrum
• [18:34] — Hayden’s skepticism about the consumer hardware market
• [23:28] — AI’s reliability and the “hallucination” problem
• [29:30] — Trade secret theft, unauthorized data use, and AI’s culture
• [38:14] — OpenAI’s internal challenges and IPO outlook
• [40:58] — Consumer AI’s emotional problem and adoption roadblocks

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Tone and Style

The conversation is skeptical, incisive, often wry, and grounded in deep reporting and personal insight. Both speakers blend industry analysis with cultural critique, mixing technical specifics with broader corporate and social dynamics.

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Summary Takeaway

The Apple vs. OpenAI lawsuit is more than a legal skirmish; it crystallizes three overlapping crises: Apple’s hunger to control and protect its assets, OpenAI’s struggle to define a coherent future as both a consumer and enterprise company, and the AI sector’s foundational reliance on “unauthorized taking.” In a world increasingly wary of both Big Tech’s ambitions and AI’s potential, the path forward for consumer-facing AI hardware is far from certain—and might be obstructed by both legal and cultural resistance.

Transcript

[Comcast Business Announcer]

Support for this show comes from Comcast Business. Modern Enterprise is a lot of moving parts. Comcast Business helps you orchestrate it all with SD WAN, working at scale to keep 150 hospital locations connected and working as one plus SASE and zero trust security, protecting financial data across a bank's 2,000 branches, and AI powered networking that optimizes traffic across five continents. No one does business like Comcast Business.

[Nilay Patel]

Hello and welcome to Decoder. I'm Neelai Patel, editor in chief of

[Decoder Host]

the Verge, and Decoder is my show

[Nilay Patel]

about big ideas and other problems.

[Decoder Host]

Today I'm talking with Hayden Field, the Verge's senior AI reporter, about the major trade secret lawsuit between Apple and OpenAI and what this tells us about OpenAI's future.

[Nilay Patel]

By now, I'm sure most Decoder listeners

[Decoder Host]

are familiar with Apple's allegations in this case. The company says a number of ex Apple employees at OpenAI targeted Apple's trade secrets in job interviews and even downloaded files from Apple servers related to hardware manufacturing. The claims are shocking, although OpenAI denies them, and we have yet to see that company's legal response. Hayden has been covering OpenAI for years now, and she talked to a number of lawyers who specialize in intellectual property and trade secret law to get a sense of how serious this case is. And the answer is not entirely positive for OpenAI, which spent more than $6.5 billion to acquire legendary Apple designer I've's AI hardware startup IO Products back in 2025. As you'll hear Hayden explain, Apple is a notoriously tenacious litigant and we have lots of tech industry history to back that reputation up. There's Apple's big fight with Microsoft over the design of windows in the 80s and 90s, all the way up to the billion dollar patent infringement saga with Samsung over Android in the early 2010s. Apple has gone to court for far less, but those cases were against companies at the scale of Microsoft and Samsung, giant corporations that could afford the cost and distraction of this kind of lit. OpenAI isn't yet that kind of company. It's still burning cash, a little strategically adrift as it tries to compete in both consumer and enterprise markets, and it's turning over executives on a regular basis. So Peyton and I spent a lot of time talking about what this case might mean for a company that defined the early part of the AI boom, but which lately always seems to be in a crisis of one sort or another.

[Nilay Patel]

Okay, Verge senior AI reporter Hayden Field

[Decoder Host]

on the Apple OpenAI lawsuit and how the AI industry might change because of it. Here we go.

[Nilay Patel]

Hayden Field, you're the senior AI reporter for the Verge. Welcome back to Decoder.

[Hayden Field]

Thanks. Great to be here.

[Nilay Patel]

Once again, we're going to talk about OpenAI.

[Hayden Field]

Hayden, once again, it never stops.

[Nilay Patel]

And we're going to talk about whether OpenAI can maintain focus at a time of great distraction, which seems to be just a theme with that company. Although this time it's not their own distraction. It's a distraction from out in the world, maybe caused by some of their own behavior. I'm of course, talking about the Apple trade secret lawsuit. It feels like a big deal. Apple is accusing OpenAI of stealing all kinds of information from that company, even in job interviews, asking people in job interviews to tell them what they know about Apple products. Tell us briefly about this lawsuit and

[Decoder Host]

what's going on here.

[Hayden Field]

I wrote a piece last week called

Sam Altman Didn't Need Another Lawsuit. And that's really the situation here. I mean, it's like, it seems pretty

egregious from some of the claims that Apple is making. Apparently, you know, former Apple employee was soliciting trade secrets, allegedly over interviews, asking people to maybe bring pieces of hardware outside the office, outside the Apple office

to OpenAI to do a show and

tell in interviews, things like that. There's a lot of allegations being made that are pretty crazy, I thought. But then when I actually interviewed a bunch of experts last week, they said

they've seen all of this before a lot. It's just they haven't seen all of it in one case with two key players.

