Apple recently filed a trade secrets lawsuit against OpenAI, accusing the AI company of a pattern of misconduct aimed at causing current and former Apple employees to share confidential information. (In response, OpenAI said it “knows of no evidence that this complaint has merit.”)
In a recent episode of TechCrunch’s Equity podcast, Kirsten Korosec, Sean O’Kane, and I debated whether this case would cast a shadow over OpenAI’s much-discussed plans to enter the hardware business (starting with the smart speaker) and then go public.
“Even setting aside whether or not the court grants you any kind of injunction or any kind of injunction against what OpenAI is doing, it would naturally lead to that kind of situation where it’s going to cause some kind of delay in what OpenAI is working on,” Sean suggested. “I’m sure that was part of the reason why Apple did this. They don’t do these things willingly.”
With all those plans on the line, will OpenAI try to resolve this as quickly as possible, or has it learned from its recent court victory against Elon Musk that it can’t afford the expense and embarrassment of a lawsuit? Kirsten, at least, predicts the latter.
Read on for a preview of our interview, edited for length and clarity.
Kirsten Korosec: Sean, how do you feel about Sam Altman listening to you on a small device maybe in your pocket?
Sean O’Kane: I’m fine. Maybe that’s predictable, but I’m fine. No thanks.
We’ll get into it, I’m sure, but this is allegedly the first product that OpenAI has been working on in its hardware division with Jony Ive and company. They’ve been forgotten ever since that weird video they put out last year sitting in that coffee shop or bar in San Francisco and talking vaguely about legacy hardware and devices, meaning laptops and phones. So if this is the direction they are headed, all the best to the people who want to have someone like that who always listens to them. This will not be mine.
Anthony Ha: Part of what we have to remember about those types of devices is that, depending on how mobile they are, they’re not just listening to you, they’re listening to the people around you. I might be okay with it – I’m not okay with it, but let’s just say I was – but if we meet in person at Disrupt, then suddenly it might be listening to all of us.
There are all kinds of social norms that will need to be negotiated if these things become widespread. I think we should laugh and criticize people who record other people without permission.
Kirsten: Well, I am bringing a device that has been thought about for a very long time, and we will see what it ends up being when it is officially presented, but it is important in the context of the case filed by Apple last Friday.
It was the big news of the week, sure, and this is a trade secret case. It has very good allegations and we must emphasize these are the allegations included in Apple’s complaint. But what he accuses OpenAI of is a pattern of misconduct at the highest levels, aimed specifically at OpenAI employees who worked at Apple. And they actually named the chief hardware officer Tang Tan in this case.
All of this is important because Apple accuses OpenAI of stealing their trade secrets, but in that case, this could be used for a competing hardware product. I’m wondering if maybe we’re not getting into whether this case is worth it, because we didn’t get the full story, but what are your initial thoughts on the case other than wow, this is going to be fun?
Sean: Two things. First, this is the biggest risk that OpenAI is likely to be working on. Even setting aside the court granting any kind of injunctive relief or any kind of restraining order against what OpenAI is doing, it would naturally lead to that kind of situation where it would cause some delay in what OpenAI is working on, which I’m sure was probably part of the reasons that Apple did this. They don’t do these things willingly.
The other thing is that we think OpenAI – we know they’ve filed an IPO in private. We think it could happen at the end of this year, or early next year, if you believe Sam Altman’s cautious language on the IPO. And this just raises a lot of questions about that because, on the one hand, we think that their business right now is probably software; they don’t really factor in any hardware business into that picture yet.
They’re going to market and they’re going to be putting in banks and investors where they think their addressable market should be, and if they’ve got a lot of that exposure to the potential division of hardware and hardware products, this could be a big risk to that and change a lot of the math in terms of how the IPO gets priced. So that’s where my head is at.
Anthony: One [allegation] that I think Apple must have solid numbers, they say more than 400 Apple employees are now working on OpenAI. Granted, both are very large companies with many thousands or tens of thousands of employees. So as a percentage, it’s not really that big. But that seems like too many people and weeding out the worst talent.
And another thing I wonder about is related to Sean’s point. In the context of a potential IPO, how much damage has OpenAI ultimately done in taking marketing and product vision to the test we’ve been through? It seemed like it basically won, but there were a lot of not-so-bad-but-embarrassing dirty clothes coming out of the evidence. How much are they like, “We don’t want to go through that again”? Or have they taken the lesson of, “Hey, we’ve been through it and survived and we’ll be fine if we have to do another experiment with Apple”?
Kirsten: I fully predict the latter, by the way.
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