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Apple Sues OpenAI
00:20:43
Apple sued OpenAI, alleging ex-employees stole trade secrets for its hardware push. Twelve states sued to block the Paramount-WBD merger, Anthropic extended free Fable 5 access as rivals raced on price, and Meta killed its Instagram AI opt-out feature.
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Welcome to the tech we write Home from Monday, July 13, 2026 I'm Brian McCullough. Today Apple sued OpenAI alleging X employees stole trade secrets for its hardware push. 12 states sued to block the Paramount WBD merger. Anthropic extended free Fable 5 access as rivals raced on price and Meta killed its Instagram AI opt out feature. Here's what you missed today in the world of tech. To all the IT pros out there, today's sponsor has a special gift for you. That gift is Ace of Uptime, an online card based game where you go up against the problems that threaten uptime on a daily basis. Each level pits you against a recognizable adversary. We're talking about alert overloads, heat that's trapped in a cramped server room, and systems that look fine but are far from it. Choose your move and see whether your decisions resolve the issue or escalate it. The game is fast, fun and designed to let you test how you'd respond when Uptime is on the line. Think you can beat the villain of downtime? Head over to eaton.com ace to find out. That's eaton.com ace well, the Great AI Horse Race has taken quite a turn. Late Friday, word leaked out that Apple is suing OpenAI, alleging that ex Apple employees stole Apple's trade secrets for the benefit of OpenAI and says OpenAI never responded to its concerns. Quoting 9to5Mac, the lawsuit names Chang Liu and Tang Tan as two of the defendants. Tang Tan served as VP of product design at Apple, leading iPhone and Apple Watch product design. He departed the company in February 2024 to work with Jony I've. Cheng Liu, meanwhile, worked at Apple for eight years and was a senior system electrical engineer before departing to join OpenAI in January of 2026. Apple's lawsuit also names OpenAI and I O products as defendants. OpenAI's hardware efforts are being led by Jony I've Apple's former chief design officer. OpenAI acquired I've Startup I O as part of a $6.5 billion deal last year. OpenAI's takeover of the company included more than 50 engineers, developers and other employees. In its original announcement, OpenAI touted that I've founded in collaboration with Scott Cannon, Evans, Hanke and Tan. Hanke led Apple's design team for several years after I've departed the company. She departed herself in 2022 before reuniting with IV as part of I O. Canon also previously worked at Apple. I've Hanke and Canon are not personally mentioned anywhere in Apple's initial filing today. Apple says it first raised concerns with OpenAI directly in February, asking the company to investigate and address the issue. OpenAI, however, never responded. Apple says the conduct detailed in the filing is the tip of the iceberg. The complaint, filed in the US District Court for the Northern District of California, alleges that Tan used insider knowledge of Apple's confidential projects to grill job candidates in interviews and learn more confidential information. Additionally, Tan directed job candidates still working at Apple to bring actual Apple hardware components and samples for show and tell sessions. This is quoting the complaint when interviewing Apple employees for jobs at OpenAI, Mr. Tan uses Apple's confidential information to gain access to even more insider knowledge. He has used an Apple internal project codename to ask, what's the plan for an unannounced Apple product? He has directed job candidates still working for Apple to bring actual parts from Apple to their interviews for show and tell sessions, in which he and his team at OpenAI can elicit still more Apple confidential information. These directions to bring Apple's parts to OpenAI job interviews surprised at least one of the candidates, who commented that he didn't even know we could take those from the office. OpenAI has been instructing Apple employees to bring CAD design artifacts and prototypes to their interviews and to divulge details about their work, such as subsystem and component selection, the tools or methodologies you use for system integration, such as CAD software simulation tools, and vendor selection and communication collaboration with vendors. Furthermore, Apple says a candidate began screenshotting and downloading files relating to a highly confidential Apple project hours before interviewing with Tan, who then solicited more information about that same Apple project. Once the interview started, this became an established pattern. Apple says Tan also allegedly possessed and distributed an internal Apple need to Know document to new OpenAI hires