So, you know, some of this stuff is pretty egregious. It seems, if it comes out to be true.

But also, you know, to the experts in the space, they're like, oh, we see this all the time with trade secrets cases.

It's not crazy.

What's really crazy is that it's all in one case and that it's two really large companies.

[Nilay Patel]

You know, it's really interesting. It's just a pattern maybe not worth diving into at great length. But in the 90s, Apple pushed copyright law to the limit. They sued Microsoft for allegedly infringing on how the Mac looked and felt with Windows. I will point out that Windows still exists.

[Decoder Host]

Microsoft is fine.

[Nilay Patel]

And then in the 2000s and early 2010s, Apple pushed patent law to the limit, suing Samsung for allegedly violating a bunch of patents with Android and Galaxy phones because Apple felt that they had protected the iPhone. And Samsung eventually paid about a billion dollars in damages. And those cases just sort of like went around in circles forever. But I'll point out that Android still exists. Samsung is doing just fine. Apple may have redefined patent law around like 3G and 4G licensing, but fundamentally it did not actually succeed in stopping its competitors with intellectual property lawsuits. And so you go from copyright to patent and now trade secret, which is the third kind of big intellectual property. And Apple's doing it again with OpenAI. And my big question is whether OpenAI can just pay the money the way that Microsoft and Samsung were kind of able to just pay the money. If you look at Samsung spending a billion dollars in penalty fees to get Galaxy Phones off the ground and be a major competitor, mobile is maybe the easiest and best investment that company ever made.

[Hayden Field]

Right?

[Nilay Patel]

But I don't know if OpenAI is the same kind of company in the same kind of moment. And it certainly seems like all of the Apple employees that went over to OpenAI maybe pushed the limit too much. Right? At least from the story that Apple's telling us right now.

[Hayden Field]

It's pretty crazy reading the wildest claims from the lawsuit and also the messages that were being exchanged. One of them allegedly accessing Apple confidential information on a device and then saying lol. So funny that I can access this. So yeah, there's a lot there.

But I've been wondering the same thing and I think that it really depends

on Apple's willingness to be petty or be like super logical here, honestly.

And when I interviewed a bunch of

lawyers about this, they said Apple is a notoriously tenacious litigant. So you know, as we've seen in

those past cases, but also they really will take things far. They have a lot of money and

they're willing to use it and it really just depends on how mad they are. Honestly I think that they would potentially

settle if OpenAI paid them enough. But will OpenAI be able to do that? They're already, they're already in a really tough year. They're about to IPO every. All the investors are looking at their bottom line, wondering when they're going to turn a profit. You know, it's a tough time to

be shelling out a ton of money to Apple so we'll have to see what they do. I think it's going to go to trial and I think it's going to be a very drawn out, years long thing and that's what a lot of

the lawyers I interviewed said as. But you know, there I could see a world in which they just figure out a way to get all this money together.

And pay and maybe Apple accepts it.

[Nilay Patel]

You know, in the Samsung patent cases, they lasted forever. And sort of in the middle of it, Tim Cook was at a code conference and I asked him what, what are you doing? Is this accomplishing anything? And he looked at me very seriously and he said, well, we think the fees for licensing standards, essential patents are out of whack. And I was like, that is not the reason you're doing any of this. Right? Like there's no. That's not the point. The point is that you were mad and you wanted to run this lawsuit to ground and you're going to run this lawsuit to ground no matter what the nominal reason is. And that feels like a big piece of the puzzle here, right? OpenAI has taken a bunch of Apple employees famously. Jony I've Apple's most famous Designer working with OpenAI on hardware devices. Tang Tan, who is OpenAI's chief hardware officer. He had a reputation at Apple for quote, playing fast and loose. That's from Mark Gurman at Bloomberg. He seems like the central character in the story. Not so much Shauny, I've. But Tang Tan and that piece where it's a bunch of ex Apple people maybe playing too fast and loose almost feels like it's personal. Almost feels like there's a lot of emotions involved. Talk about Tang Tan and talk about what all these folks are alleged to have done. That feels like it's a little more personal than your standard big corporate dispute.

[Hayden Field]

And also, I will say what you said about talking to Tim Cook, I

truly believe people underestimate companies pettiness.

I really do. Like we've seen in recent years, like the OpenAI Elon Musk lawsuit, there's so many things that could have been avoided if companies weren't trying to just be petty, which is fine. They can do that. They have enough money to do that. But I'm just saying I think people underestimate how much that plays a part sometimes in these things.

