Apple’s lawsuit may slow OpenAI before it reaches court

Transcript

From the transcript TBPN publishes with the episode.

1. 1:58:46

   Is that about App Store ranking? No. No. No. So XA SpaceX currently has an ongoing lawsuit with Apple about the App Store ranking. That has not been decided. But separately, XAI sued OpenAI for poaching employees and potentially getting those employees to share secrets of how Grok is trained. That's the allegation. And that case was just dismissed last month on the fifteenth. But it took a year to get there. And I'm wondering because we have that as an example, we also have the Samsung Apple battle that took eight years and ultimately ended in a settlement.

2. 1:59:23

   And I'm just wondering about how you're feeling about the pace of things. There was sort of a quick back and forth on X, some comments from OpenAI leaders. But how will this story actually evolve and play out?

3. 1:59:35

   It all depends. I mean, OpenAI is going to fight Apple like hell. Yeah. They'll have a law firm involved. Mhmm. In fact, you know, OpenAI hired a law They want

4. 1:59:43

   to use chat, Kodak's bearish, you know, new models. Yeah. They hired they they they actually hired a law firm a couple months ago Okay. And they were gonna sue Apple over the relationship when it came to the Apple Intelligence Siri deal. So they've got lawyers looking into this and working on this. I wonder so Apple's saying that they reached out to OpenAI in February about their concerns over trade secrets and whatnot. I wonder if OpenAI started preparing its lawsuit against Apple as part of a down the line countersuit type of situation, or as in response to Apple's letter to every neither here nor there. I think this could take several months to years.

5. 2:00:24

   Really depends. The discovery process is going to take a while. But if I'm going to be really honest with you, I don't think the courtroom timeline really matters. I mean, it matters to some extent, but the bigger picture already happened. If you're an Apple employee, and you're thinking about joining OpenAI right now Sure. First of you're going keep your mouth shut. You're not going to tell anyone. Yeah. Right? They're going to walk you out.

6. 2:00:49

   Yeah. It is not a good thing to be someone on Apple right now who's thinking about joining OpenAI. Sure. Sure. Sure. You're gonna have Apple security all over you. Your manager's gonna despise you.

7. 2:00:59

   And everything you do. They're gonna be Yeah. Watching every website you went to on your Yeah. Computer for the last month. So you got to know that you're going to be really clean if you're thinking about that. Yeah.

8. 2:01:08

   Yeah. So if you're thinking about going to OpenAI and you're at Apple, the way Apple wrote this lawsuit, you have to be out of your mind to not think twice about it. And I think that Apple needed to stop the bleeding to OpenAI, and this lawsuit is certainly going to help with that. The other thing is, is you're going to have Tang Tan, all those guys caught up in depositions and discovery, and meetings with lawyers now. It's like, how are you supposed to launch a product?

9. 2:01:34

   How are you supposed to do your job if you're stuck in the office all day with lawyers? Sure, sure. Everything's going to need to be cleaned up. They're going need to work in a clean room like environment now. They're going to investigate what kind of Apple IP is in there. And even if OpenAI did nothing wrong, all of the work that's going to need to be done to prove that, is just going to be a big waste of time for everyone. By just filing the lawsuit, Apple accomplished quite a bit.

10. 2:01:58

    Yeah. So how do you think a company like Apple who notoriously is, you know, very protective about internal secrets, process, supplier, you know, all these different things, is in the middle of of getting, you know, you know, the craziest talent raid in consumer electronics history and then just like has someone go out the door and and they're not even, you know, we were reading Ben Thompson's piece earlier just and he was kind of mocking Apple's security and and as I was reading the complaint, I was thinking back to the deal sort of rippling drama that happened last year and how Yeah. The guy was kind of set up in in some way. And and I was thinking like 2.5.

11. 2:02:50

    Is Apple Apple savvy enough to to like try to create a smoking gun by being like, yeah, let's not let's just let it yeah. This is full tinfoil. Yeah.

12. 2:03:00

    You think Apple just made this whole thing up? No. No. I'm not saying that I'm not saying I'm not saying that at all. I'm just saying like, it would be crazy to me if you get you're getting people post and you're not like, oh, yeah. We should make sure all the Oh, you're leaving the company? Sure. Yeah. Just keep your laptop kind of thing. Oh, yeah.

13. 2:03:17

    Yeah. That'd wild wild twist. Well, mean, I I'm sure more information will come out and

14. 2:03:23

    The discovery process is going to be very exciting, very interesting. Totally. I think Apple has a very high burden of proof here from a legal standpoint. I'm not a lawyer, but being able to prove that its IP is within certain products is going to be it's to be difficult to prove. Yeah. So we'll see if we're able

15. 2:03:40

    to do it. Also the narrowing of, like, what is a trade secret because, like, it's been this, like, awkward reality in the AI race that when a AI researcher leaves for another lab, they basically take the architecture that isn't necessarily patented in this sort of a trade secret. Like, they take that with them and they just say, oh, yeah. Like, we should probably train a model of this size or we should probably include some of this training data. And that's why we've seen the frontier.

16. 2:04:08

    But that's very different from hardware stuff with patents and Right. I would like to know what trade secrets or what Apple will be able to claim as a trade secret Yep. Ends up in these products. Because as you know, and everyone listening to this knows, hardware is incredibly commoditized. There are hundreds of companies that make electronics in the same space as Apple all over the world. And being able to prove that you're using Apple technology to release your phone, and build your phone, and develop your phone, that's going to be very difficult. I don't see this being a clean victory for Apple if it goes to a jury trial.

17. 2:04:44

    They don't My guess is they're not going to have Remember the Samsung trial? This is what Samsung phones looked like before the iPhone. This is what the iPhone looked like. Yep. This is what Samsung phones looked like, right? They broke it down so a third grader would understand it. It was very easy to follow. Short of that, I just don't see how Apple could win a jury case here. And if you read the complaint, over and over again, acknowledges that they don't really know what is really happening here. They know enough to know there's something shady going on, and we need discovery to figure out what is going on.

18. 2:05:19

    So they'll do that, but I'd be very surprised if they find something. The other part of this is there's a few things that you can really make a trade secret case on right now. That's silicon, And Apple has very proprietary silicon code, the way they develop chips and design chips, and they went after this company called Rebos that Meta ended up buying, and they got major changes made to how Rebos operates. The other one you mentioned is AI. You know, there's no AI thing that OpenAI is stealing from Apple.

19. 2:05:52

    And from the chip side, everything we know is that OpenAI is using Qualcomm and third party chip providers. So I'm very curious to see what Apple ends up finding. Interesting. I'm sure they'll find some good text messages and emails, though.