before they gave their notice to Apple. The document included Apple's departure security protocols. As part of its investigation, Apple found a pattern by employees who depart for OpenAI of taking steps to evade the security security process intended to protect Apple's confidential information. Meanwhile, Apple also claims former engineer Liu exploited a security bug to download confidential engineering files after leaving the company. Rather than report the exploit, Liu allegedly joked about it in messages. Lol. So funny. Liu also failed to return an Apple issued laptop after his departure. Apple alleges that Liu downloaded a compilation of technical files with over 1000 pages with details of work he did at Apple. This included detailed manufacturing documents covering the complex circuit boards used in Apple hardware products. Liu also allegedly coached another Apple employee at the time whom he was recruiting to OpenAI on which confidential materials to study before her own OpenAI interview. Finally, Apple alleges that OpenAI had a trusted Apple partner carry out Apple's proprietary metal finishing technique, misleading the partner into believing it had Apple's permission to do so. Apple also says OpenAI approached a second long time Apple supplier that works on power and battery manufacturing, using insider terminology to ask targeted questions about specific Apple components. The suit seeks injunctive relief and damages and comes as OpenAI works to bring its first consumer hardware device to market. End quote. Apple claims OpenAI has recruited more than 400 ex Apple employees. Apple says OpenAI's leadership normalized misconduct and OpenAI's hardware business is rotten to its core by its illegal reliance on stolen trade secrets. Quoting TechCrunch, the accusations come at a time when OpenAI is rumored to be developing its first hardware product, which would likely compete with the iPhone. In April, industry analyst Ming Chi Kuo suggested this device could be a smartphone that would rely on AI agents instead of apps. If true, it would be one of the largest threats to Apple's core hardware business to date. Apple's former lead designer Jony ives device startup IO was acquired by OpenAI last year in a $6.5 billion deal to aid the AI company with its hardware ambitions. While I O was named in the filing, I've was not. Apple says its ongoing investigation revealed that OpenAI and its partners have even used Apple's confidential information while the AI model maker develops its own hardware product. For instance, the filing references a proprietary metal finishing technique that OpenAI used after it allegedly misled a partner into believing it had Apple's permission to do so. Like many tech companies, Apple typically investigates potential trade secret theft or other improper activity by analyzing communications that took place on company owned devices and reading through its server logs. By taking the case to court, Apple will have an opportunity to learn more about the extent of the alleged operation through the legal discovery process. Apple is asking the court to bar OpenAI from using or disclosing its trade secrets, require the company to return any confidential Apple material, and preserve evidence related to the case. Quoting Apple one more time this is the tip of the iceberg. Apple lacks visibility into what's been happening behind closed doors at OpenAI, where such misconduct is normalized and exemplified by leadership, the filing states. As a natural result, OpenAI's nascent hardware business now rests on the shakiest of foundations, rotten to its core by its illegal reliance on misappropriated trade secrets. I will note that at this point OpenAI has been gently burning its bridges with Microsoft, and now the bridge with Apple is positively torched, one would think what happens if OpenAI cannot move into the hardware space it has been clearly thinking about because it's tied up in litigation for years. More litigation Quoting Variety a coalition of 12 states filed an antitrust lawsuit on Monday to block the merger of Paramount, Skydance and Warner Brothers, defying the Department of Justice, which approved the deal last month. The coalition, led by California Attorney General Rob Bonta, alleges that the $111 billion transaction violates the Clayton act by lessening competition in three distinct markets wide release theatrical distribution, top grossing theatrical distribution and basic cable licensing. The suit argues that the combined company will control 27% of the wide release theatrical distribution market, 30% of the submarket comprising anticipated blockbuster films and 27% of the basic cable bundle. The states argue that such consolidation will harm theaters and cable and satellite providers that rely on competition among distributors. Paramount and Warner Brothers are two of the five