As for Tang Tan, yeah, he worked at Apple for 24 years. He was the VP of the Apple Watch. You know, he left in 2024 to work on Jony I've's hardware company IO, which obviously OpenAI ended up purchasing. And then OpenAI appointed him as chief hardware officer. So he had a C suite role at OpenAI. But this is after 24 years at Apple. Now he apparently, according to Apple's lawsuit, claims it was kind of like the

mastermind of a lot of this, this

trade secrets gathering regarding, you know, interviews that he would conduct and ask about like secret code named projects. And then the person being interviewed would feel like maybe they were able to tell him stuff because, oh well, why would he know the name of this project or these details about it if he wasn't involved also? So they felt they could speak more freely, allegedly. You know, there are other times that, yeah, he asked, you know, hey, why don't you bring some, you know, batteries or other pieces of hardware outside the Apple office that you've worked on the past, allegedly, so that like, you know, we can do like a show and tell, you know, things like that. So it's just very interesting to kind of go through these claims. Yeah. It's just seemed like he really was

not worried about what was going to come of this if these claims are true.

[Nilay Patel]

The other major character here is Jony I've Apple's very famous ex designer who worked with Steve Jobs and all of those famous projects. I would say I've reportedly has a very testy relationship with Apple now that he's left. He's certainly made that clear in various interviews and statements. And he's working with Sam Altman on new devices. He made a video with Sam Altman which I can only describe as a romantic coffee date.

[Hayden Field]

Absolutely.

[Nilay Patel]

In which they described the phone and the laptop as legacy devices.

[Hayden Field]

It was instantly memed. I have to say the memes were

amazing of that, of that video.

[Nilay Patel]

It's very good. And they shut down like half of San Francisco to make it. I thought I've calling the phone and the laptop legacy devices in that video was just a straight shot at Apple. Right. These are the things that he made that he revolutionized in many, many ways. And he's like, these are over now. You can say a lot about whether that's true, whether that can come true. I want to talk about that in a little bit. But it's notable to me that Jony I've is not mentioned in this lawsuit. Like there's a line Apple wouldn't cross. And it's mentioning the fact that it's Jony I've who went to OpenAI and started hiring all of his old designers who sold a big portion of his company to OpenAI and now they're trying to make hardware and allegedly stealing trade secrets. But Johnny I've, he's, he's not part of it. We're just going to leave his name out of it. Is that because he's too famous? Is that because it's too nuclear? Is it because he's still friends with Lauren Powell Jobs? What do you make of that?

[Hayden Field]

It may be more that he knew how to cover his tracks. You know, to me, I mean, it could be that he's too powerful or any of the things you said, but I really feel like it's just that he has other people doing his dirty work for him, you know, I mean,

like the other stuff in this lawsuit is pretty egregious and, and they found it all. So I'm kind of wondering like if they found some really intense stuff on Jony, I've.

Would they really not put it in the lawsuit? Like there's some bad blood between them. I just feel like they would put it in there.

I don't know. This is just speculation, but I kind of think it's just when you become,

when you're, when you're a powerful enough role, you don't have to do all this stuff yourself.

You just have other people doing it for you and you also know how to cover your tracks. So to me, maybe they just didn't have anything on him or he's distracted

[Nilay Patel]

designing Ferraris no one likes or whatever it is he's doing, but he's not in this. And I do think that's notable because the reason Sam Altman would hire a Jony I've is, is to make a credible claim to the next device, whatever that category of AI powered device is going to be. You hire the most famous designer to say I made the iPhone and I'm going to make this thing. And then it seems like OpenAI also wanted a bunch of Apple's know how in order to make that thing. What do you make of that? That OpenAI needed hardware know how from Apple or at least Apple alleges that OpenAI needed hardware know how from Apple to make whatever the next thing is.

[Hayden Field]

I think to some extent, whether you're talking about trade secrets or just regular,

you know, legal above board know how from hiring their employees, of course they needed it. I mean, they've seen a ton of hardware and AI crash and burn and they're trying to not become the next like humane or AI pin or any of this.

It's just, it can be incredibly embarrassing to make an AI hardware device in

this day and age.

I mean, like, chances are you're probably going to fail miserably and you're going

to become a laughingstock. And so if you want to avoid that, of course you need to get the best people on your side.

It's hardware is hard as everyone says.

So, you know, of course they want

to get experts in there. That, you know, have experience actually being

incredibly successful at hardware.

That's not surprising to me. And I think it's a smart decision because, I mean, OpenAI has demonstrated in the past, sometimes they don't. This is typical of every tech company. It's not just OpenAI and also every AI company, but sometimes you're a little bit disconnected from what the consumer actually wants. You know, you roll something out, no one really wants it.

Okay.

With software that's a little easier to pivot from, as we've seen from them,

like deleting their side quests and stuff,

they're like, oh, we're not doing this anymore, we're not doing this anymore. We're rolling this into that.

