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Is Apple paying OpenAI or vice versa?

by xyonent
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I don’t know. Am I wrong in optimal contract theory to think that because there is a dual agency relationship, payments should go both ways? Of course, optimal contract theory often fails.

Ben Thompson There is a hypothesis (Gated):

This seems like a strategy to gain users and mindshare, and potentially upsell those users to a subscription; i.e. the exact same model that OpenAI employs with its website and app. Moreover, it also explains why OpenAI is the only option if Apple doesn’t pay in this partnership. For example, Google probably wanted to be paid for Gemini, or Anthropic for Claude. And (1) it’s conceivable that Apple would stay the course of not paying, especially if (2) OpenAI is making aggressive moves to build a consumer business and become a lasting brand and winner in the consumer space. So my latest thinking is that both Apple and OpenAI are betting that very large language models are becoming increasingly commoditized, which means Apple doesn’t have to pay to access the models, and OpenAI thinks that scale and consumer mindshare are the best path to a sustainable business.

If I had to guess, I would say the main payment will come from Apple to OpenAI. Apple is very good at extracting revenue from its customers. OpenAI, no matter how fast it grows in the next few years, will never have a track record that can match that. So one model would be for Apple to pay for AI access and later charge extra for the iPhone. If enough people demand it, you could buy a cheap phone without these services. Of course, OpenAI would also charge, but only if it exceeds its quota. Because OpenAI, unlike Apple, faces the “additional subscription fatigue problem”.

It’s just a hypothesis. The fact that we don’t know should say something about the limits of economic reasoning.

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