remaining legacy studios. Together, all five, including Disney, Sony and Universal, control 86% of theatrical distribution and 90% of blockbuster distribution, the states said. Warner Bros. And Paramount are also the second and third largest basic cable distributors, respectively. Consolidation here not only leads to higher prices, it also leads to fewer opportunities for important stories to come to life and fewer ways for audiences to encounter stories, ideas, perspectives beyond their own experiences, bonta said. In this country, no one is above the law with this lawsuit. California and our sister states are fighting for free and fair markets, not rigged markets. America has no kings in government or our economy. The DoJ gave its blessing to the merger in June, issuing an unusually lengthy commentary arguing that the deal will not harm competition in the theatrical streaming and linear TV markets. Meanwhile, Hollywood unions have expressed reservations or outright opposition to the deal, warning that further industry consolidation threatens thousands of jobs. This is one of the worst proposed mergers we've seen, said Michelle Mulroney, the president of the Writers Guild of America west, in a statement applauding the lawsuit on Monday. We've been very clear from day one that combining Warner brothers discovery with Paramount threatens our members and this industry and must be blocked. The states are expected to seek an injunction to block the transaction, which Paramount expects to close sometime after July 22nd. End Quote. AI in Real Life the future of AI isn't just digital. It's physical. From robots and drones to cars, industrial equipment and medical devices, intelligent machines can transform our lives. But every intelligent device needs an efficient brain, one that can reason locally without cloud inference delays and without draining its battery. That's where SIMA AI comes in. With the Agentix software Environment palette NEAT and the Modalics machine Learning system on chip hardware, developers can build high performance physical AI applications not in months, but in days and hours. Join the webinar to see how customers use reasoning enabled AI and agentic workflows to accelerate the development of intelligent machines and autonomous systems. Discover what's possible with physical AI. Head to SIMA AI. That's SEMA AI. Neat. When critical company knowledge isn't documented, there's a major ripple effect. Work becomes inconsistent, tools don't get adopted, and knowledge walks out the door when someone leaves. Thankfully, our sponsor Scribe, was built to fix that. Their workflow AI platform is trusted by nearly half of the Fortune 500 to capture workflows in real time. Here's how it works. You turn on the Scribe browser extension or desktop app, do a process as you normally would, and Scribe will build a guide as you go. It automatically redacts sensitive information and even suggests improvements to your existing workflows. To see what Scribe could look like. For your org, head to Scribe how ridehome and mention Ride home for your first month of Scribe, capture free on select plans. That's S C R I B E How ridehome. But back to the AI race. Hey, look at that. Anthropic says it is extending Claude Fable 5 access on all paid plans again, as well as keeping Claude Code's weekly rate limits 50% higher through July 19th. Quoting the economic Times. This comes amid multiple last minute reprieves and an intensifying competition in the AI market. OpenAI's GPT 5.6 family reached general availability just last week, with early benchmarks showing it closing in on or in Some cases surpassing Fable 5 performance on coding and reasoning tasks. Extending free access may be one of the ways of keeping developers testing on Anthropic's model. This may also be about goodwill, as Fable 5's release hasn't been ideal for Anthropic. It launched June 9 as part of Anthropic's new mythos tier, only to be suspended three days later by the US government due to security reasons. The suspension lasted 19 days. Access returned July 1 once the controls were lifted, with a 50% of weekly limit allowance set to expire July 7, which Anthropic has now pushed to July 12. Anthropic said it hopes to eventually restore Fable 5 as a standard subscription feature, but has given no firm timeline. So here's the thing. I was planning to immediately switch over to GPT 5.6 if they took Fable away from me. Apparently everyone else was too. And Anthropic apparently knows that if you use this stuff every day, you know it's not even a close call. The Fable and Soul level models are so superior to the Opus level models, you really can never go back. And if OpenAI is the only one offering that level of model, well here are some comments from the Peanut gallery quoting netcapgirl on X this is like your parents fighting and then getting two Christmases out