With hardware you can't do that. So it's like, you better have it right from the get go.

[Decoder Host]

We need to pause here for a quick break.

[Nilay Patel]

We'll be right back.

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[Decoder Host]

We're back with Verge senior AI reporter Hayden Field. Before the break, we're discussing the specifics of Apple's trade secret lawsuit against OpenAI. But now I want to take a step back and look at the bigger picture. Why, if all the AI money right now is in enterprise deployments, does OpenAI want to make its own consumer hardware device?

[Nilay Patel]

I'm glad you said consumer. I think that brings me to what I think is the heart of the problem for OpenAI, which is they were going to be the consumer AI company, Anthropic, famously focused on enterprise. It's been lucrative for them. Maybe that's where all of the money is. But OpenAI was going to take down Google, maybe through Bing, maybe through its own app. They were going to be a consumer company. And the only reason you would make hardware is to go attack the consumer, to go attack the iPhone. So OpenAI's ambitions, at least as I could see them, were first to take market share from Google, which is one of the most lucrative businesses in the history of the world, and then to go attack the iPhone, which is the most famous and culturally dominant tech product that has ever existed. I don't know how they can do either of those things. It doesn't seem like consumers even want these products or want AI at the scale. I don't know where that revenue comes from in consumer. And the college students are all booing AI at graduation. Does OpenAI just need to pivot to enterprise? Do they need to spend their time spinning their wheels at consumer hardware devices before they figure out their business?

[Hayden Field]

OpenAI has pivoted so many times internally, and their most recent pivot was that

they were going to focus on their

key revenue drivers, which are enterprise and coding. They said that a million times.

They folded Sora Atlas, you know, the sexting feature. It feels like years ago, but crazy that that was like, you know, in the past year anyway.

Yeah, they've done a lot of this. And so everyone thought, okay, they're going for it, they're doing enterprise because that's the tried and true moneymaker here. Especially in a year that they're going to ipo. To be fair. Yes. They had already planned to do the hardware device before this whole, like, pivot and, you know, cutting out the side quests. I guess they can't afford to cut

out this potential side quest because they've

already spent a lot on it.

It's happening kind of no matter what.

So now they're just kind of trying to make it as successful as it can. But it is interesting to me because I've only been on the AI beat for six years. That is a long time in AI. But, you know, maybe I'm missing something,

but I just do not see a

market when everyone is buying an OpenAI hardware device. I really don't. If I'm wrong, we can come back

on here and laugh at my clip from July 2026.

But like, yeah, smart speaker, okay, maybe people buy it just to be a smart speaker. Kind of like, you know, Google Home. That's what I use mine for. Basically just a smart speaker. But I think it's going to be one of those things that a few people really, really, really love and that the general public probably does not adopt because it's difficult to get them to adopt anything unless all their friends have it.

There's a social aspect and, you know, you're going to be a Laughingstock with green texts. If you don't have a, an iPhone. You know, not, no, hate to Android people. I'm just saying, you know, sometimes you don't get added to the group text or something. It's sad. It's sad and it's not right. But, you know, I'm just saying there's got to be some, like, public buy

in if you're going to be adopting a new piece of hardware. A lot of times, unless you just love tech, which a lot of people will buy this just because they love tech. But if you're going for the general public, which is what I think they would need in order to make this

much money back, I don't know.

[Nilay Patel]

We founded the Verge at the start of the smartphone boom. And you know, just thinking back on it, it was never a question of whether people would adopt smartphones. That was obvious. It was obvious to us. Maybe it wasn't obvious to everyone, but we were in it. And the only thing that wasn't obvious was who would win.

[Hayden Field]

Right?

[Nilay Patel]

And after a while, it became obvious that Apple would win. Like, how many iPhone killers did we cover 15 years ago? And they all came and went and they looked like new operating systems. Windows Phone existed, the Palm Pre ran an operating system called WebOS. Android was ascendant. Nokia tried to do its own thing and then they pivoted to Windows Phone. And at the end of the day, we kind of ended up with iOS and Android and everything else fell into line. And maybe the whole tech industry hates this and they hate paying the app Store fees, but this feels like that same kind of moment, right, where OpenAI is going to put out a hardware device, it's going to run its own operating system. Elon Musk is fulminating about starlink and XAI putting out their own phone, maybe running their own operating system. Apparently in the run up to ipo, they were showing it to people. And I just have really dumb questions that to me mirror the same questions we asked about new smartphone operating systems 15 years ago. Are you going to make a Gmail client? Is it going to have Instagram? Because if you don't have those things, you don't actually get to replace the phone. And if you don't replace the phone, well, I've got the beta of iOS27 on my iPhone right here, and Siri AI is definitely good enough to just get through the day.

