Apple announces deal with OpenAI. Will it be a game-changer?

Apple is finally taking the plunge on AI.

The company on Monday unveiled a suite of new artificial intelligence capabilities that will be available in its newest operating system, including connecting its interactive voice feature Siri with OpenAI’s ChatGPT in a major deal that could supercharge adoption of the fast-developing technology.

Siri, for example, will be able to surface answers from ChatGPT for Apple devices and provide relevant contextual information across several apps, the Cupertino, Calif., tech giant said at its highly anticipated developer conference. The iPhone, Mac and iPad maker’s newest operating system update will also feature AI-augmented improvements in its photo editing and image search capabilities, among other things.

Apple Chief Executive Tim Cook described Apple’s new AI-based functions, dubbed Apple Intelligence, as the next big step for the company, which has been slow to adopt emerging technology that has the potential to change the way people live and work.

“Recent developments in generative intelligence and large language models offer powerful capabilities that provide the opportunity to take the experience of using Apple products to new heights,” Cook said in a keynote address during Apple’s Worldwide Developers Conference, where the company previewed the iOS 18 system and other software updates for products including the Mac and iPad.

The move signals Apple’s wider ambitions in the expanding AI landscape, as technology has progressed dramatically. Tools made by San Francisco-based OpenAI have been used to create music videos, read bedtime stories to children and help brainstorm ideas for writers. Companies including Microsoft and Google have aggressively incorporated AI into their products and services.

Apple has often not been the first to market with new technological advances, choosing instead to enter new product categories — including smartphones and tablets — once they’ve been established, leading to broader consumer adoption. For example, Apple only began selling its own virtual and augmented reality headset (known as Vision Pro) early this year.

Apple said its AI capabilities were created with privacy protections in mind. Apple Intelligence uses on-device processing. For requests that require use of the cloud, iPhone, iPad and Mac “do not talk to a server unless its software has been publicly logged for inspection” and the data are not retained or exposed, the company said.

Apple presented several uses for Apple’s new AI features. For example, if an iPhone user gets a notification that a work meeting has been moved to a later time, she can ask Siri how much time it would take for her to get from where the meeting is located to her kid’s play that night. In another hypothetical instance, an iPad user could share a photo of an empty patio and ask Siri what plants should be added.

The company also said customers can use Apple Intelligence to make suggestions for their writing, using it to analyze the tone of an email with options to make it more friendly or professional.

The announcement of the OpenAI deal “kicks off a new frontier for Apple,” said Daniel Ives, a managing director at Wedbush Securities who follows Apple.

“This was a historical day for Apple and Cook & Co. did not disappoint in our view,” Ives, who has an “outperform,” or “buy,” rating on the company’s stock, said in a note to clients. “Apple is taking the right path to implement AI across its ecosystem while laying out the foundation for the company’s multi-year AI strategy across the strongest installed base of 2.2 billion iOS devices over the coming years.”

Investors were less impressed, sending Apple’s stock down 1.9% to $193.12 a share.

Apple hopes adding new AI tools to its products and services will make them more useful to customers and thus more attractive. The company has faced a number of challenges, including slowing device sales in China. Ives said that AI technology introduced to Apple’s ecosystem will bring more opportunities for Apple to generate revenue.

Through its deal with OpenAI, Apple’s digital assistant Siri can ask Apple users if Siri can relay a question to ChatGPT for further information. This allows Apple to harness ChatGPT’s platform and in return, Apple users also become familiar with ChatGPT and what it can do. Every day, Apple said, Siri gets 1.5 billion voice requests.

ChatGPT will be available for free to Apple users on its newest operating systems for iPhones, iPads and Macs later this year. Apple said its users won’t need an account with ChatGPT to use it on Apple devices. OpenAI won’t store requests and IP addresses will be obscured, the company said.

“Together with Apple, we’re making it easier for people to benefit from what AI can offer,” OpenAI CEO Sam Altman said in a statement.

Some tech companies, including Apple, didn’t anticipate the breakthroughs in AI over the last year, said Rob Enderle, principal analyst with advisory services firm Enderle Group. The partnership with OpenAI is one way for Apple to catch up. One of OpenAI’s major backers is Microsoft, an Apple competitor.

“Apple’s been significantly behind on AI,” Enderle said. “This is a method to allow Apple to make up for the fact that they haven’t been focused on AI like they should have done over the last decade or so.”

Apple Intelligence was one of many announcements and updates from Apple on Monday, including a feature that lets AirPods Pro users nod yes or shake their heads no to Siri’s questions when they are in crowded spaces. Additionally, the company announced that the Vision Pro headset will also be available in additional countries starting later this month, including mainland China, Hong Kong, Japan and Singapore.

The company also unveiled a new feature called InSight for its tvOS18 that is similar to Amazon’s X-Ray and shows the names of actors or a song playing on an Apple TV+ program.

OpenAI has become the best-known player in the artificial intelligence space, thanks to its tools including ChatGPT and Sora, its text-to-video tool. But the company has faced its fair share of controversies and challenges.

OpenAI last month received backlash from actor Scarlett Johansson, who said she was approached by the startup’s CEO to record her voice for a Siri-like voice assistant version of ChatGPT. After she declined the opportunity, Johansson said, she was upset when she heard what sounded like her voice in a ChatGPT demo.

Altman is known to be a fan of the 2013 movie “Her,” in which Johansson plays “Samantha,” the disembodied voice of a computer who provides friendship and, eventually, love to a lonely man played by Joaquin Phoenix.

OpenAI said that the AI voice, called “Sky,” was not Johansson’s and was recorded by an unnamed voice actor. Nonetheless, the company paused the use of the Sky voice.

OpenAI recently caught flak for disbanding a team that was tasked with coming up with systems to prevent the rise of artificial intelligence from leading to disaster for humanity. After the firestorm, OpenAI created a new safety committee led by board members, including Altman.

Last week in an open letter, former and current OpenAI employees also raised concerns. The group said that “AI companies have strong financial incentives to avoid effective oversight, and we do not believe bespoke structures of corporate governance are sufficient to change this.”

OpenAI said in a statement said that it believes “rigorous debate is crucial” and it will continue to engage with communities, governments and civil society. The company said it has an anonymous hotline and a safety and security committee.

“We’re proud of our track record providing the most capable and safest AI systems and believe in our scientific approach to addressing risk,” the company said.

Large tech companies are also facing their own challenges, with the U.S. government raising antitrust concerns.

In March, the Department of Justice sued Apple, accusing the tech giant of stifling competition and leveraging its clout and ownership of the popular App Store to increase prices for customers. Apple said the lawsuit threatens “who we are.”

“If successful, it would hinder our ability to create the kind of technology people expect from Apple — where hardware, software, and services intersect,” Apple said in a statement.