OpenAI’s ambitious deal with Apple, which brought ChatGPT directly into Apple’s operating systems, is not delivering the results the artificial intelligence company had hoped for. According to a report from Bloomberg’s Mark Gurman, OpenAI expected a significant surge in paid subscribers from the integration, but the numbers have been disappointing. Now, the company is weighing legal action against Apple, which could include sending a notice alleging breach of contract before potentially filing a full lawsuit.

Background of the Partnership

The partnership was announced in 2024 as part of Apple’s broader push to integrate third-party AI services into its ecosystem. Users could access ChatGPT directly from Siri, the control center, and various system-level features on iPhones, iPads, and Macs. In exchange, OpenAI gained privileged access to Apple’s massive user base, with the expectation that a fraction of those users would convert to ChatGPT Plus subscribers, priced at $20 per month. Industry analysts at the time estimated that even a 1% conversion rate among Apple’s 1.5 billion active devices could generate hundreds of millions in annual revenue.

However, the reality has been starkly different. Internal OpenAI documents reviewed by Bloomberg indicate that subscriber growth from the Apple integration has been “far below projections.” The company had budgeted for marketing spend and infrastructure expansions based on those optimistic forecasts, leading to a shortfall that has strained internal resources. Meanwhile, Apple has reportedly been slow to roll out deeper integration features that were promised, such as allowing ChatGPT to access calendar data, reminders, and other personal information that could have made the AI assistant more useful.

Why the Deal Faltered

Several factors have contributed to the underperformance. First, Apple’s own AI ambitions have grown significantly. The company has been developing its own large language models and is reportedly preparing to launch a more advanced version of Siri powered by proprietary technology. This has reduced Apple’s incentive to promote a rival’s AI tool aggressively. Second, user privacy concerns have limited adoption. Many Apple users who value tight data controls are wary of sending queries to a third-party service like OpenAI, even if anonymized. Apple’s privacy-focused marketing may have inadvertently discouraged use of the ChatGPT integration.

Third, the competitive landscape has shifted. Since the deal was signed, new AI assistants from Google, Microsoft, and Anthropic have gained traction, offering similar capabilities on Apple devices without requiring a subscription. Google’s Gemini, for example, is deeply integrated into iOS via apps like Google Search and Gmail, giving users alternative ways to access AI without leaving Apple’s ecosystem. Fourth, the subscription model itself may be a barrier. ChatGPT Plus offers priority access and advanced features, but many casual users find the free version sufficient, especially when limited to occasional queries through Siri.

Possible Legal and Business Implications

If OpenAI follows through with legal action, it could set a precedent for how AI partnerships with major platform holders are structured. The breach of contract claim would likely center on Apple’s alleged failure to market the integration effectively or to deliver on technical milestones. “Sending a notice of breach is often a prelude to renegotiation or litigation,” said corporate law expert Dr. Sarah Lin in an interview. “It pressures the counterparty to address grievances before things escalate.”

For Apple, a lawsuit could be a reputation risk, as it would publicly highlight friction with a key partner at a time when the company is positioning itself as an AI leader. However, Apple has deep legal resources and may argue that the integration has been implemented as agreed upon, and that subscriber conversion is not Apple’s responsibility. The outcome could affect future deals between large tech firms and AI developers, potentially leading to more explicit performance guarantees in contracts.

Broader Industry Context

The OpenAI-Apple tension mirrors broader challenges in the AI industry. As large language models become ubiquitous, the value of exclusive distribution deals is being questioned. Many AI companies are finding that simply being available on a platform is not enough; users need compelling reasons to choose one AI assistant over another. This has led to a race for unique features, such as real-time memory, advanced image generation, and multimodal capabilities.

Meanwhile, Apple is not the only platform holder facing discontent from AI partners. Google has had similar issues with its integration of Bard (now Gemini) into its own ecosystem. Amazon’s Alexa has struggled to make its AI skills profitable. The lesson so far is that deep technical integration and heavy marketing are necessary but not sufficient for driving subscriptions. User behavior is shaped by many factors, including brand trust, ease of use, and perceived value.

OpenAI’s situation is also complicated by its own internal changes. The company has seen multiple executive reshuffles in recent months as it tries to pivot toward AI agents and other new product categories. The Apple deal was supposed to provide a stable revenue stream during this transition, but its underperformance adds pressure on CEO Sam Altman to deliver growth from other sources, such as enterprise contracts and direct web subscriptions.

For now, both companies remain publicly silent on the matter. Industry watchers expect that OpenAI will first try to renegotiate the terms of the agreement before resorting to litigation. Apple may be willing to offer more prominent placement for ChatGPT in future OS updates or to allow deeper integrations that respect its privacy safeguards. However, if no resolution is reached, a legal battle could unfold that reveals sensitive details about the inner workings of AI partnerships—and reshape how Silicon Valley collaborates on artificial intelligence.

This article has been updated to reflect additional context about the AI industry and the history of the partnership.

Source: The Verge News