[Hayden Field]

Yeah, that's what really gets me here is because the smartphone replaced the dumb phone. So, okay, it's like you got to

have something Way better than the smartphone.

Are you going to? Doubtful.

But you know, we'll see.

But the other thing that gets me here is how many devices OpenAI is reportedly working on. I think what's their lineup? They're working on reportedly five hardware devices and the screenless smart speaker is the first one. How can they come up with five?

That's what I want to know. What are the five and shouldn't you be putting all your resources toward one? It's already hard to make one. I'm a little dubious of five successful AI hardware devices. Even one is a long shot, but five is a little bit crazy.

[Nilay Patel]

I'm sure there's a lot and some will come and go. The thing that I think about, particularly when it comes to Jony I've and his approach to hardware, which is familiar at this point. We've watched him launch a lot of hardware at Apple. I've tends to focus on new input methods for new devices. So the ipod had the click wheel and that really defined the form and function of the ipod. The iPhone has a multi touch screen that really defined the form and function of the iPhone. And then the iPad, if you remember the Apple Watch, they launched it with great fanfare about the scroll wheel on the side. I don't know if that came to pass, but they really thought that was a big deal when they launched the Apple Watch. This is I've's go to path, right? We find a new input mechanism. We're going to define the product around it. I know exactly what that should be for AI, right? It's a natural language input. You can just tell the computer whatever you want, it'll figure it out and it'll go off and do it for you. But we're however many years into the AI revolution, right? We're three or four years into this version of it and it doesn't quite work yet. I think this is why the AI devices keep failing, as you keep mentioning, because you can talk to a humane pin all day and all night and it will pretend to understand you and then not actually be able to do the things on the other side of it. That feels like the problem in AI right now. There's these flashes of brilliance and then there's these limits of capability. Where do you think we are in that process of figuring out exactly what it can and can't do? And, and how do you think that limits a hardware device?

[Hayden Field]

We're still in the midst of it. I mean, I personally use AI all the time, obviously in my personal life to test Things out, see what it can do, you know, month to month I see how it's improved, at least from my own personal things that I try. It's all anecdotal, obviously, but you know, just the other day I was trying to look up a lot of addresses of companies because I wanted to kind of like map something out. And I would say like 80%, maybe 60%. 60% of the ones that I looked up were completely wrong, just wrong. It made me a whole table and it was like, yeah, don't worry, all these are definitely correct. And then 60% wrong. I'm like, a lot of these are wrong. They're like, oh, sorry, my mistake. Yeah, so I mean, I don't know my favorite.

Yeah, it's like, oh, yeah, you're right, you caught me.

So I mean, obviously, yeah, it's right about a lot of stuff a lot of the time. But what I wonder is there are certain tasks that, as we all know from like, you know, when we were an intern back in the day, or if we've ever had an intern, there are certain things just easier to do yourself if you're not 100% sure the person is going to get it right. And so what I wonder is for a hardware device like this, there are a lot of low stakes things. You can ask it and you know it'll be fine, but for higher stakes things or things that you, it's simpler just look it up yourself or do it yourself even than then put it out there when it's going to be a potentially wrong answer. That's what I wonder, like, is this going to end up like a Google home type of situation where you're just using it as a speaker and you're asking it what the weather is? Because it doesn't really matter that much if it's wrong. But as we know, it can only really be super useful if you can trust it with that higher stakes type of question. And so, you know, like saying, hey, what time does Emily's flight get in tonight? Because she's staying with me.

[Nilay Patel]

This does seem like the core problem. Will there be enough progress? And certainly the industry will claim that they've made great progress on hallucinations. Whether or not that is the lived experience of people who use these products. I think up for debate, but the industry claims they've made great progress here. And then the other piece is, will OpenAI have access to all of your data and personal context to make this useful in an environment with a smart speaker where you can just say whatever you want?

[Decoder Host]

To it.

[Nilay Patel]

And that again brings you back to is it going to have a Gmail client? Where's the Gmail client going to run? Are you going to let OpenAI log into your Gmail so when you ask for flight information it can go look at it, or are you just going to default to opening Gmail on your phone and asking it? Because Google already has it. And this seems like a, like a version of competition that really depends on how comfortable you are handing over all of your data to various AI providers. And I'm just not sure OpenAI is, is that one.

[Hayden Field]

Yeah. The other part of this is that, I mean, obviously this is a vocal minority here. It's not like the majority of OpenAI users. But a lot of people are extremely worried about ads. You know, anthropic capitalized on that with their super bowl ads that were kind of like anti AI AD. OpenAI has been dealing with that kind of fallout. Just trying to say, hey, don't worry, we're not going to influence answers. We're just going to raise a, a similar ad underneath the answer. But you know, it can be unnerving. Whenever I use ChatGPT and then AD surfaces, I'm like, oh, it just makes me feel like it's less private. It's like, look, it's just a little bit strange. And I feel like everyone gets that kind of unnerved feeling. Even if it's not, you know, affecting the actual answer, it's still like, you know, just kind of reminding you that it's not a space that, you know,

no one's trying to sell you something. Someone always is trying to sell you something. So yeah, I don't know.

