What Apple’s OpenAI lawsuit is really about

Support for this show comes from Comcast Business. Modern enterprise is a lot of moving parts. Comcast Business helps you orchestrate it all with SD-WAN working at scale to keep 150 hospital locations connected and working as one. Plus SASE and zero trust security protecting financial data across a bank's 2,000 branches. And AI-powered networking that optimizes traffic across five continents. No one does business like Comcast Business. Hello and welcome to Decoder. I'm Nilay Patel, Editor-in-Chief of The Verge. And Decoder is my show about big ideas and other problems. Today I'm talking with Hayden Field, The Verge's senior AI reporter, about the major trade secret lawsuit between Apple and OpenAI and what this tells us about OpenAI's future. But now I'm sure most Decoder listeners are familiar with Apple's allegations in this case. The company says a number of ex-Apple employees at OpenAI targeted Apple's trade secrets and job interviews and even downloaded files from Apple's servers related to hardware manufacturing. The claims are shocking, although OpenAI denies them. And we have yet to see that company's legal response. Hayden has been covering OpenAI for years now. And she talked to a number of lawyers who specialize in intellectual property and trade secret law to get a sense of how serious this case is. And the answer is not entirely positive for OpenAI, which spent more than $6.5 billion to acquire legendary Apple designer Jony Ive's AI hardware startup, Ayo Products, back in 2025. As you'll hear Hayden explain, Apple is a notoriously tenacious litigant. And we have lots of tech industry history to back that reputation up. There's Apple's big fight with Microsoft over the design of Windows in the 80s and 90s, all the way up to the billion dollar patent infringement saga with Samsung over Android in the early 2010s. Apple has gone to court for far less. But those cases were against companies at the scale of Microsoft and Samsung, giant corporations that could afford the cost and distraction of this kind of litigation. OpenAI isn't yet that kind of company. It's still burning cash, a little strategically adrift as it tries to compete in both consumer and enterprise markets, and it's turning over executives on a regular basis. So Hayden and I spent a lot of time talking about what this case might mean for a company that defined the early part of the AI boom, but which lately always seems to be in a crisis of one sort or another. Okay, Verge senior AI reporter Hayden Field on the Apple OpenAI lawsuit and how the AI industry might change because of it. Here we go. Hayden Field, you're the senior AI reporter for The Verge. Welcome back to Decoder. Thanks. Great to be here. Once again, we're going to talk about OpenAI, Hayden. Once again, it never stops. And we're going to talk about whether OpenAI can maintain focus at a time of great distraction, which seems to be just a theme with that company. Although this time, it's not their own distraction. It's a distraction from out in the world, maybe caused by some of their own behavior. Before I start talking about the Apple trade secret lawsuit, it feels like a big deal. Apple is accusing OpenAI of stealing all kinds of information from that company, even in job interviews, asking people in job interviews to tell them what they know about Apple products. Tell us briefly about this lawsuit and what's going on here. I wrote a piece last week called Sam Altman didn't need another lawsuit. And that's really the situation here. I mean, it's like, it seems pretty egregious from some of the claims that Apple is making. Apparently, you know, a former Apple employee was soliciting trade secrets allegedly over interviews, asking people to maybe bring pieces of hardware outside the office, outside the Apple office to OpenAI to do a show and tell in interviews, things like that. There's a lot of allegations being made that are pretty crazy, I thought. But then when I actually interviewed a bunch of experts last week, they said they've seen all of this before a lot. It's just they haven't seen all of it in one case with two key players. So, you know, some of this stuff is pretty egregious, it seems if it comes out to be true. But also, you know, to the experts in the space, they're like, oh, we see this all the time with trade secrets cases. It's not crazy. What's really crazy is that it's all in one case and that it's two really large companies. You know, it's really interesting. It's just a pattern, maybe not worth diving into a great length. But in the 90s, Apple pushed copyright law to the limit. They sued Microsoft for allegedly infringing on how the Mac looked and felt with Windows. I will point out that Windows still exists. Microsoft is fine. And then in the 2000s and early 2010s, Apple pushed patent law to the limit, suing Samsung for allegedly violating a bunch of patents with Android and Galaxy phones because Apple felt that they had protected the iPhone. And Samsung eventually paid about a billion dollars in damages. And those cases just sort of like went around in circles forever. But I'll point out that Android still exists. Samsung is doing just fine. Apple may have redefined patent law around like 3G and 4G licensing, but fundamentally it did not actually succeed in stopping its competitors with intellectual property lawsuits. And so you go from copyright to patent and now trade secret, which is the third kind of big intellectual property. And Apple's doing it again with OpenAI. And my big question is whether OpenAI can just pay the money the way that Microsoft and