Apple in Talks with More AI Companies to Integrate Models, But Won't Pay Them; Instead, Takes a Cut from Subscriptions

During WWDC 2024, Apple unveiled Apple Intelligence, a new service integrating OpenAI's offerings to provide cloud-based AI functionalities to users. Apple has expressed an intention to incorporate additional artificial intelligence services or models, including but not limited to Google Gemini, starting with the best, hence the initial collaboration with OpenAI.

Interestingly, despite integrating OpenAI's AI services, Apple will not pay OpenAI. Instead, OpenAI offers its services for free, leveraging Apple's platform to promote its products and attract users to subscribe to services like ChatGPT Plus.

Apple is currently in discussions with Meta, Anthropic, and Perplexity, aiming to integrate their AI models into Apple Intelligence, effectively turning Apple into a large AI marketplace where users can choose from various models based on their needs.

Meta's current flagship product is the open-source Llama model series, Anthropic offers the Claude series, and Perplexity specializes in AI question-answering and search services.

Following the precedent set with OpenAI, Apple plans to continue this trend of not paying these AI developers. In return, AI companies do not have to pay Apple either.

By promoting their products on Apple Intelligence and drawing in users to subscribe to premium versions, AI companies can benefit. Should users opt for premium subscriptions, Apple would then collect a 30% commission, in line with AppStore standards.

Analyst Gene Munster suggests that OpenAI's collaboration with Apple could double ChatGPT's usage, with infrastructure costs increasing by 30-40%. An estimated 10-20% of Apple users might pay for premium AI functionalities.

This revenue could not only cover infrastructure costs but also increase income for AI companies, explaining why OpenAI agrees to offer its model to Apple without a partnership fee.

With an active iPhone user base of 1.3 to 1.4 billion worldwide, such a vast audience indeed presents an excellent promotional platform. Assuming 10% of users subscribe at 20 per month, this could generate up to 30 billion.

However, negotiations between Apple and Meta, a leading player, have yet to be confirmed, leaving it uncertain whether users will be able to access AI services powered by Meta Llama directly on their iPhones.