I mean, I think there's already a lot of loss of trust right now

in AI labs, if anyone trusted them to begin with. Right now it's at an all time low.

We're seeing the rise of AI populism. We're seeing lots of death threats against AI CEOs. As the Wall Street Journal covered the other day, there's a lot of backlash. Like you were saying about booing AI at graduations. We're seeing a huge backlash right now. And I just think it's a strange time to be releasing like a public facing. Every consumer should buy this AI hardware device.

[Decoder Host]

We have to take another short break. We'll be back in just a minute.

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[Decoder Host]

We're back with Verge senior AI reporter Hayden Field diving into how the Apple OpenAI lawsuit ties into the broader AI industry's reputation for using other people's creative work without permission.

[Nilay Patel]

That connects to, I think, just a bigger issue for OpenAI in this lawsuit, which is the AI industry right now is basically built on unauthorized taking. I'm saying that instead of theft, because there's a lot of lawsuits. I know, I know our audience wants me to just call it theft. And maybe it is theft. And maybe we can just say that when we get to the end of the road of 10,000 different lawsuits. But that part of the AI industry feels like we have to studiously ignore it. Right? There's $1 trillion question over whether training data is fair use or not. That is as yet unresolved. And we can just go down the list of lawsuits where all of these companies have to defend themselves about training data. And if they lose any one of them, maybe this whole industry cost structure falls apart.

[Hayden Field]

Right?

[Nilay Patel]

Like the inputs to AI right now are free. They just took the Internet and they took all the books. We just saw Suno, as a result of a hack, had to basically admit that it had scraped all of the music off of YouTube illegally. Right? Like they just didn't have permission. And I think YouTube feels a certain way about that. And certainly the artists on YouTube feel a certain way about that. Here's Apple saying OpenAI also took our hardware designs and our manufacturing know How? They didn't have permission for that either. Those are our secrets. They hired people and they concocted this scheme to take all of that stuff without permission. Again, culturally, this just feels like part of the AI industry to me, that they think they can just take everything to build super intelligence as fast as they can, and once they get there, all will be forgiven. But the public doesn't seem to like it. Certainly artists and writers and musicians don't seem to like it. And now Apple doesn't like it. It feels like this lawsuit is going to be a proxy for that as much as anything else. Can you take all this stuff without permission? I'm not sure OpenAI has the cultural capital to fight back. What are they going to say?

[Hayden Field]

Yeah, I think it's really ironic that this whole industry, it's only possible because of the amount of data it's consumed, whether above board or not.

And AI labs get so. Or just tech companies in general get

so litigious when others take that information elsewhere. So I think this whole thing is pretty ironic.

The AI industry is really famously cliquish. It's almost incestuous. It's like you work with the same people here, then you depart and go elsewhere, then that same company buys your startup that you created and then you leave that startup to go somewhere else and you get Aqua hired by your old friend that worked at this other place. Like it is just a lot of industries are like that, but this industry specifically is so much like that. And so, yeah, I think it's just, it's a bit ironic on both counts. It's like Apple, okay, people are going to leave, they're going to take some trade secrets. Was this incredibly egregious? Yes.

Some of these claims are crazy, but

also like you're mentioning a lot of the reason that any of these companies

are even successful in the first place

is because of all the unauthorized taking they've done.

So, yeah, it's just, it's an interesting time to be watching all this play out.

[Nilay Patel]

All the AI companies get really mad when, I don't know, Chinese AI companies distill their models. Like, I'm just thinking about a jury.

[Hayden Field]

Yeah, right.

[Nilay Patel]

And, and how Apple will play this case to a jury and be like, you stole all the music, didn't you? And then you also stole our manufacturing designs. And don't you get mad when the Chinese companies distill. ChatGPT in the course of your reporting, does it ever occur to the people in the AI industry that being mad about distillation is the exact same feeling that artists and musicians have about all of their work being put into the model in the first place.

[Hayden Field]

I haven't seen any of them even

acknowledge that or at least even hint towards it one time, which is crazy. It just feels so like

there's a disconnect there. They get so, so angry about distillation. They're like, it's against our terms of service.

They can't even say it's illegal, just against the terms of service. They write open letters to the government. They even come together with their mortal enemies at other AI labs to unite against distillation. So it's just interesting to me. Yeah, I've never seen that occur to them.