Samsung were kind of able to just pay the money. If you look at Samsung, spending a billion dollars in penalty fees to get Galaxy phones off the ground and be a major competitor mobile is maybe the easiest and best investment that company ever made. Right. But I don't know if OpenAI is the same kind of company in the same kind of moment. And it certainly seems like all of the Apple employees that went over to OpenAI maybe pushed the limit too much, right? At least from the story that Apple is telling us right now. It's pretty crazy reading the wildest claims from the lawsuit and, you know, also the messages that were being exchanged. Like one of them allegedly accessing, you know, Apple confidential information on a device and then saying, LOL, so funny that I can access this. So yeah, there's a lot there. Um, but I've been wondering the same thing. And I think that it really depends on Apple's willingness to be petty or be like super logical here, honestly. And when I interviewed a bunch of lawyers about this, they said Apple is a notoriously tenacious litigant. So, you know, as we've seen in those past cases, but also they really will take things far. They have a lot of money and they're willing to use it. And it really just depends on how mad they are, honestly. Um, I think that they would potentially settle if OpenAI paid them enough, but will OpenAI be able to do that? They're already, they're already in a really tough year. They're about to IPO every, all the investors are looking at their bottom line, wondering when they're going to turn a profit. You know, it's a tough time to be shelling out a ton of money to Apple. So we'll have to see what they do. I think it's going to go to trial and I think it's going to be a very drawn out years long thing. And that's what a lot of the lawyers I interviewed said as well. But, you know, there, I could see a world in which they just figure out a way to get all this money together and pay and maybe Apple accepts it. You know, in the Samsung patent cases, they lasted forever. And sort of in the middle of it, Tim Cook was at a code conference and I asked him, What are you doing? Is this accomplishing anything? And he looked at me very seriously and he said, Well, we think the fees for licensing standards essential patents are out of whack. And I was like, that is not the reason you're doing any of this, right? Like there's no, that's not the point. The point is that you were mad and you wanted to run this lawsuit to ground and you're going to run this lawsuit to ground no matter what the nominal reason is. And that feels like a big piece of the puzzle here, right? OpenAI has taken a bunch of Apple employees, famously Johnny Ive, Apple's most famous designer working with OpenAI on hardware devices. Tang Tan, who is OpenAI's chief hardware officer. He had a reputation at Apple for, Quote, playing fast and loose. That's from Mark Gurman at Bloomberg. He seems like the central character in this story. Not so much Johnny Ive, but Tang Tan. And that piece where it's a bunch of ex-Apple people maybe playing too fast and loose almost feels like it's personal, almost feels like there's a lot of emotions involved. Talk about Tang Tan and talk about what all these folks are alleged to have done that feels like it's a little more personal than your standard big corporate dispute. And also I will say, you know, what you said about talking to Tim Cook. I truly believe people underestimate companies pettiness. I really do. Like we've seen in recent years, like the OpenAI, Elon Musk lawsuit. There's so many things that could have been avoided if companies weren't trying to just be petty, which is fine. They can do that. They have enough money to do that. But I'm just saying, I think people underestimate, you know, how much that plays a part sometimes in these things. Um, as for Tang Tan, yeah, he worked at Apple for 24 years. He was the VP of the Apple watch. You know, he left in 2024 to work on Johnny Ive's hardware company, IO. Which obviously OpenAI ended up purchasing. Um, I'm glad you said consumer. I think that brings me to what I think is the heart of the problem for OpenAI, which is they were going to be the consumer AI company. Anthropic famously focused on enterprise. It's been lucrative for them. Maybe that's where all of the money is. But OpenAI was going to take down Google, maybe through Bing, maybe through its own app. They were going to be a consumer company. And the only reason you would make hardware is to go attack the consumer, to go attack the iPhone. So OpenAI's ambitions, at least as I could see them, were first to take market share from Google, which is one of the most lucrative businesses in the history of the world, and then to go attack the iPhone, which is the most famous and culturally dominant tech product that has ever existed. I don't know how they can do either of those things. It doesn't seem like consumers even want these products or want AI at this scale. I don't know where that revenue comes from in consumer. And the college students are all booing AI at graduation. Does OpenAI just need to pivot to enterprise? Do they need to spend their time spinning their wheels at consumer hardware devices before they figure out their business? OpenAI has pivoted so many times internally. And their most recent pivot was that they were going to focus on their key revenue drivers, which are enterprise and coding. They said that a million times. They folded Sora, Atlas, you know, the sexting feature. It feels like years ago, but crazy that that was like, you know, in the past year. Anyway, yeah, they've done a