of it. Here's friend of the show Gurgly Oros this is why competition leads to much better outcomes for customers and consumers in general. If it was not for GPT 5.6, released a few days ago, Anthropic would most likely have removed Fable from most paid plans and charged money for access. But with GPT 5.6 out, they cannot, and quoting it Trini on X Sorry babe, I can't go out this week. It's the third last week Fable is included on all paid plans. Here's the thing. OpenAI, Meta and SpaceX clearly realize they may be able to put pressure on Anthropic by emphasizing cost efficiency as business customers increasingly are scrutinizing their AI spending. Remember how I told you the token price pricing for those new models released by Meta and SpaceX AI last week were super competitive on pricing. Quoting Bloomberg earlier this year, firms encouraged employees to outdo one another by using AI as much as possible, a practice known as token maxing. But in recent months, some companies have imposed tighter limits after being hit by sticker shock, in part due to developers like Anthropic switching to usage based pricing rather than simply charging a flat subscription fee. Gautier Cloy, CEO of Paris based AI startup H Company said he's spoken with a number of executives whose businesses have racked up significant bills after using models from OpenAI and Anthropic. One CEO showed him an invoice indicating a month of AI model usage costs millions of dollars, Cloy said. Companies are spending a lot more than they used to, said Gil Lauria, head of technology research at D.A. davidson Co. As they see these costs get out of control, they're starting to ask questions about efficiency. As a result, top AI developers must now find ways to maximize value for current and potential customers without undercutting themselves to the point where they'd struggle to recoup the hundreds of billions of dollars they've invested in chips and data centers. Meta, which benefits from having a lucrative online advertising business, is prepared to be aggressive, according to CEO Mark Zuckerberg. The pricing from some of the other labs is very extreme and has very high margins, he said in an interview. We think that there's a real ability to be able to offer frontier or very high level intelligence at a much more afford cost. OpenAI may have less wiggle room, but also sees the need to be competitive on costs. Every enterprise now is thinking about spend and the value they're getting in exchange for AI, and this is what we really want to do, OpenAI CEO Sam Altman said in an interview with CNBC on Thursday. The rhetoric is notably different from a year or so ago, when OpenAI executives were publicly musing about one day, charging thousands of dollars for monthly subscriptions to top tier AI models to better reflect the growing value they provide to businesses. Now, in addition to introducing more efficient new models, OpenAI has also been taking steps to help companies manage their AI outlays. Last month, the ChatGPT maker introduced credit usage analytics and updated spending controls. End quote. Finally today, quoting Variety, Meta said on Friday it would discontinue an AI feature that allowed users to generate images using public Instagram accounts following days of criticism over the feature's opt out policy, including by Hollywood talent agencies. Earlier this week, we announced that one way for people to generate images in Meta AI is by an ention on public Instagram accounts that they want to reference, a Meta spokesperson said in a statement. Our intent was to provide a useful, creative tool and to give people control over whether their public content could be referenced in this way. We've heard the feedback and that this feature missed the mark so it's no longer available. End quote Meta introduced the new Muse image model on Tuesday, letting users manipulate an image of a person by tagging their public Instagram account or any public Instagram account at all in service of the social experiences billions of people already love, according to the company. However, the feature was met with near immediate backlash over its opt out policy, which required users above 18 with public accounts to disable the feature in order for their images to be excluded from the image generator. Caa whose clients include the likes of Tom Hanks and Meryl Streep, said it raised its concerns with Meta directly and urged the platform to take on a more reasonable approach. Meta's reversal comes as AI companies continued experimentation with new features test their users boundaries with how their likenesses are scraped by models. OpenAI temporarily had a similar opt out feature for its Sora 2 video model, drawing similar criticism before changing its policies and eventually shutting it down earlier this year. End quote. Nothing more for you today. Talk to you tomorrow.