[Nilay Patel]

I know a lot of people are probably listening to this and they're mad at me, mad at us for not making the claim that Apple is just filing this lawsuit because it was behind in AI, Right. It missed. With Apple intelligence, it took a long time to catch back up. It's only shipping it now. They had to go to Google to maybe distill Google's models and put it in private cloud compute. All the stuff that they needed to do that stuff is shipping now. Do you feel like the broader AI industry is just looking at Apple lashing out at being late? Because I have heard a lot of glimmers of that, that this is just Apple trying to slow down the biggest threatened consumer as it launches Apple intelligence and tries to catch back up.

[Hayden Field]

Yeah, I mean, I think that could be definitely part of it. Everyone knows Apple has been famously, incredibly behind in AI and it's been a big topic of conversation and an embarrassment for the company for years. So, I mean, that could definitely be part of it. But the fact that this lawsuit is not about someone stealing trades, I'm doing air quotes, stealing trade secrets for, you

know, Siri or something. It's not about that.

It's about hardware specifically. Show and tell of hardware, things like that. Hardware is something that Apple does amazingly and they are, you know, pretty much

by all accounts the best at.

So I mean, I think some people are thinking that, like, yeah, I mean, it's, it's a benefit for Apple if they're able to kneecap a competitor from pulling ahead in any way. But the fact that this is a trade secrets lawsuit about hardware specifically, I think has rolled back a few of those claims just because it's not like they're trying to claim that they're, you

know, that OpenAI is stealing from them Siri AIs, you know, secrets that it may not have many of.

[Nilay Patel]

They're like, please take. Take everything we know about Siri AI that. That will truly kneecap you. Apple can afford the distraction, right? You've mentioned this already in this conversation. That Apple can just hire a bunch of lawyers and set them off to be as tenacious as they want. And maybe the rest of Apple won't even notice that that's happening. They're busy making the next iPhone. Apple spent however many years and like $10 billion trying to make a car, and it just didn't work. And the rest of Apple didn't. It didn't even occur to the rest of Apple that was happening. Right? They. They just kept shipping phones and laptops and everything was just fine. OpenAI is not that company. OpenAI might not even have enough executives to absorb the cost of another distraction. They keep leaving. Greg Brockman, who's the president of OpenAI, seems to be running the entire company himself. As you've been reporting on the story. Has it occurred to OpenAI that they are going to need more people to do more things? Because I look at that company and they just keep shedding all of their talent and pivoting, as you said, from one thing to the other, and they've landed on we need to compete with anthropic. But it doesn't seem like they can afford distraction at this scale in any way, shape or form.

[Hayden Field]

Yeah, they can't. This is like the final battle, actually.

There's gonna be a lot more battles, but this is, this is a key battle in the, in the long standing,

you know, AI arms race. It's like this is IPO year. Things are coming to a head. Investors are looking very closely at these companies in a way they haven't before. They're looking for them to turn a profit or at least have a way to turn a profit in a way that they have not, you know, really paid too much attention to before. And it's all coming down to the line. So, yeah, they cannot afford a distraction right now. They are reshuffling, restructuring, you know, changing executives around. They would. When I've asked them about this, they will say, well, it's, you know, it's all been one large plan that we've just been doing in little pieces. You know, it's not like we pivoted a million times. We've always been going towards one thing, and these are just different steps along that journey. But it doesn't always read that way to the general public. And, you know, I think in some ways, yes, like, you know, Greg Brockman taking control of product. It, you know, it was because Simo, the AGI chief, left because of her health, and then she permanently, or at least more permanently left because of her health. So it's not all things that the company could control. But I do think there's been a lot of defections, even from the rank and file staff. And so, you know, it's, it's, they've got to get more people, they've got to hire more, which will require even more money. And it's, it's not the time to get distracted by anything.

[Nilay Patel]

It's worth noting that there's some reporting saying OpenAI will delay its IPO. And as you and I are sitting here speaking, SpaceX's stock price has dipped below its IPO number. These mega IPOs are, they're, they're in some kind of danger.

[Comcast Business Announcer]

Right?

[Nilay Patel]

It might not be a good idea to do this, especially if you don't have the revenue or the profits, more importantly, to back it up. Do you think there's some risk that this lawsuit is the straw that pushes OpenAI to delay its IPO?

[Hayden Field]

Absolutely. I think that reporting showed that Sam Altman was originally worried about, you know, filing form S1 before anthropic then they didn't do that. Anthropic did it first. And then I think this is me just speculating from, or here from things I've heard. But it seems like after Anthropic kind of won that part of the race, they kind of backed off and they said, okay, well, should we actually do this right now? We were trying really hard to win, but like, let's look at the facts here. And that's why they said, okay, it might be early next year, might not be this year. And that was before Apple's lawsuit dropped.

So now, of course, I'm sure they're thinking, okay, should we delay it even more?