lot of this. And so everyone thought, okay, they're going for it. They're doing enterprise, because that's the tried and true moneymaker here, especially in a year that they're going to IPO. To be fair, yes, they had already planned to do the hardware device before this whole like pivot and, you know, cutting out the side quests. I guess they can't afford to cut out this potential side quest because they've already spent a lot on it. It's happening kind of no matter what. So now they're just kind of trying to make it as successful as it can. But it is interesting to me because I've only been on the AI beat for six years. That is a long time in AI, but, you know, maybe I'm missing something. But I just do not see a market when everyone is buying an OpenAI hardware device. I really don't. If I'm wrong, we can come back on here and laugh at my clip from, you know, July 2026. But like, yeah, smart speaker, okay, maybe people buy it just to be a smart speaker, kind of like, you know, Google Home. That's what I use mine for, basically just a smart speaker. But I think it's going to be one of those things that a few people really, really, really love and that the general public probably does not adopt because it's difficult to get them to adopt anything unless all their friends have it. There's a social aspect. And, you know, you're going to be a laughing stock with green text if you don't have an iPhone, you know? No hate to Android people. I'm just saying, you know, sometimes you don't get added to the group text or something. It's sad. It's sad and it's not right. But, you know, I'm just saying there's got to be some like public buy-in if you're going to be adopting a new piece of hardware a lot of times, unless you just love tech, which a lot of people will buy this just because they love tech. But if you're going for the general public, which is what I think they would need in order to make this much money back, I don't know. We founded The Verge at the start of the smartphone boom. And, you know, just thinking back on it, it was never a question of whether people would adopt smartphones. That was obvious. It was obvious to us. Maybe it wasn't obvious to everyone, but we were in it. And the only thing that wasn't obvious was who would win. And after a while, it became obvious that Apple would win. Like, how many iPhone killers did we cover 15 years ago? And they all came and went. And they looked like new operating systems. Windows Phone existed. The Palm Pre ran an operating system called WebOS. Android was ascendant. Nokia tried to do its own thing, and then they pivoted to Windows Phone. And at the end of the day, we kind of ended up with iOS and Android. And everything else fell into line. And maybe the whole tech industry hates this, and they hate paying the App Store fees. But this feels like that same kind of moment, right? Where OpenAI is going to put out a hardware device that's going to run its own operating system. Elon Musk is fulminating about Starlink and xAI putting out their own phone, maybe running their own operating system. Apparently, in the run-up to IPO, they were showing it to people. And I just have really dumb questions that, to me, mirror the same questions we asked about new smartphones operating systems 15 years ago. Are you going to make a Gmail client? Is it going to have Instagram? Because if you don't have those things, you don't actually get to replace the phone. And if you don't replace the phone, well, I've got the beta of iOS 27 on my iPhone right here. And Siri AI is definitely good enough to just get through the day. Yeah, that's what really gets me here is because the smartphone replaced the dumb phone. So, okay, it's like, you got to have something way better than the smartphone. Are you going to? Doubtful, but we'll see. But the other thing that gets me here is how many devices OpenAI is reportedly working on. I think what's their lineup they're working on? Reportedly five hardware devices and the screenless smart speaker is the first one. How can they come up with five? That's what I want to know. Like, what are the five? And shouldn't you be putting all your resources toward one? It's already hard to make one. I'm just, I'm a little dubious of five successful AI hardware devices. Even one is like a long shot, but five is a little bit crazy. I'm sure there's a lot and some will come and go. The thing that I think about, particularly when it comes to Johnny Ive and his approach to hardware, which is familiar at this point. We've watched him launch a lot of hardware at Apple. Ive tends to focus on new input methods for new devices. So the iPod had the click wheel and that really defined the form and function of the iPod. The iPhone has a multi-touch screen and that really defined the form and function of the iPhone and then the iPad. If you'll remember the Apple Watch, they launched it with great fanfare about the scroll wheel on the side. I don't know if that came to pass, but they really thought that was a big deal when they launched the Apple Watch. This is Ive's go-to path, right? We found a new input mechanism. We're going to define the product around it. I know exactly what that should be for AI, right? It's natural language input. You can just tell the computer whatever you want and it'll figure it out and it'll go off and do it for you. But we're however many years into the AI revolution, right? We're three or four years into this version of it. And it doesn't quite work yet. I think this is why the AI devices keep failing, as you keep mentioning, because you can talk to a humane pin all day and all night, and it will pretend to understand you and then not actually be able to do the things on the other side of it. That feels like the problem in AI right now. There's these flashes of brilliance, and then there's these limits of capability. Where do you think we are in that process of figuring out exactly what it can and can't do? And how do you think that limits a hardware device? We're still in the midst of it. I mean, I personally use AI all the time, obviously, in my personal life to test things out, see what it can do. And, you know, month to month, I see how it's improved, at least for my own personal things that I try. It's all anecdotal, obviously. But, you know, just the other day, I was trying to look up a lot of addresses of companies because I wanted to kind of like map something out. And I would say like 80%, maybe 60%, 60% of the ones that I looked up were completely wrong, just wrong. It made me a whole table. And it was like, yeah, don't worry. All these are definitely correct. And then at 60% wrong, I'm like, a lot of these are wrong. They're like, oh, sorry, my mistake. So, I mean, I don't know. It's like, yeah, it's like, oh, yeah, you're right. You caught me. So, I mean, obviously, yeah, it's right about a lot of stuff a lot of the time. But what I wonder is, there are certain tasks that, as we all know from like, you know, when we were an intern back in the day or if we've ever had an intern, there are certain things just easier to do yourself if you're not 100% sure the person is going to get it right. And so, what I wonder is, for a hardware device like this, there are a lot of low stakes things you can ask it and, you know, it'll be fine. But for higher stakes things or things that you, it's simpler to just look it up yourself or do it yourself, even then put it out there when it's going to be a potentially wrong answer. That's what I wonder. Like Like, I'm just thinking about a jury. Yeah. Right? And how Apple will play this case to a jury and be like, you stole all the music, didn't you? And then you also stole our manufacturing designs. And don't you get mad when the Chinese companies distill ChatGPT? In the course of your reporting, does it ever occur to the people in the AI industry that being mad about distillation is the exact same feeling that artists and musicians have about all of their work being put into the model in the first place? I haven't seen any of them even acknowledge that or at least even hint towards it one time, which is crazy. It just feels so like, like there's a disconnect there. They get so, so angry about distillation. They're like, it's against our terms of service. They can't even say it's illegal, just against the terms of service. They write open letters to the government. They even come together with their like mortal enemies at other AI labs to, you know, unite against distillation. So it's just interesting to me. Like, yeah, I've never seen that occur to them. I know a lot of people are probably listening to this and they're mad at me, mad at us for not making the claim that Apple is just filing this lawsuit because it was behind in AI, right? It missed with Apple Intelligence. It took a long time to catch back up. It's only shipping it now. They had to go to Google to maybe distill Google's models and put it in private cloud compute, all the stuff that they needed to do. But that stuff is shipping now. Do you feel like the broader AI industry is just looking at Apple lashing out at being late? Because I have heard a lot of glimmers of that, that this is just Apple trying to slow down the biggest threat in consumer as it launches Apple Intelligence and tries to catch back up. Yeah, I mean, I think that could be definitely part of it. Everyone knows Apple has been famously incredibly behind in AI and it's been a big topic of conversation and an embarrassment for the company for years. So, I mean, that could definitely be part of it. But the fact that this lawsuit is not about someone stealing trade, I'm doing air quotes, stealing trade secrets for, you know, Siri or something. It's not about that. It's about hardware, specifically show and tell of hardware, things like that. Hardware is something that Apple does amazingly and they are, you know, pretty much by all accounts, the best at. So, I mean, I think some people are thinking that, like, yeah, I mean, it's a benefit for Apple if they're able to kneecap a competitor from pulling ahead in any way. But the fact that this is a trade secrets lawsuit about hardware specifically, I think has rolled back a few of those claims, just because it's not like they're trying to claim that they're, you know, that OpenAI is stealing from them. Siri AI's, you know, secrets that they may not have many of. They're like, please take everything we know about Siri AI. That will truly kneecap you. Apple can afford the distraction, right? You mentioned this already in this conversation that Apple can just hire a bunch of lawyers and set them off to be as tenacious as they want. And maybe the rest of Apple won't even notice that that's happening. They're busy making the next iPhone. Apple spent however many years and like $10 billion trying to make a car and it just didn't work. And the rest of Apple, it didn't even occur to the rest of Apple that that was happening, right? They just kept shipping phones and laptops and everything was just fine. OpenAI is not that company. OpenAI might not even have enough executives to absorb the cost of another distraction. They keep leaving. Greg Brockman, who's the president of OpenAI, seems to be running the entire company himself. As you've been