Especially because there's no way we're going to beat Anthropic to market. And I mean, it seems like that

might be a smart idea.

[Nilay Patel]

I mean, if you can put out a great hardware device and make some sort of big, splashy, profitable entry into the consumer market, that's a good story to tell in an ipo. But if you can't do that because everything you do is going to end up in litigation or you're going to in messy discovery on the way to litigation, maybe that all just has to set, be set to the side. And that's pretty much my last question here. I feel like my thesis on the show on the Verge generally has been, okay, I understand how this is going to work for software development and I understand how this is going to work in enterprise, although even that's pretty shaky still. But consumers don't love this stuff, right? 900 million free ChatGPT users is not a reflection of anything other than, well, Google search got really bad and this thing will tell you it loves you, right? But it hasn't turned into we should build more data centers. It hasn't turned into we culturally love the products of AI. It's turned into, get this slop out of my face and we're going to boo you at graduation and we're going to come to the town board meetings and say we don't want data centers and there's some huge gap there. Do you think OpenAI can close that gap? Because they have always been the company chasing the big consumer product vision, the big consumer market, and if they can't close the gap, they should just shut it down and compete with anthropic for enterprise uses. I don't know which one it's going to be. Do you have a sense through all this reporting, if they have realized how existential the consumer side of the debate is?

[Hayden Field]

I think they know to some extent, but not the full extent, because they will get at it. You know, in speeches, in research papers, in tweets. They. They have some PR lines where they will acknowledge that this is a thing, but I just don't think they realize how deeply this, like, crevice goes. The gap is so wide, and I don't see them being the only company to close it if it's ever going to be closed. People are extremely worried about so many things when it comes to AI, and they're very emotional about it. It's not just logic. I think if it was just a logical gap, you know, some people logically think it's not good. Some people logically think it is good. I think they could probably close that. But if, when emotions come into play, no, I don't think that they will be able to fully bridge that gap. I mean, for me, when I became an AI reporter six years ago, none of my friends really knew or cared what I wrote about.

That was fine. It was like, really niche, whatever, you know.

Now, not even just now. I mean, starting like four years ago, it would come up at the bar at the club. Like, I'll be walking down the street, someone's asking me about it, and they don't know I'm an AI reporter. So when they learn I'M an AI

reporter, even more so.

But just randomly, this is coming up for people extremely, making them extremely emotional. So, yeah, I just don't think this is going to be the company to bridge that gap again. Like, I think we'll see what happens with the hardware of it all. You know, if, if you make it super useful. A lot of people I've been seeing, like, you know, TikTok creators, creators on other platforms kind of trying to like, change the narrative here, saying, hey, don't get left behind, learn how to use this stuff. And that's it's something that can be valid, but the way that they're framing it a lot of the time is more, oh, it's such a high learning curve. You must learn how to use it before it leaves you behind. It's not that high of a learning curve, you know, I mean, it depends on how you're using it, but you know what I mean? Sometimes it is. Yeah. If you're using like codecs and like doing all sorts of, like, intense vibe coding, yes, of course it is. But if you're just like chatting with the chatbot, it's really not a high learning curve.

[Nilay Patel]

I personally believe all that algorithmic social video content is Astroturf. That's just me. That's a conspiracy theory. We're going to leave that aside. I do want to pitch you video series called Hayden in the Club, where you just go to the club and talk to people at AI.

[Hayden Field]

I would love to do that officially instead of just having it happen to be unofficial all the time.

[Nilay Patel]

It's been a long time since I was in the club. That was not what the club was like when I was younger. Things have changed. Hayden, this has been great. I have a strong suspicion you're going to be back on this show talking about this lawsuit and OpenAI for the rest of this year. We're going to have to have you back very soon.

[Hayden Field]

Can't wait. Thanks.

[Decoder Host]

Thanks. I'd like to thank Hayden for joining the show. She's always great. I'm sure we're going to have her back as this lawsuit continues. I'd also like to thank all of you for listening. I hope you enjoyed it. If they'd like to let us know what you thought about this episode or really anything else at all, drop us a line. You can email us atdecoder the verge.com we really do read all the emails. Or you can hit me up directly on threads or Blue sky. We're also on YouTube. You can watch full episodes at Decoder.

[Chris McFarlane]

Pod.

[Decoder Host]

We also have a TikTok and Instagram. Same handle at Decoder Pod. They're a lot of fun. If you like Dakota, please share it with your friends and subscribe wherever you get your podcasts. Decoder is production of the Verge and part of the Vox Media Podcast Network show is produced by Kay Cox and Nick Stadt. This episode was edited by Ursa Wright. Our Editorial director is Kevin McShane. The decoder of music is by Breakmaster Cylinder. We'll see you next time.

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