reporting on this story, has it occurred to OpenAI that they're going to need more people to do more things? Because I look at that company and they just keep shedding all of their talent and pivoting, as you said, from one thing to the other. And they've landed on, we need to compete with Anthropic. But it doesn't seem like they can afford distraction at this scale in any way, shape or form. Yeah, they can't. This is like the final battle. Actually, there's going to be a lot more battles, but this is a key battle in the in the longstanding, you know, AI arms race. It's like this is IPO year. Things are coming to a head. Investors are looking very closely at these companies in a way they haven't before. They're looking for them to turn a profit or at least have a way to turn a profit in a way that they have not, you know, really paid too much attention to before. And it's all coming down to the line. So, yeah, they cannot afford a distraction right now. They are reshuffling, restructuring, you know, changing executives around. They would, when I've asked them about this, they will say, well, it's, you know, it's all been one large plan that we've just been doing in little pieces, you know, it's not like we pivoted a million times. We've always been going towards one thing and these are just different steps along that journey. But it doesn't always read that way to the general public. And, you know, I think in some ways, yes, like, you know, Greg Brockman taking control of product, you know, it was because Simo, the AGI chief, left because of her health and then she permanently, or at least more permanently left because of her health. So it's not all things that the company could control. But I do think there's been a lot of defections, even from the rank and file staff. And so, you know, it's, it's, they've got to get more people. They've got to hire more, which will require even more money. And it's, it's not the time to get distracted by anything. It's worth noting that there's some reporting saying OpenAI will delay its IPO. And as you and I are sitting here speaking, SpaceX's stock price has dipped below its IPO number. These mega IPOs are, they're, they're in some kind of danger, right? It might not be a good idea to do this, especially if you don't have the revenue or the profits, more importantly, to back it up. Do you think there's some risk that this lawsuit is the straw that pushes OpenAI to delay its IPO? Absolutely. I think that reporting showed that Sam Altman was originally worried about, you know, filing a form S1 before Anthropic. Then they didn't do that. Anthropic did it first. And then I think this is me just speculating from, or hearing from things I've heard, but it seems like after Anthropic kind of won that part of the race, they kind of backed off and they said, okay, well, should we actually do this right now? We were trying really hard to win, but like, let's look at the facts here. And that's why they said, okay, it might be early next year. It might not be this year. And that was before Apple's lawsuit dropped. So now, of course, I'm sure they're thinking, okay, should we delay it even more, especially because there's no way we're going to beat Anthropic to market. And I mean, it seems like that might be a smart idea. I mean, if you can put out a great hardware device and make some sort of big splashy, profitable entry into the consumer market, that's a good story to tell in an IPO. But if you can't do that because everything you do is going to end up in litigation or you're going to just in messy discovery on the way to litigation, maybe that all just has to be set to the side. And that's pretty much my last question here. I feel like my thesis on this show, on the verge generally, has been, okay, I understand how this is going to work for software development. And I understand how this is going to work in enterprise, although even that's pretty shaky still. But consumers don't love this stuff, right? 900 million free ChatGPT users is not a reflection of anything other than, well, Google Search got really bad and this thing will tell you it loves you, right? But it hasn't turned into, we should build more data centers. It hasn't turned into, we culturally love the products of AI. It's turned into, get this slop out of my face and we're going to boo you at graduation and we're going to come to the town board meetings and say we don't want data centers. And there's some huge gap there. Do you think OpenAI can close that gap? Because they have always been the company chasing the big consumer product vision, the big consumer market. And if they can't close the gap, they should just shut it down and compete with Anthropic for enterprise uses. I don't know which one it's going to be. Do you have a sense through all this reporting if they have realized how existential the consumer side of the debate is? I think they know to some extent, but not the full extent. Because they will get at it, you know, in speeches, in research papers, in tweets. They have some PR lines where they will acknowledge that this is a thing, but I just don't think they realize how deeply this crevice goes. The gap is so wide. And I don't see them being the only company to close it, if it's ever going to be closed. People are extremely worried about so many things when it comes to AI and they're very emotional about it. It's not just logic. I think if it was just a logical gap, you know, some people logically think it's not good. Some people logically think it is good. I think they could probably close that. But when emotions come into play, no, I don't think that they